[Click eStock] “LG Saenghwal Geongang, Excessive Stock Price Decline”

Persistent Demand in China... Attention Needed on Omicron Spread
Yuanta Securities "Maintains LG Household & Health Care Target Price at 1.45 Million KRW"

[Asia Economy Reporter Gong Byung-sun] LG Household & Health Care's stock price is falling due to concerns over the new COVID-19 variant 'Omicron' and sluggish performance in the Chinese market. However, Yuanta Securities interpreted the decline as excessive, considering the performance shown during China's Singles' Day and the approaching time to overcome market concerns.

According to Yuanta Securities on the 1st, LG Household & Health Care closed the day at 1,054,000 KRW, down 5.3% from the previous day. This is also the 52-week low.

Concerns about slowing growth in China are one of the reasons for LG Household & Health Care's stock price decline. However, demand for LG Household & Health Care's brand 'Whoo' remains strong in China. During last month's Singles' Day in China, Whoo's sales reached 329.4 billion KRW, a 61% increase compared to the same period last year. Additionally, on Alibaba, China's largest e-commerce platform, Whoo ranked 3rd among luxury cosmetics brands by sales and 1st among all single products (SKU) in the beauty category.

Researcher Park Eun-jung of Yuanta Securities stated, "Due to last year's high base and China's platform advertising regulations, we expected about 10% growth during this Singles' Day. The actual results exceeded expectations, indicating strong demand, making the current stock price level excessive."

However, the impact of Omicron needs to be considered. Amid concerns about its spread, the possibility of low effectiveness of existing vaccines is also being raised. This has brought uncertainty to the real economy. Researcher Park explained, "Vaccine manufacturers such as Pfizer and Moderna have stated that they can confirm vaccine effectiveness against Omicron within two weeks. Stock price volatility due to external factors is expected to stabilize around two weeks before and after the vaccine effectiveness announcement."

Accordingly, Yuanta Securities maintained its investment opinion of 'Buy' and target price of 1,450,000 KRW for LG Household & Health Care.

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