Korea Investment & Securities, LG Household & Health Insurance target price ↓… “3rd quarter performance, 30% lower than expectations”

On the 4th, Korea Investment & Securities lowered its target stock price for LG Household & Health Care [051900] by 8.8%, saying that its third quarter performance fell below market expectations by more than 30%.

Previously, LG Household & Health Care announced that its consolidated operating profit for the third quarter was 70.4 billion won. This is 30.5% below the consensus.

Regarding this, researcher Kim Myeong-joo pointed out in the report, "Daily necessities met market expectations, but the performance of the beverage and beauty divisions was poor."

In particular, in the case of the beauty division, he said, "It is estimated that the Chinese business recorded an operating loss of about 20 billion won due to a decrease in sales due to the improvement of the Chinese online business structure," and "Because there was no clear shopping season in North America, the North American own brand would also have recorded a small operating loss this quarter, unlike the second quarter."

At the same time, LG Household & Health Care's investment opinion was maintained at 'buy', but the target stock price was lowered from 340,000 won to 310,000 won. The closing price the previous day was 262,000 won.

Researcher Kim said, “LG ​​Household & Health Care is considering resuming trading with Daigong (Chinese bundle store) for ‘Cheongidan’. Duty-free sales may temporarily increase, but if China’s economic recovery is slow, selling luxury products through Daigong may lead to an undermining of pricing policy.”