NH Investment & Securities noted on the 29th that LG H&H is expected to recover its profitability in the second half of the year and gradually raise its earnings outlook. It maintained an investment opinion of 'neutral (Hold)' and a target stock price of 340,000 won. The closing price of LG H&H on the previous trading day was 319,000 won.
Jeong Ji-yoon, a researcher at NH Investment & Securities, said, "The trend of declining revenue in the cosmetics sector is inevitable in the second quarter, but it will be in the process of recovering profitability." She analyzed that, "It is still highly likely that all business divisions are in a phase of defending profitability, so we should approach with a long-term perspective until the second half of the year."
She added, "In the first half of this year, the overall profitability of the company will show a decline at expected levels rather than further deterioration," and noted that "despite last year's consumer weakness in China, sales of the '후' brand (premium cosmetics) achieved a 15% growth compared to the previous year, reaching a significant milestone."
The performance in the first quarter (January to March) was viewed positively compared to concerns. Researcher Jeong said, "The growth of 3% in North America and 23% in Japan in overseas sales compared to the same period last year is a positive signal," adding, "However, it's also necessary to consider marketing investments for sales diversification in the countries where the company is focusing."
Earlier, LG H&H announced on the 28th that it recorded sales of 1.6979 trillion won and an operating profit of 142.4 billion won in the first quarter of this year. Compared to the same period last year, sales decreased by 1.8% and operating profit decreased by 5.7%.