Lowest Price Since COVID-19 Followed by Two Consecutive Days of Rebound
Strong Demand Confirmed at China's Guanggun Festival... Market Concerns Near Resolution
[Asia Economy Reporter Minwoo Lee] LG Household & Health Care's stock price has rebounded after falling to the level of March last year, when the impact of COVID-19 on the stock market was at its peak. As Chinese earnings recover and the perception of an excessive decline spreads, funds aiming for bottom-fishing appear to have poured in.
As of 11:06 a.m. on the 2nd, LG Household & Health Care's stock price recorded 1,156,000 KRW, up 5.28% from the previous day. Following a 4.17% rise the day before, it has been on an upward trend for two consecutive days. This contrasts with the intraday low of 1,054,000 KRW on the 30th of last month. Compared to 1,784,000 KRW recorded on July 1, it has fallen about 41%, putting its status as a 'Hwangjejeu'?a stock priced over 1 million KRW?at risk. During the same period, it fell nearly three times more than the KOSPI's decline of 13.5%. The stock price dropping to the 1,050,000 KRW level is the first since March 24 last year, when the KOSPI fell to the 1,400 level due to COVID-19.
It is interpreted that investor sentiment has focused on the judgment that earnings have 'bottomed out' as demand in China recovers. In fact, during last month's largest Chinese discount event, 'Guanggunje,' LG Household & Health Care's brand 'Whoo' recorded total sales of 329.4 billion KRW, an increase of about 61% compared to the same period last year. It ranked third among high-end cosmetics brands by sales on Alibaba, China's e-commerce platform, and first among all single products (SKU) in the beauty category, confirming strong demand.
Industry insiders expect LG Household & Health Care to surpass 8 trillion KRW in sales this year, having reached the 90% mark beyond market concerns. According to financial information provider FnGuide, LG Household & Health Care's consolidated earnings market consensus for this year forecasts sales of 8.2329 trillion KRW and operating profit of 1.3113 trillion KRW, representing increases of 4.95% and 7.41%, respectively, compared to last year.
In this atmosphere, Yuanta Securities upgraded LG Household & Health Care's investment opinion from 'Neutral' to 'Buy.' Eunjeong Park, a researcher at Yuanta Securities, explained, "Despite last year's high base and China's platform advertising regulations, solid demand was confirmed to the extent that results exceeded expectations. Considering that profit fluctuations were not significant even during past external shocks, if concerns about the new COVID-19 variant 'Omicron' ease, the currently low stock price will stand out as attractive."
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