[Click eStock] "LG Saenghwal Geonhang, Earnings Outlook Remains 'Clear' Despite COVID-19... Target Price Up 6%"

[Asia Economy Reporter Jihwan Park] NH Investment & Securities on the 6th maintained a 'Buy' rating on LG Household & Health Care, stating that despite the impact of the novel coronavirus disease (COVID-19), the company's third-quarter earnings this year are expected to exceed consensus estimates, and raised the target price by 5.9% from the previous 1.7 million KRW to 1.8 million KRW.

Researcher Mijin Cho of NH Investment & Securities said, "Despite the continued impact of COVID-19 in the third quarter, operating profit is expected to increase by 3% year-on-year, surpassing consensus," and added, "The overall strength of all business divisions is expected to improve through mix enhancement such as expansion of high-margin products and channels."

Researcher Cho explained, "Despite an unfavorable business environment, the trend of increasing operating profit is expected to be maintained across all business divisions due to strong brand power," and stated, "Amid restrictions on cross-country movement, performance differentiation based on strong brand power and consumer loyalty is expected to emerge."

He predicted that the trend of increasing operating profit will continue with improvements in the household goods and beverage sectors, along with a reduction in the decline of cosmetics sector performance, and said, "Duty-free stores are understood to be maintaining a steady monthly performance trend due to increased purchases before the price hike in July and the subsequent effect of ASP (Average Selling Price) increase."

In particular, he forecasted that the local Chinese market will show a strong consumption rebound with a high growth rate in the 20% range.

Researcher Cho stated, "The household goods sector will continue its performance level-up trend due to strong sales of premium products, increased demand for hygiene products, gift set sales, and the acquisition effects of Physiogel and New Avon," and added, "Although the beverage sector's growth rate is expected to slow compared to the first half due to the rainy season, performance improvement is expected to continue thanks to reduced promotions and increased sales of high-margin carbonated drinks despite the high base last year."

This content was produced with the assistance of AI translation services.