[Click eStock] "Fila Holdings, Profitability Improvement Slow Due to Fila Brand Restructuring"

NH Investment & Securities Report
Target Price Lowered by 6%

[Asia Economy Reporter Minji Lee] NH Investment & Securities on the 27th issued a buy rating and a target price of 60,000 KRW for Fila Holdings, down 6% from the previous target price. Although Akushnet's strong performance is expected due to the increase in golf population, it is judged that profitability improvement will be slow due to Fila's brand restructuring.

In the fourth quarter of last year, Fila Holdings is estimated to have recorded sales of 768.5 billion KRW and operating profit of 79.6 billion KRW, down 3% and 6% respectively from the same period last year.

By segment, Fila is expected to have recorded sales of 292.7 billion KRW and operating profit of 38.8 billion KRW, down 18% and 25% respectively from the same period. Overall, poor performance is expected due to the resurgence of COVID-19, but China is observed to have increased sales by 20% thanks to consumption recovery and high growth in e-commerce. The U.S. is also expected to have grown about 10% supported by new sales channels such as Peloton and expansion of e-commerce, but there is a high possibility of one-time costs occurring.

Akushnet is expected to have recorded sales of 443.5 billion KRW and operating profit of 38.5 billion KRW, increasing 2% and 16% respectively compared to a year ago. Ji-young Lee, a researcher at NH Investment & Securities, said, “Golf has become a popular sport in the new normal era,” adding, “In the fourth quarter of last year, the number of rounds played in the U.S. increased sharply by 32% in October, 57% in November, and 37% in December compared to the same period last year, leading to strong performance.”

This year, Akushnet is expected to record a high growth rate of 9% benefiting from the global increase in golf population. Fila intends to focus on building a foundation for future growth by strengthening product lines and expanding e-commerce. Accordingly, new hiring and increased research and development costs are expected, so the pace of profitability improvement is anticipated to be slow.

Researcher Ji-young Lee said, “During Fila's brand restructuring period, Akushnet will support performance,” and added, “Fila's changes are positive in that they lay the groundwork for future growth.”

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