三星-韩国-家庭与保健行业（个股-LG）-无需担心-20171013-Samsung_Securities-LG_Household_＆_Health_CareNo_need_to_worry_9页

LG Household & Health Care Summary

Core Content

This document is an analyst update from Samsung Securities on LG Household & Health Care (051900), outlining the company's performance, financial forecasts, and valuation metrics. The analyst, Eunkyung Park, provides insights into the company's quarterly performance, business segments, and investment outlook.

Main Points

Current Price and Target Price

• Current price: KRW975,000
• Target price: KRW1,210,000
• Target price upside: 24.1%

Market Performance

• Market cap: KRW15.2t/USD13.4b
• Shares (float): 15,618,197 (59.8%)
• 52-week high/low: KRW1,007,000/KRW741,000
• Avg daily trading value (60-day): KRW27.8b/USD24.5m

One-Year Performance

• LG H&H: 8.2% (1M), 25.6% (6M), 6.9% (12M)
• Vs Kospi: 3.4% (1M), 8.1% (6M), -12.1% (12M)

Key Changes

• Recommendation: No change (BUY)
• Target price: No change (KRW1,210,000)
• 2017E EPS: 38,732 (down 0.4% from 38,899)
• 2018E EPS: 45,385 (down 0.3% from 45,525)

Analyst's Outlook

• 3Q17 Performance: Sales down 1% y-y to KRW1.55t, operating profit up 2% y-y to KRW247.9b, in line with consensus
• Cosmetics Division: Sales fell 4% y-y to KRW714.7b, operating profit up 2% y-y to KRW132.2b, margin improved to 18.5%
• Household Goods Division: Sales and operating profit up 2% y-y to KRW447.3b and KRW68.9b, margin flat at 15.4%
• Beverages Division: Sales up 2% y-y to KRW390.3b, operating profit up 4% y-y to KRW46.8b, margin up 0.2% to 12%
• Overall Performance: Profit growth slowed in beverages but accelerated in cosmetics, offsetting the decline

Valuation Summary

• P/E (adj): 21.5x (2018E), offering 24% upside
• P/B: 7.0x (2018E)
• ROE: 22.2% (2017E), 22.2% (2018E), 20.6% (2019E)
• EV/EBITDA: 13.1x (2018E)
• Dividend yield: 1.0% (2017E), 1.2% (2019E)

Financial Forecast

Revenue (KRWb)

• 2016: 6,094
• 2017E: 6,165
• 2018E: 7,029
• 2019E: 7,626

Net Profit (adj) (KRWb)

• 2016: 579
• 2017E: 657
• 2018E: 770
• 2019E: 850

EPS (adj) (KRW)

• 2016: 34,208
• 2017E: 38,732
• 2018E: 45,385
• 2019E: 50,076

EPS Growth (% y-y)

• 2016: 24.6%
• 2017E: 13.2%
• 2018E: 17.2%
• 2019E: 10.3%

EBITDA Margin (%)

• 2016: 16.6%
• 2017E: 17.4%
• 2018E: 17.5%
• 2019E: 17.8%

Valuation Comparison

Investment Recommendation

• The analyst maintains a BUY rating for LG H&H
• The stock is considered one of the most attractively valued cosmetics stocks globally
• The analyst recommends adding exposure before China risk wanes
• The company has shown consistent earnings performance over the past four quarters

Key Takeaways

• LG H&H's performance in 3Q is expected to be similar to 2Q
• The cosmetics division is the key driver of profit growth
• Despite external challenges, the company's profitability has improved due to cost-cutting and a shift to high-value-added products
• The stock is undervalued relative to its fundamentals and global peers
• The analyst believes the company has the potential to deliver steady earnings growth in the future