[Click eStock] "F&F, Expects Recovery of China Subsidiary Sales This Year"

Daishin Securities Report

[Asia Economy Reporter Minji Lee] Daishin Securities maintained a buy rating on F&F on the 18th and raised the target price by 36% from the previous level to 167,000 KRW, considering the growth potential of the Chinese market.

In the fourth quarter of last year, F&F recorded sales and operating profit of 345.7 billion KRW and 72.1 billion KRW respectively, showing growth of 5% and 3% compared to the same period last year.

MLB's domestic duty-free channel sales decreased by about 30%, but this is seen as a significant improvement compared to the previous quarter's negative growth rate of 48%. The Shanghai subsidiary in China recorded sales of 48.3 billion KRW, greatly exceeding market expectations of 25 billion KRW. The number of stores in China increased from only 4 at the end of the previous year to 70 by the end of last year, and Tmall sales grew to about 17 billion KRW, showing explosive sales growth.

Researcher Junghyun Yoo of Daishin Securities explained, "Considering that the cumulative sales of the Chinese subsidiary in the third quarter of last year were 31 billion KRW, the fourth quarter sales of 48.3 billion KRW indicate rapidly increasing demand for the MLB brand in China."

Discovery's sales increased by 10% year-on-year in the fourth quarter due to strong sales of key product lineups such as outerwear and shoes. Despite reduced traffic in major distribution channels following strengthened social distancing measures since November, sales of major items showed favorable performance thanks to the brand's planning capabilities.

Improvement in the performance of the Chinese subsidiary is expected this year. The Chinese subsidiary's margin showed a strong recovery from operating profit margin (OPM) losses due to high growth last year. Researcher Yoo said, "The number of stores is expected to increase from 70 at the end of last year to 250-270 this year," adding, "With quarterly sales of the Chinese subsidiary stabilizing above 40 billion KRW, the subsidiary's annual sales are expected to grow by more than 170%, significantly increasing to the 200 billion KRW level this year."

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