[Click eStock] "F&F, Buy Valid from China Consumer Goods Perspective"

KB Securities Report

[Asia Economy Reporter Minji Lee] KB Securities maintained a buy rating and a target price of 1.25 million KRW for F&F on the 16th, based on the expectation that sales to China will significantly increase this year as well.

In the fourth quarter of last year, consolidated sales reached 563.2 billion KRW, a 63% increase compared to the previous year. Operating profit grew by 153% to 182.4 billion KRW. Due to the leverage effect from the surge in sales, the operating profit margin improved by 11.5 percentage points.

By segment, MLB Korea's pure sales grew 76% year-on-year to 81 billion KRW, and duty-free sales increased by 44% to 73 billion KRW. Despite an unfavorable operating environment due to mild weather, Discovery recorded sales of 209.6 billion KRW, a 17% growth. MLB Kids saw sales rise 64% to 31.9 billion KRW, supported by a low base effect and increased exports to its Chinese subsidiary. The Chinese corporation posted sales of 150.4 billion KRW, with offline sales at 121.4 billion KRW and online sales at 29 billion KRW, increasing by 354% and 76%, respectively. Shin-ae Park, a researcher at KB Securities, said, “The number of stores in the Chinese corporation increased by 105 compared to the previous quarter, and the online market reflected the effect of the Singles' Day event.”

This year, consolidated sales are expected to reach 1.8937 trillion KRW, and operating profit 547.3 billion KRW, representing growth of 27% and 29% respectively compared to the same period last year. Sales of the Chinese corporation are estimated to increase by 72% to 656 billion KRW during the same period. Offline sales are expected to be 571.9 billion KRW, and online sales 109.4 billion KRW. Despite a high base, Discovery’s sales are projected to maintain solid growth of 12% year-on-year. MLB sales are forecasted at 261.2 billion KRW for pure domestic sales, 322.1 billion KRW for duty-free, and 109.7 billion KRW for Kids.

Researcher Shin-ae Park analyzed, “The excellent performance momentum based on strong brand power, effective digital marketing, and aggressive overseas expansion strategies will continue this year as well,” adding, “The proportion of China-bound sales from MLB and MLB Kids is expected to reach 52% of total sales this year, making a buy recommendation valid from the perspective of ‘Chinese consumer stocks.’”

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