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Photo courtesy of Yonhap News |
[Alpha Biz= Paul Lee] The global rise of K-beauty is creating strong momentum across the cosmetics industry, driven by record export growth in the U.S. and Europe. However, despite the favorable industry backdrop, performance divergence among companies is becoming increasingly pronounced, prompting calls for more selective investment strategies.
According to Meritz Securities on May 3, Korea’s cosmetics exports rose 19% year-on-year in the first quarter, with the U.S. and European markets surging 40% and 53%, respectively.
Analyst Park Jong-dae said Europe in particular is entering “a completely new phase,” noting that export volumes in key countries such as the U.K. and Poland have reached unprecedented levels. He added that overall export growth this year is likely to exceed the initial 15% forecast.
Despite the industry tailwinds, LG H&H continues to lag behind peers. Its stock has underperformed the broader market, rising just 4.1% over the past month compared to a 25% gain in the KOSPI. Over the past six months, the stock has fallen 11.5%, significantly trailing the index, and remains down more than 85% from its 2021 peak.
The company reported first-quarter operating profit of KRW 107.8 billion, down 24.3% year-on-year. While the figure exceeded market expectations, analysts say the result reflects lowered expectations rather than a fundamental recovery.
Korea Investment & Securities noted that duty-free sales recovery may not be sustainable, citing weakening demand from Chinese daigou resellers. Meanwhile, KB Securities warned that rising packaging and logistics costs tied to higher raw material prices could weigh on margins.
DB Financial Investment also flagged concerns over increased overseas marketing expenses, particularly in China, where promotional costs for new product launches are expected to rise in the second quarter.
While K-beauty’s global expansion continues to strengthen the sector’s fundamentals, analysts say company-specific execution and cost management will be key differentiators going forward.
Alphabiz Reporter Paul Lee(hoondork1977@alphabiz.co.kr)
