[THE INVESTOR] TonyMoly’s business in China will see better profits, said Cape Investment and Securities on Oct. 20, maintaining a “buy” recommendation. Its earnings this year, however, will be slow, said the securities firm lowering the target price to 23,000 won (US$20.30) from 29,000 won.

It has clinched a 400 billion won five-year deal with China’s DMX, a distribution specialist in cosmetics, which is more than 170 percent of its revenue last year, noted analyst Kang Su-min.

Its plans to concentrate on the online channel in China is favorable as it has continues to suffer losses in mainland China burdened by the fixed cost for operating over 70 stores, explained the analyst. When the offline branches are streamlined, losses in China will shrink and the operation ratio of its subsidiary Megacos’ factory will rise from the secured shipment for the coming five years, added Kang. 

Earnings for this year, though, will be slow, with 229 billion won revenue and 4 billion won operating profit, down 1.72 percent and 77.78 percent, respectively, from the previous year, she estimated.

By Hwang You-mee (glamazon@heraldcorp.com)