[Click eStock] "LG Saenghwal Geongang, Q3 Earnings Slowdown Expected... Target Price Down"

[Asia Economy Reporter Song Hwajeong] NH Investment & Securities on the 1st revised down the target price of LG Household & Health Care from 2.1 million KRW to 1.9 million KRW, anticipating a slowdown in the company's third-quarter performance this year. The investment opinion was maintained as 'Buy.'

Researcher Jomi Jin of NH Investment & Securities explained, "We adjusted the estimates considering the inevitable impact on local operations in China due to the resurgence of COVID-19 and the pressure from rising prices of raw materials."

NH Investment & Securities estimated LG Household & Health Care's third-quarter consolidated sales and operating profit at 2.1278 trillion KRW and 328.5 billion KRW, respectively. These figures represent increases of 2.8% and 0.3% compared to the same period last year. Sales in the cosmetics division are expected to increase by 1.8% to 1.1644 trillion KRW, with operating profit rising 1.4% to 200.5 billion KRW. The household goods division is projected to see sales growth of 3% to 524.1 billion KRW, while operating profit is expected to decrease by 1.1% to 66 billion KRW. Researcher Cho analyzed, "In the cosmetics division, growth will be limited due to logistics issues caused by COVID-19 in China and the burden of last year's high base in the duty-free channel. In the household goods division, profitability will decline due to the end of the base effect from the inclusion of Physiogel, a drop in hygiene product sales, and rising raw material costs." The beverage division is estimated to have sales increase by 5.1% to 439.3 billion KRW, while operating profit is expected to decrease by 2% to 61.9 billion KRW. Although favorable weather and price increases will boost sales, operating profit margins are likely to be hit by can supply issues and rising aluminum prices.

Despite the unfavorable external environment, the opinion is that the stock price decline was excessive. Researcher Cho stated, "The slowdown in performance in the second half is due to external environmental factors rather than entering a structural downturn. The stock price decline was excessive. Although there are concerns about performance, further declines are limited at the current price with a 12-month forward price-to-earnings ratio (PER) of 22.6 times, and it is time to look for opportunities for a stock price rebound."

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