[Click eStock] "LG Saenghwal Geongang, Recovery Begins for Main Channels and Hero Brands"

IBK Investment & Securities Issues 'Buy' Rating and Sets Target Price at 1.9 Million KRW... Closing Price on 23rd at 1.539 Million KRW

LG Household & Health Care's Singles' Day Participation Advertisement (Photo by Asia Economy DB)

[Asia Economy Reporter Kum Bo-ryeong] LG Household & Health Care is analyzed to have started recovering through its main channels and hero brands.

According to IBK Investment & Securities on the 26th, LG Household & Health Care's consolidated third-quarter results showed a 5.4% increase in sales and a 5.1% increase in operating profit compared to the previous year.

By segment, cosmetics recorded sales of -1.5% and operating profit of -6.7%, household goods (HBD) showed sales growth of 26.8% and operating profit growth of 47.9%, and beverages posted sales growth of 3.8% and operating profit growth of 15.1%.

Growth rates by channel were duty-free -1.7%, department stores -15%, door-to-door sales -1.5%, and China 22%, showing recovery compared to the previous quarter. In the previous quarter, duty-free was -45%, department stores -19%, door-to-door sales -4%, and China 18%.

Researcher An Ji-young of IBK Investment & Securities explained, "The launch of new products and price increases of the representative hero brand 'Whoo' directly contributed to increased demand," adding, "HBD's consolidation of Physiogel is also positive. Beverages, centered on high-margin carbonated drinks, saw online and delivery sales offset offline sluggishness."

The recovery in advanced markets is expected to remain limited in the fourth quarter due to the resurgence of COVID-19. Regarding this, Researcher An said, "Nevertheless, LG Household & Health Care maintains a solid advantage and visible business portfolio competitiveness domestically and in China compared to peer companies," adding, "Especially ahead of November 11's Singles' Day, it was selected as one of five brands with transaction amounts exceeding 500 million yuan (approximately 84.8 billion KRW). Based on sales trends during the warm-up period, Whoo's sales are estimated to exceed 100 billion KRW this Singles' Day, as the warm-up sales surpassed 500 million yuan within 14 minutes, mainly driven by Cheongidan, Hwahun, and Gwangchae basic gift sets."

IBK Investment & Securities gave LG Household & Health Care a 'Buy' investment rating with a target price of 1.9 million KRW, up from the previous 1.6 million KRW. The closing price on the 23rd was 1.539 million KRW.