[Click eStock] "LG Household & Health Care Strong Earnings, Sustainability to Watch... Investment Opinion Neutral"

On the 26th, Korea Investment & Securities maintained a neutral investment opinion on LG Household & Health Care, stating that "it is a time to verify whether the strong performance is sustainable." No target price was provided.

On the same day, Kim Myung-joo, a researcher at Korea Investment & Securities, said, "It is positive that the first-quarter earnings this year exceeded the market's low expectations following the fourth quarter of last year, but the anticipation for this strong performance has already been reflected in the stock price."

In the first quarter, LG Household & Health Care's sales amounted to 1.7287 trillion KRW, a 2.7% increase compared to the same period last year, and operating profit rose 3.5% to 151 billion KRW. Sales met market expectations, and operating profit exceeded market expectations by 16.6%.

Researcher Kim said, "The cosmetics division's performance was better than the market anticipated. Rebranding centered on Whoo was carried out in China, and as a result, the China business recorded an operating loss in the second half of last year," adding, "In the fourth quarter of last year, LG Household & Health Care's duty-free sales recovery was very sluggish compared to the industry, but this quarter's sales growth rate significantly outpaced the industry's, which is very impressive."

He further noted, "Considering the lowered inventory levels of cosmetics among Chinese consumers last year, the Chinese cosmetics market is expected to recover in the first half of this year," but added, "However, due to the continued high uncertainty in the Chinese economy, the recovery of consumer demand for mid-to-high-end cosmetics is likely to be very slow."

Additionally, Researcher Kim stated, "Given the persistent high uncertainty in China's macroeconomy, it is necessary to verify whether Whoo, a mid-to-high-end brand, continues to achieve favorable sales recovery in China and duty-free channels in the second quarter as it did in the first quarter, meeting market expectations."