[Alpha Biz= Reporter Kim Sangjin] On October 8, shares of LG Household & Health Care fell over 8% due to worries about poor demand from China affecting its Q3 performance.

The company's stock closed at 353,500 won, down 8.06% from the previous trading session. This marked a turnaround to a downward trend after four consecutive trading days of gains since September 30.

On the same day, Hyeonguk Securities downgraded its investment opinion on LG Household & Health Care from "Buy" to "Hold," citing concerns about weak cosmetic demand in China and increased marketing expenses. They also reduced the target price from 430,000 won to 410,000 won.

Hyeonguk Securities noted that despite LG Household & Health Care’s strong stock performance due to China's large-scale stimulus announcements, the stock price had already factored in the expectations for economic recovery. They emphasized that the key issue now is the actual recovery of retail sales in the Chinese cosmetics market. They expressed skepticism that the stimulus measures would necessarily lead to a significant rebound in domestic consumption.

Additionally, Hyeonguk Securities highlighted that retail sales of cosmetics in China decreased by 6% compared to the same period last year in July and August, prompting them to adjust their estimates for LG Household & Health Care’s duty-free and local sales downward. They also lowered the Q3 operating profit forecast for the cosmetics division by 47% to account for the expanded marketing expenses.

Consequently, the overall Q3 operating profit is expected to be 135.3 billion won, reflecting a 25% decrease from previous estimates.

 

 

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