[THE INVESTOR] LG Household and Health Care will continue to post strong earnings, said Korea Investment and Securities on July 11, maintaining a “buy” recommendation and raising the target price to 1.6 million won (US$1,425) from 1.45 million won. 

Its operating profit in the second quarter will rise 17 percent on-year to 273 billion won, as cosmetics offset the slow household goods and beverages, contributing 71 percent of operating profit. Due to the low baseline effect from last year’s Chinese regulations on Korean goods, sales of cosmetics will increase 21 percent from the same period last year and operating profit by 30 percent. Duty-free sales in particular will jump 58 percent on-year, said analyst Na Eun-chae.

Chinese customers show solid brand loyalty in premium and luxury cosmetics sector and LG H&H’s growth momentum will be The History of Whoo and SUM. SUM only has about 70 branches as of now and is expected to grow, added Na.

By Hwang You-mee (glamazon@heraldcorp.com)