[Click e Stock] "F&F, Continued Strong Earnings Momentum from China"

[Asia Economy Reporter Song Hwajeong] KB Securities on the 13th raised the target price for F&F from the previous 1.1 million KRW to 1.25 million KRW, expecting continued strong performance from China. The investment rating was maintained as 'Buy.'

F&F's fourth-quarter results last year are expected to exceed market consensus due to strong performance in China. KB Securities estimated F&F's consolidated fourth-quarter sales and operating profit at 541.4 billion KRW and 159.2 billion KRW, respectively. These figures represent increases of 57% and 121% compared to the same period last year. Shin-ae Park, a researcher at KB Securities, said, "Fourth-quarter sales and operating profit are expected to exceed consensus by 4% and 11%, respectively," adding, "Operating profit margin will improve by 8.5 percentage points to 29.4% due to leverage effects from the surge in sales." MLB Korea is expected to achieve domestic sales growth of 20% to 55.2 billion KRW and duty-free sales growth of 65% to 83.6 billion KRW. Discovery's operating environment was unfavorable due to mild weather, but it is expected to post solid results with sales increasing by 16% to 208 billion KRW. MLB Kids is expected to see sales rise by 35% to 26.3 billion KRW, driven by a base effect and increased exports to its Chinese subsidiary. In particular, sales from the Chinese corporation are expected to show strong performance, increasing by 264% to 157.6 billion KRW. Park said, "Offline sales are estimated to have increased by 409% to 136.2 billion KRW, influenced by an increase of 99 stores compared to the previous quarter and the delivery of relatively high-priced winter products," and analyzed, "Online sales also rose by 30% to 21.5 billion KRW due to the effect of Guanggunjie (China's largest shopping festival)."

Based on strong performance in China, excellent earnings momentum is expected to continue. Park said, "This year, the estimated net increase in the number of stores in China was raised from 183 to 312, and sales from the Chinese corporation were also revised upward by 18% to 729.5 billion KRW, an 87% increase compared to the previous year," explaining, "The proportion of sales to China (Chinese corporation + duty-free) from MLB and MLB Kids in consolidated sales this year will reach 57%."

KB Securities forecast F&F's consolidated sales this year to increase by 32% year-on-year to 1.9324 trillion KRW, and operating profit to rise by 37% to 549.3 billion KRW. Park said, "Based on strong brand power, effective digital marketing, and aggressive overseas expansion strategies, excellent earnings momentum will continue."

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