[Click eStock] "F&F, Discovery's Surge to Drive Q1 Earnings Momentum"

Ebest Investment & Securities Issues 'Buy' Rating and 150,000 KRW Target Price... Closing Price 111,000 KRW on 21st

[Asia Economy Reporter Geum Bo-ryeong] An analysis suggests that Discovery's strong performance will be the momentum for F&F's first-quarter results.

According to Ebest Investment & Securities on the 22nd, F&F's first-quarter sales are expected to be 165.4 billion KRW, with an operating profit of 19.9 billion KRW. These figures represent increases of 1.7% and 5%, respectively, compared to the previous year.

At the beginning of this year, concerns over declining MLB China duty-free store sales arose due to the outbreak of the novel coronavirus (COVID-19) in China, causing F&F's stock price to adjust downward by more than 10%. However, as the situation eased, local demand has shown signs of recovery.

Researcher An Jin-ah of Ebest Investment & Securities stated, "MLB's first-quarter results are expected to record sales at the previous year's level due to the high base effect from last year, a decrease in MLB Asia (HK) offline sales, and the impact of the domestic COVID-19 spread in early February. However, despite COVID-19 in China and domestically, better-than-expected MLB domestic sales (excluding duty-free), Discovery's strong performance, and the recovery of daily sales on China's T-mall to the 50 million KRW range are factors that clearly demonstrate the solid fundamentals of F&F brand demand and confirm sales recovery during the COVID-19 lull."

In the case of MLB domestic sales, the duty-free sales ratio is around 60%, with foreign tourist demand and daigou demand at similar levels. Due to the domestic COVID-19 spread causing a sharp decline in tourist demand and entry restrictions such as quarantine for overseas arrivals, the risk of sluggish duty-free sales cannot be ruled out.

However, Discovery's strong performance is expected to act as a momentum for first-quarter results. Researcher An said, "Unlike MLB, Discovery mainly relies on domestic demand, so there is no risk from the duty-free channel. The main product, the shoe bucket series, continuously generates demand regardless of age, gender, or season, so it is expected to be a clear momentum for F&F, which typically saw sales concentrated in the fourth quarter. Discovery, along with MLB, is a key brand that responds quickly and flexibly to domestic conditions, which is a strength," she analyzed.

Ebest Investment & Securities gave F&F a 'Buy' rating with a target price of 150,000 KRW. The closing price on the 21st was 111,000 KRW.

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