[Click e Stocks] LG Household & Health Care "Difficult to Expand Non-Core Business"

[Asia Economy Reporter Junho Hwang] Hana Securities revised LG Household & Health Care's target stock price to 850,000 KRW while maintaining a 'neutral' investment rating.

Hana Securities expects LG Household & Health Care's sales in the Chinese market to continue underperforming. They forecast approximately a 30% sales decline to persist until the Singles' Day promotion.

On the other hand, the Japanese business is seen to be expanding. Quarterly sales in the Japan region are about 100 billion KRW. Having acquired local brands such as Ginza Stefany in the past, the company has established an independent category locally and is building a luxury-focused portfolio, resulting in an operating profit margin exceeding 10%, according to their analysis.

In the U.S. market, LG Household & Health Care is increasing local accessibility by acquiring Avon and The Creme Shop. Through the acquisition of The Creme Shop, they are exploring new channels such as Walmart and Ulta Beauty. Although various brands like Physiogel are being developed through Avon, the results are assessed as limited.

Jongdae Park, a researcher at Hana Securities, stated, "LG Household & Health Care has a significantly higher luxury proportion compared to competitors, but the strengths of K-Beauty in non-Chinese regions such as Japan and the U.S. focus on cost-effectiveness and innovative categories targeting the mid-to-low price range. Therefore, the scope for maneuvering in regional diversification and channel strategy is inevitably limited."