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[Alpha Biz= Kim Jisun] Yuanta Securities has projected stagnation in LG Household & Health Care’s (LG H&H) growth, lowering its target price from 480,000 KRW to 320,000 KRW and downgrading its investment rating from "Buy" to "Neutral." On the most recent trading day (Feb. 7), LG H&H closed at 309,500 KRW.


On Thursday, Yuanta Securities stated, "LG H&H’s growth will be limited due to declining sales in traditional channels such as duty-free shops and direct sales by 2025." It added, "The company’s overseas business growth rate is relatively lower than other K-beauty cosmetics firms, raising concerns about its overall growth outlook."


In Q1 2024, revenue growth is expected to be driven by overseas operations. However, the analyst noted, "The duty-free and China businesses will likely experience negative growth year-over-year due to a high base effect from last year."


In Q4 2023, LG H&H reported revenue of 1.61 trillion KRW and an operating profit of 43.4 billion KRW, falling short of the market consensus of 56.2 billion KRW. Beauty sales reached 699.4 billion KRW, with a slight increase in beauty operating profit to 11 billion KRW compared to the previous year. Overseas sales also grew marginally, reaching 615 billion KRW.


For 2025, LG H&H has set an annual guidance for mid-single-digit revenue growth.


Duty-free sales dropped approximately 20% year-over-year, and a double-digit decline is expected in 2024 as well. Direct sales revenue also fell by 10% in 2023, with another 10% decline anticipated in 2025.

 

 

 

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