[Click e Stocks] Will LG Household & Health Care Recover from Cosmetics Slump?

[Asia Economy Reporter Hwang Junho] Meritz Securities adjusted its investment opinion on LG Household & Health Care to neutral on the 10th and also lowered the target stock price to 1.2 million KRW.

The main reason for this adjustment is the poor performance of the cosmetics division. The sales and operating profit of the cosmetics division are expected to be 1.2576 trillion KRW (down 5.1% year-on-year) and 210 billion KRW (down 6.7%), respectively. Due to a preference to avoid discounts, the duty-free sector (-13.3%, -64.8 billion KRW) showed sluggish performance, while the Chinese market is expected to remain solid with an 11.6% increase (45.7 billion KRW) driven by the Guanggun Festival effect.

Meritz Securities expects that due to the cosmetics division's poor performance, the total sales in the fourth quarter of last year will decline by 1.3% year-on-year to 2.0678 trillion KRW. Operating profit is also expected to decrease by 3.9% during the same period to 246.3 billion KRW. Net profit is projected to fall by 5.9% to 131.7 billion KRW.

Hanuri, a researcher at Meritz Securities, stated, "The dark clouds hanging over the entire industry do not seem likely to clear in the short term, so a conservative approach is recommended," adding, "The Chinese cosmetics market is expected to face a short-term base effect burden and enter a low-growth phase in the mid to long term."

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