[Edaily Reporter Kwon Oh Seok ] Target stock prices for major domestic companies leading the K-Beauty sector are falling simultaneously. LG H&H(051900), a traditional powerhouse, saw its stock price plummet due to a restructuring of its China operations and widening overseas losses, while APR(278470), which had been maintaining high growth, was held back by foreign exchange losses resulting from the strong won. There are concerns that investor sentiment toward the cosmetics sector as a whole is cooling.

According to MP Doctor on the 7th, LG H&H closed at 234,000 won the previous day (the 6th), down 5,000 won (2.09%) from the previous trading day. LG H&H’s 52-week high is 335,500 won, meaning the stock price has fallen by about 10%. On the same day, APR closed at 255,500 won, down 13,500 won (5.02%). Compared to its 52-week high of 475,000 won, the price has fallen to about half that level.
In particular, the securities industry’s assessment was harsh immediately following the earnings announcement. Previously, LG H&H reported third-quarter consolidated revenue of 1.5774 trillion won, a 0.2% decrease year-over-year, while operating profit rose 52.4% to 70.4 billion won—though this still fell more than 31% short of market expectations. Most painfully, the cosmetics division continued to post losses, recording an operating loss of 10.9 billion won.
In response, securities firms unanimously lowered their target prices. Meritz Securities issued a report setting its target price at 320,000 won, down from the previous 370,000 won. Korea Investment & Securities lowered its target from 340,000 won to 310,000 won, and SANGSANGINVESTMENT&SECURITIES also reduced its target from 350,000 won to 310,000 won.
Song Ji-yeon, an analyst at SANGSANGINVESTMENT&SECURITIES, stated, “It is too early to discuss a recovery in the fundamentals of the cosmetics business. A re-rating could be possible if the recovery of The After or the additional success of in-house brands other than Dr. Groot is confirmed in the future.” However, she added, “Since it is difficult to expect visible results from either of these in the short term, we judge that the potential for a sustained upward trend in the stock price is limited.”
In contrast, for APR, it was an exogenous variable—the “exchange rate”—rather than its business structure that disrupted earnings. Although the company posted its highest-ever quarterly revenue thanks to expanded overseas sales, foreign exchange losses resulting from the strong won eroded operating profit. APR’s third-quarter revenue this year reached 773.1 billion won, a 100.3% increase year-over-year. Operating profit rose 67.1% to 160.6 billion won but fell short of market expectations by about 11%. Compared to the previous quarter, revenue increased by 0.7%, while operating profit decreased by 15.7%.
With overseas sales accounting for 94% of APR’s total revenue, securities analysts note that the 5.6% and 11.9% declines in the average and end-of-quarter exchange rates, respectively, weighed on revenue and profitability when converted to Korean won. The impact of the exchange rate decline on the operating profit margin was estimated at minus (-) 1.7 percentage points.
Consequently, IBK Investment & Securities lowered its target price for APR from 550,000 won to 500,000 won. Jo Kyung-jin, an analyst at IBK Investment & Securities, stated, “We are lowering the target price to reflect the pressure on profitability caused by exchange rate fluctuations and adjustments to the earnings outlook,” adding, “While increased exchange rate sensitivity resulting from the expansion of overseas sales is a short-term burden on profitability, the company’s medium- to long-term growth potential remains valid, driven by cosmetics-led growth and the diversification of global sales channels.”
SamsungSecurities also lowered its target price from 550,000 won to 400,000 won. Jeong Dong-hee, an analyst at SamsungSecurities, said, “Reflecting the decline in third-quarter earnings due to exchange rate impacts, we have lowered our operating profit forecasts for this year and next year by 14% and 4%, respectively, compared to previous estimates.” He added, “While a short-term downward adjustment in expectations is inevitable due to increased exchange rate sensitivity resulting from the expansion of the export share, we believe the stock is currently oversold relative to its growth potential.”
In addition, EUGENE INVESTMENT & SECURITIES lowered its target price from 530,000 won to 450,000 won, and ShinyoungSecurities lowered its target price from 560,000 won to 450,000 won.