Korea’s major beauty stock APR surpasses Shiseido in value

(APR)

South Korean beauty brand APR Co. has overtaken Japanese cosmetics mogul Shiseido Co. in market capitalization.

Shares of APR gained 4.4 percent to close at a record 261,000 won ($185.92) on Wednesday, lifting its market value to 9.77 trillion won, just short of the 10 trillion won mark. Shares of Shiseido fell 1.15 percent, leaving its market cap at 9.52 trillion won.

At the beginning of the year, APR’s value was only one-fifth of Shiseido’s. Strong first-quarter earnings ignited a rally that pushed the company ahead of LG H&H Co. and Amorepacific Corp. in market value.

APR shares have jumped 415 percent this year, while those of Shiseido have shed about 7 percent.

Investors have been drawn to APR’s rapid growth and profitability, powered by global demand for Korean beauty products. Overseas sales represent 80 percent of its revenue, with the U.S. and Japan driving expansion.

In the first half, overseas cosmetics sales surged 373 percent year-on-year, fueled by the popularity of products such as Zero Pore Pads and collagen-based items.

Third-quarter device sales are projected to rise more than 20 percent, while cosmetics sales are expected to climb about 220 percent, setting up record earnings. Growth accelerated with July’s Amazon Prime Day and an August launch at Ulta Beauty in the U.S.

NH Investment & Securities Co. Analyst Jung Ji-yoon estimates third-quarter sales will increase 251 percent in the U.S. and 217 percent in Japan from a year earlier.

APR also stands out in profitability.

Its second-quarter operating margin was 25.8 percent, compared with Estée Lauder Companies Inc. at 8 percent, Amorepacific at 7.3 percent, and Shiseido at 4.5 percent.

Generous shareholder returns have added momentum.

In July, APR declared a 134.3 billion won special dividend, pushing total payouts above 220 billion won. By converting capital reserves into retained earnings, the dividends were tax-exempt. The company’s shareholder return ratio reached 55.7 percent last year.

While APR has gained ground through platforms such as Qoo10 and sales campaigns in Japan, Shiseido has struggled to revive demand at home and abroad.

Shiseido, Japan’s largest cosmetics company and a global top-five player, is known for its high-end skincare products. It operates in more than 120 countries, with overseas markets contributing about 70 percent of sales.

First-half net sales fell 7.6 percent year-on-year to 469.8 billion yen. Adjusted operating profit rose 21 percent to 23.4 billion yen, but the stock has lagged amid weak department store and duty-free sales in Japan, slower growth in China, and U.S. setbacks, including weakness in the Drunk Elephant brand.

LS Securities Co. Analyst Oh Lin-a noted that Drunk Elephant attracted younger buyers through TikTok and social media but lost its core premium consumers aged 25 to 40. With teen demand now collapsing and product recalls weighing on results, first-half sales fell 57 percent. Shiseido announced a rebranding in the first quarter to restructure its business.