"It has become poisoned by dependence on China" LG Life Insurance's 'shocking performance'... The stock price plunged 11% in the early days of opening
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“It has become poisoned by dependence on China” LG Life Insurance’s ‘shocking performance’… The stock price plunged 11% in the early days of opening

Under the influence of China’s lockdown, the ‘cosmetics giant’ LG Household & Health Care’s first quarter performance plunged sharply. In response to the earnings shock that fell far short of expectations, securities companies all at once lowered their target price by more than 20%. Stock prices are also struggling.

LG Household & Health Care announced on May 11 that it recorded 175.6 billion won in operating profit in the first quarter of this year, down 52.6% from the same period last year. During the same period, sales decreased 19.2% to 1.64 trillion won.

Profits fell sharply in the cosmetics sector. The cosmetics business recorded 699.6 billion won in sales, down 40% from the same period last year. Operating profit plunged 72.9 percent to 69 billion won.

First, it is explained that bad news from China, such as the lockdown, is the cause of the earnings shock. It was duty-free sales and sales in China that dragged down earnings. While duty-free sales fell 67% during the same period, sales of local cosmetics in China also recorded a ‘reverse growth’, down 32%.

However, it is analyzed that this is a very poor performance compared to the entire duty-free market or competitors. Park Shin-ae, a researcher at KB Securities, said, “The growth rate of the duty-free market during the same period was -1%. It would have fallen short of expectations.”

The stock market lowered the target price of LG Household & Health Care all at once. Samsung Securities lowered its target price by 45% from 1.15 million won to 630,000 won. IBK Investment & Securities lowered its target price by 27% from 1.5 million won to 1.1 million won. KB Securities offered 750,000 won, down 25% from the previous one.

As soon as the market opened on May 12, the share price of LG Household & Health Care was plummeting. The stock, which closed at 811,000 won on the 11th, is trading at 719,000 won, down 11.34% from the previous day, as of 9:40 am on the 12th. At the beginning of the market, it fell as low as 70,000 won. / [윤은별 기자]


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Reference-www.mk.co.kr

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