20170414-三星证券-Household_Goods_OVERWEIGHT_Conservative_approach_needed_30页_831kb

报告摘要

Sector Update Summary

Core Content

This document provides an analysis of the Korean cosmetics sector, focusing on the performance of five major companies: LG Household & Health Care (051900), Cosmax (192820), Able C&C (078520), AmoreG (002790), and Amorepacific (090430). The analysis includes forecasted financial results for the first quarter of 2017, target prices, and market performance data. It highlights the sector's challenges, particularly related to China-related risks, and offers investment recommendations.

Main Points

Sector Overview: The Korean cosmetics sector is facing challenges due to the impact of China's THAAD retaliation and a boycott of Korean products. These factors have led to a decline in DFS (Duty-Free Sales) and local sales in China, which have affected the sector's performance.
Conservative Approach Needed: The sector is expected to miss consensus estimates, and investors should approach with caution due to ongoing uncertainty.
Performance of Key Companies:
- LG Household & Health Care (051900):
  - Sales and operating profit rose by 5% and 6% y-y, respectively, in 1Q17, aligning with consensus forecasts.
  - The company is considered the most resilient to China risk, with limited exposure to local Chinese sales.
  - Target price: KRW940,000 (20.1% upside).
  - Recommended as a BUY.
- Cosmax (192820):
  - Sales and operating profit increased by 23.1% and 24.5% y-y in 1Q17, respectively.
  - The company is more affected by DFS and China-related sales than its domestic peers.
  - Target price: KRW170,000 (22.3% upside).
  - Recommended as a BUY.
- Able C&C (078520):
  - Sales and operating profit rose by 3% and 5.2% y-y, respectively.
  - Limited China exposure (15%) makes it less vulnerable.
  - Target price: KRW27,000 (10.7% upside).
  - Recommended as a BUY.
- AmoreG (002790):
  - Expected to have strong 1Q earnings growth in absolute terms.
  - However, 2Q results may be a concern for investors.
  - Target price: KRW140,000 (16.2% upside).
  - Recommended as a BUY.
- Amorepacific (090430):
  - Overseas sales forecasts are more conservative than the consensus.
  - Short-term results may be volatile.
  - Target price: KRW280,000 (2.8% upside).
  - Recommended as a HOLD.

Key Financial Data

Metric	1Q17E (A)	Chg (% y-y)	Chg (% q-q)	Consensus (B)	Diff (%) (A-B)/B	2016	2017E (C)	Chg (% y-y)	2017E Consensus (D)	Diff (%) (C-D)/D
Sales	5,241.3	4.0	12.3	5,421.3	-3.3	19,628.6	20,582.0	4.9	21,502.7	-4.3
Operating Profit	992.5	-1.6	127.3	1,025.4	-3.2	2,888.8	2,943.8	1.9	3,194.6	-7.9
Pre-Tax Profit	988.0	-2.1	155.9	1,019.9	-3.1	2,771.0	2,925.6	5.6	3,199.0	-8.5
Net Profit	737.4	-3.2	200.3	769.3	-4.1	2,086.0	2,177.3	4.4	2,373.5	-8.3
Operating Margin (%)	18.9	-	-	18.9	-	14.7	14.3	-	14.9	-
Pre-Tax Margin (%)	18.9	-	-	18.8	-	14.1	14.2	-	14.9	-
Net Margin (%)	14.1	-	-	14.2	-	10.6	10.6	-	11.0	-

Investment Recommendations

LG Household & Health Care (051900):
- Rating: BUY
- Target Price: KRW940,000
- Upside: 20.1%
- Reasoning: Resilient to China risk, with a strong 1Q performance and a favorable valuation compared to the global average.
Cosmax (192820):
- Rating: BUY
- Target Price: KRW170,000
- Upside: 22.3%
- Reasoning: Least affected by China-related negatives among domestic peers, with strong US operations.
Able C&C (078520):
- Rating: BUY
- Target Price: KRW27,000
- Upside: 10.7%
- Reasoning: Limited China exposure, potential for surprise in 1Q results.
AmoreG (002790):
- Rating: BUY
- Target Price: KRW140,000
- Upside: 16.2%
- Reasoning: Robust 1Q earnings growth, but 2Q results may prompt caution.
Amorepacific (090430):
- Rating: HOLD
- Target Price: KRW280,000
- Upside: 2.8%
- Reasoning: Conservative overseas sales forecasts, potential for volatility in short-term results.

Market Performance

LG Household & Health Care (051900):
- Current Price: KRW783,000
- Market Cap: KRW12.2t / USD10.8b
- 52-Week High/Low: KRW1,181,000 / KRW741,000
- Avg Daily Trading Value (60-day): KRW33.7b / USD29.8m
- One-Year Performance:
  - 1M: -4.6%
  - 6M: -15.3%
  - 12M: -20.0%
- Performance vs Kospi:
  - 1M: -6.0%
  - 6M: -20.5%
  - 12M: -26.2%

Valuation Comparison

Company	Target Price (KRW)	P/E (Adj) (x)	P/B (x)	EV/EBITDA (x)	ROE (%)
LG Household & Health Care	940,000	20.7	7.7	12.7	22.1
Cosmax	170,000	14.8	5.0	11.4	15.1
Able C&C	27,000	15.8	4.0	9.9	10.6
AmoreG	140,000	16.5	6.1	10.8	14.1
Amorepacific	280,000	16.3	10.9	11.3	14.4

Summary

The sector is facing headwinds from China-related issues, particularly DFS and local sales.
LG Household & Health Care is highlighted as the most resilient due to its limited China exposure and strong performance in 1Q17.
Cosmax and Able C&C are also seen as relatively safe investments due to their lower exposure to China.
AmoreG is expected to have strong 1Q results but may face challenges in 2Q.
Amorepacific is recommended as a HOLD due to its conservative sales forecasts and potential for volatility.
The document emphasizes the importance of a conservative approach and the need for investors to monitor the sector closely.

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