[Click eStock] "LG Saenghwal Geonhang, Lack of Stock Price Rise Momentum... Target Price Down"

Yuanta Securities diagnosed that LG Household & Health Care lacks momentum for stock price increase. The investment opinion was set to 'Hold' and the target price was lowered from 400,000 KRW to 320,000 KRW.

LG Household & Health Care recorded sales of 1.5672 trillion KRW and operating profit of 54.7 billion KRW in the fourth quarter of last year. This represents a decrease of 13.3% and 57.6%, respectively, compared to the same period last year. These figures were in line with market expectations of sales of 1.7055 trillion KRW and operating profit of 54.3 billion KRW. Researcher Lee Seung-eun of Yuanta Securities analyzed, "Sales decreased due to price policies and sales volume adjustments to maintain brand value at domestic duty-free shops," adding, "Overseas, the overall beauty operating profit declined due to one-time costs related to business efficiency improvements such as the poor performance of the Chinese Singles' Day event, the closure of Chinese department store outlets, and restructuring in North America."

Lee predicted that a conservative approach will be necessary for LG Household & Health Care this year. He explained, "The price-to-earnings ratio (PER) applied to the target price is the average from 2010 to 2012, before the Chinese business gained attention," and added, "Currently, there is no momentum for stock price increase, and it will take time until the rebranding succeeds."

He continued, "LG Household & Health Care presented a single-digit growth in sales compared to the previous year in its annual guidance for this year," and said, "They plan to invest resources centered on the CNP, belif, and The Face Shop brands to secure business momentum outside China, including domestic, North American, and Japanese markets, along with the rebranding of The History of Whoo."

He added, "In China, while continuing brand investment, they will continue offline store efficiency improvements until the first half of the year," and "They plan to strengthen responses through online and offline channels centered on strategic brands to recover sales."

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