[Click eStock] "LG Saenghwal Geongang, Clear Recovery Expected in Cosmetics This Year"

[Asia Economy Reporter Song Hwajeong] NH Investment & Securities maintained a 'Buy' rating and a target price of 2 million KRW for LG Household & Health Care on the 23rd, forecasting a clear recovery in the cosmetics division's performance this year.

LG Household & Health Care recorded solid results in the first quarter of this year. On a consolidated basis, first-quarter sales reached 2.0367 trillion KRW, up 7.4% year-on-year, and operating profit increased by 11% to 370.6 billion KRW. Mi-jin Cho, a researcher at NH Investment & Securities, analyzed, "Although sales slightly missed market consensus, operating profit exceeded expectations by achieving solid results in the household goods and beverage divisions compared to market concerns."

The cosmetics division saw sales and operating profit increase by 8.6% and 14.8% respectively compared to the same period last year, marking the first sales growth since the outbreak of COVID-19. In particular, the 'Whoo' brand led overall growth by posting strong performances, with sales rising 58% in the Chinese local market and 29% in duty-free channels, surpassing market growth rates. The household goods division saw sales and operating profit increase by 8.6% and 1.4%, respectively. Although sales of hygiene products, which led a surprise earnings performance in the first half of last year, sharply contracted, operating profit increased year-on-year due to the inclusion of Physiogel (25 billion KRW) and expanded sales of premium brands. The beverage division recorded a 2.0% increase in sales and a 6.9% rise in operating profit. Profitability improved due to a mix improvement effect from strong sales of high-margin carbonated drinks and reduced marketing expenses.

There is an opinion that a corporate value reassessment based on brand strength and divisional performance is necessary. Researcher Cho said, "Along with the recovery in cosmetics performance, the household goods and beverage divisions, which faced a tough base last year, are expected to maintain solid performance through expanded sales of Physiogel and premium product lines and the effect of price increases," adding, "Currently, LG Household & Health Care is significantly undervalued with a discount of more than 30% compared to domestic and international peers, and a corporate value reassessment based on improved divisional performance and strong brand power is necessary."

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