[Click eStock] "Fila Holdings Enters Oversold Phase"

Korea Investment & Securities Issues 'Buy' Rating and 50,000 KRW Target Price... Closing Price on 19th at 21,050 KRW

Photo by Asia Economy DB

[Asia Economy Reporter Kum Boryeong] An analysis has been raised that FILA Holdings has entered an oversold phase.

On the 20th, according to Korea Investment & Securities, FILA Holdings presented guidance reflecting the impact of the novel coronavirus disease (COVID-19). This year, domestic sales are expected to increase by mid-single digits, commission income from China by double digits, the Americas by high single digits to low double digits decline, and royalties are expected to decline slightly.

Na Eunchae, a researcher at Korea Investment & Securities, explained, "The domestic sector recorded solid growth until January and February. Although this month is sluggish, the offline impact is being offset by strengthening the online product lineup," adding, "Assuming a 3% growth rate domestically, 17% increase in commission income from China, 10% decline in the Americas in dollar terms, and 8% decline in royalties, FILA's overall operating profit is estimated to decrease by 12%."

Even considering uncertainties and discount factors, the analysis suggests an oversold phase. Researcher Na said, "The market capitalization level of 1.3 trillion KRW is the same as in 2017 when FILA brand performance began to turn around, and considering the value of the Acushnet stake at 1.2 trillion KRW, the brand value of FILA is extremely low," adding, "The stock price decline started with concerns about the Americas and was compounded by COVID-19 worries, but the rapid stock price drop seems to have been fueled more by short selling and supply-demand factors vulnerable to small and mid-cap stocks amid the market plunge than by actual performance impact."

He continued, "It is necessary to maintain balance considering the sustainability of a global top 5 brand and the possibility of normalization over time," adding, "Now is the time to pay attention even to small signs of recovery. The largest single sales market for the FILA brand, China, is gradually recovering."

Korea Investment & Securities gave a 'Buy' investment opinion on FILA. The target price was lowered from 60,000 KRW to 50,000 KRW. The closing price on the 19th was 21,050 KRW.

This content was produced with the assistance of AI translation services.