[Click eStock] F&F, Continued Outlook for Earnings Improvement

[Asia Economy Reporter Junho Hwang] Hana Financial Investment maintained the target price for F&F at 1.2 million KRW on the 14th.

First, the operating profit for the fourth quarter of last year is expected to increase by 123% year-on-year to 160.6 billion KRW. Sales are also projected to rise by 60% to 552.2 billion KRW. MLB sales are expected to grow by 126% compared to the previous year, with pure domestic sales increasing by 63% and duty-free sales by 60%. In particular, MLB Kids sales are anticipated to achieve a high growth rate of 75% due to the added effect of exports to China. Discovery sales are also forecasted to show a stable growth rate of 17% compared to the previous year.

Offline sales are expected to achieve the highest quarterly performance due to an increase in the number of stores and the stocking of high-margin winter products. This year, the number of stores in China is planned to increase to a cumulative total of 800. Even with a conservative assumption (net increase YoY +200 stores), annual sales in China are estimated to reach 726.7 billion KRW (YoY 89%, accounting for 37% of consolidated sales).

Hyunjung Seo, a researcher at Hana Financial Investment, analyzed, "If the core fundamental factor of F&F, MLB's brand power in China, is not an issue, the medium- to long-term growth potential is considered valid. The effect of store expansion based on the strong brand power in the Chinese sector, differential growth compared to the domestic market, and business area expansion through the acquisition of TaylorMade are factors that increase the medium- to long-term investment value."

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