[Click eStock] "LG Saenggeon, Q3 Operating Profit Expected to Fall Short of Market Expectations"

Korea Investment & Securities Report

Korea Investment & Securities forecasted on the 26th that LG Household & Health Care's operating profit for the third quarter is expected to fall short of market expectations. Accordingly, it maintained a 'Neutral' investment rating.

Kim Myung-joo, a researcher at Korea Investment & Securities, stated in a report on the same day, "LG Household & Health Care is expected to record consolidated sales of 1.7278 trillion KRW and an operating profit of 151.1 billion KRW in the third quarter, with operating profit likely to fall 9.6% below market expectations."

He added, "In the third quarter, the slow recovery of the Chinese economy and cosmetics industry is expected to result in continued sluggishness in LG Household & Health Care's duty-free business and slow sales recovery in the Chinese cosmetics business."

Accordingly, the cosmetics division, which recorded an operating profit margin of 9.6% in the second quarter, is estimated to have posted 6.4% in the third quarter.

Recently, LG Household & Health Care has been making efforts to diversify the countries contributing to cosmetics sales by expanding sales in the United States. Researcher Kim noted, "Although the proportion of non-China sales in total sales is low, it is clear that LG Household & Health Care's products are standing out on Amazon US in the short term, making this a key point to watch going forward."

Considering the Chinese government's strong commitment to economic stimulus, he believes the likelihood of further deterioration in the Chinese cosmetics industry is low. However, he advised that it is necessary to verify whether the market can improve as much as expected. Researcher Kim said, "China still contributes significantly to LG Household & Health Care's cosmetics sales, and within the Chinese business, the proportion of high-end cosmetics sales, such as Whoo, is high. It is not too late to reassess LG Household & Health Care after confirming the recovery of the Chinese cosmetics industry."

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