[外行报告] 韩国化妆及护肤品行业研究报告2008年4月 [推广有奖]

COSMETICS & PERSONAL CARE
Ready to Wear?
􀂄 Rising Female Purchasing Power as Structural Driver
We believe Korea’s cosmetics industry will likely grow by 5%~7% YoY, outpacing the private
consumption growth rate of 5%~6% on the back of the rising purchasing power of women.
As the portion of working women in Korea has grown to 42% of the total female population,
women have more financial resources at their disposal for self-gratification. Moreover, the
average household nowadays has only one child, leaving mothers with more time to devote
to their personal beauty and self-development.
􀂄 Bipolar Consumer Traits Help Avert Intra-Industry Cannibalism
Higher vs. lower income, luxury vs. “good enough” cosmetics, the younger vs. older
demographic, and general purpose vs. functional cosmetics are examples of the bipolar
profile of this industry. These consumer traits create submarkets within the industry that
grow independently of one another, preventing execessive competition and cannibalism in
the unified market arena at the expense of overall market growth.
􀂄 Predominately Domestic Industry Means Less Volatility from External Factors
We consider the cosmetics and personal care product sector predominantly a domestic
industry in which much of the supply and demand is created and met locally. Because the
cosmetics and personal care industry is at the very end of the economic supply chain and its
products are in direct demand by actual users, we see less industry volatility coming from
external factors such as acute market penetration by offshore multinational brand cosmetics
for lack of critical mass and narrow distribution to take the lion’s share in Korea.
􀂄 We Prefer AmorePacific over LG Household and Healthcare
Both AmorePacific and LG Household and Healthcare will fare well in 2008 with much desired
earnings visibility without great volatility, in our view. However, we feel LG Household and
Healthcare’s valuation is high, traded at 36.7x 2008F P/E, thus prefer AmorePacific (20.6x
2008F P/E), based on valuation call.

Content
Investment Summary............................................................................. 3
Cosmetics Industry at a Glance ............................................................. 5
As-Is for Korean Cosmetics and Personal Care ...................................... 6
Structural Drivers for Cosmetics & Personal Care .......................................... 8
Where to Get Value-Added.................................................................. 11
Consumer Traits Behind the Industry................................................... 16
Growing Market Catalyst ..................................................................... 19
China – The Next Domestic Market...................................................... 20
Peer Group Comparison ...................................................................... 22
AmorePacific (090430)........................................................................ 23
Investment Summary ..................................................................................24
Operating Performance and Valuation.........................................................26
Corporate Overview ....................................................................................30
Risk Factors ................................................................................................31
Pacific Corporation Holding Structure .........................................................32
LG Household & Health Care (051900) ................................................ 34
Investment Summary ..................................................................................35
Operating Performance and Valuation.........................................................38
Corporate Overview ....................................................................................43
Risk Factors ................................................................................................44
LG Corporation and LG H&H’s Ownership Structure ....................................45
Korea Kolmar (024720) ....................................................................... 47
Investment Summary ..................................................................................48
Operating Performance...............................................................................50
Risk Factors ................................................................................................50
Corporate Overview ....................................................................................51

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