I only knew the holiday gift set, the beauty king who aimed at 2 million won per week

It is a long way to end the corona. With the spread of vaccines, countries crying out for liberation are appearing one after another, but it will take a long time before you can take off your mask and go around freely. Maybe next year?! Still, what is hopeful is that the situation is more likely to get better than it will worsen. If you travel abroad, you can’t just pass the duty-free shop. What is the essence of a duty-free shop? cosmetics. This is the reason for thinking of LG Household & Health Care.

Isn’t AMOREPACIFIC the number one cosmetic product? Yes. Not anymore. Last year, LG H&H’s cosmetics division sales were KRW 4.458 trillion. It decreased by 6% from the previous year due to the corona effect. However, during the same period, sales decreased by more than 20%, and it was better than Amorepacific, which collapsed to 3 trillion won. If LG is healthy for life, is it a holiday gift set? (Certification of an old person!!) That it wasn’t that company in the past.

It’s not just the name, it’s actually a healthy company!! Until last year, it set a record for 16 consecutive years of growth. The important thing here is’continuous’. There were many big crises such as the financial crisis, the THAAD crisis, and the corona in the past 16 years, but they just ran and ran. Even in 2020, when the corona hit was hit, sales increased by 2.1% to 7,844.5 billion, and operating profit increased by 3.8% to 1.2209 billion. It has growth potential, but it says that it has good defense.

A good company doesn’t always increase the stock price. What is certain is that one day it will be valued! First of all, we can expect the base effect of coronavirus this year. Last year, overall sales increased, but sales of the flagship cosmetics declined 6.1%. Duty-free stores and department stores, the main retailers, were sluggish than in 2019. People don’t go there, but there’s a way.

First, let’s look at the domestic, especially duty-free shops. In August of last year, the peak season, the number of duty-free shoppers decreased by 85.4% from August 2019. It wasn’t just like August. Nevertheless, LG H&H was able to defend its duty-free store sales (total 2020) (1,8466 billion won → 1.59 trillion won) thanks to the’Tai Palace (Chinese Bundari Award)’. LG H&H has been empowering marketing for Taigung for quite a long time, and that’s how it works.

From the standpoint of Dai Palace, in order to come to a Korean duty-free shop and buy cosmetics, you have to quarantine for two weeks, unlike in the past. Still, they come and buy. Why? Because it sells well in my home country (China). Considering that the corona prevention measures will gradually weaken as time goes by, we can expect that base effect this year. With the recovery of the domestic economy, department store sales are expected to gain strength, and a good report card will come out.

From a distance, it is gradually growing its presence in overseas markets. In particular, China boasts a strong brand power, but the’online + luxury’ strategy is paying off. For the first time last year, sales of the Chinese subsidiary exceeded 1 trillion won. We do not open a separate store in China, and we use a strategy of selling mid- and low-priced brands only online, which is another factor that caused little damage last year. This is because high-end brands are relatively less susceptible to downturns in consumption.

As for the product line, the flagship’Woo’ with worldwide sales of 2.6 trillion won is led by’Soom’ and’Ohhui’. It is also worth noting that the opening of duty-free stores in China this year, including Hainan Island, is concentrated! The performance is also good outside of China. LG H&H acquired business rights in Asia and North America of New Avon in the U.S. in 2019 and Piggiogel in February of last year. It is not in the stage of making money yet, but it is observed that it will become a great weapon in a few years.

It’s okay if the cosmetics don’t meet your expectations a little. A strong portfolio is the strength of LG H&H. In terms of sales, cosmetics account for 58%, household goods (HDB) at 23%, and beverages at 19%. The HDB division offset last year’s corona shock. Hair loss care brand’Dr.Groot’ and body care brand’Belman’ are good candidates. Beverages, such as Coca-Cola, Powerade, and Georgia, are also expected to grow smoothly. (Let’s increase delivery food, sodas too!)

There is no particular weakness, and the mid- to long-term growth potential is good, but since we made a good mark last year, we may be less interested in stocks than those that were sluggish. The growth of local brands in China is also an issue to be wary of! Companies like Proya, Weijiahui, and Shanghai Jahua are growing up. It is characterized by aggressive marketing using influencers and SNS, and is expanding the market by targeting young people in their 20s and 30s. In the past, there was distrust about domestic products, but it has changed. All of the mainland auto brands in China have grown that way.

LG H&H’s share price goes up to 1.5 million won. Among the domestic stocks, the price per share is the most expensive. From the standpoint of individual investors, it is better to invest. Of course, it is worth mentioning that the face-to-face split. There were mentions after the division of Samsung Electronics’ face value in 2018, but the company’s remarks at the time were “not reviewed”. Sooner or later, Kakao will split face-to-face, and NCsoft will also have a prospect. LG H&H is also determined?

There should be one such company in your portfolio…

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