Korea Consumer Equities: Looking for laggards? Korea

Staple names under our coverage underperformed the market significantly (y-t-d down 3% vs the KOSPI up 57%), which may not be a surprise. Domestic consumption, except for luxury to some extent, remains sluggish, as indicated by the monthly retail sales data. Polarisation of spending continues. As such, we think 3Q earnings are unlikely to beat consensus expectations, except for Samyang Foods and KT&G where overseas contributions continue to rise. We believe weak earnings are more than priced into shares. We continue to prefer companies with overseas expansion momentum. Among our staple coverage, we prefer Samyang Foods (Buy) given its long-term sustainable growth outlook, and KT&G (Buy), as it still offers c10-11% shareholder returns over 2026-28e. We update our 2026-28 estimates for the six stocks to reflect 2Q26 actual results, and accordingly adjust our TPs for three stocks, still with 2026 as our valuation base year. Our ratings are unchanged. 3Q26 results will be announced from ea