LG Household & Healthcare under KRX probe for possible disclosure violation

South Korea¡¯s top household goods and cosmetics maker LG Household & Healthcare Co. is under Korea Exchange (KRX) probe over suspicion of violating disclosure rule amid nosedive in one of the most expensive stocks on Kospi.

LG Household & Healthcare shares lost more than 13 percent on Jan. 10, falling below 1 million won ($838) to hit a 52-week low of 921,000 won amid a rush of downgrades by analysts based on projections of disappointing fourth-quarter results in LG Household & Healthcare after sustaining multi-year growths even under pandemic.

Shares closed 1.75 percent lower at 957,000 on Monday.

The company¡¯s fourth-quarter operating income is estimated at 232.9 billion won, down 9 percent from a year ago, with revenue contracting 1 percent on year to 2.07 trillion won, missing earlier consensus by a large margin. The beauty brand is projected to have been hit hard by slowdown in China. Except for one quarter in 2005, the company had kept up growth for 66 consecutive quarters until the third quarter of last year.

KRX announced on Monday that it is looking into whether LG Household & Health Care Co. violated disclosure rule.

Listed companies offer earnings guidance before official release. Securities market disclosure rules require companies to report forecasts or predictions for sales, operating profit or loss, net profit or loss to the KRX first.

LG Household & Health Care is suspected to have shared the numbers with some analysts before reporting to the KRX.

Violation of the fair disclosure rule will result in sanctions such as the company being designated as an "unfaithful disclosure" corporation.

¡°We are currently looking into whether LG Household & Health Care has provided security firm researchers with specific information,¡± said an official from KRX. The company will avoid any disciplinary action if information it shared with them do not fall into disclosure rules.

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