F&F, Domestic Market + China Synergy Emerges

[Asia Economy Reporter Jang Hyowon] NH Investment & Securities on the 27th presented a target price of 1,000,000 KRW for F&F, stating that the synergy of a two-track strategy of expanding market share in the domestic market and opening stores in China is simultaneously emerging.

F&F is a company that manufactures and sells fashion brands such as MLB and Discovery. Last year, it recorded consolidated sales of 1,089.1 billion KRW, operating profit of 322.7 billion KRW, and net profit of 231.9 billion KRW.

Jung Jiyoon, a researcher at NH Investment & Securities, analyzed, “F&F is expected to record sales of 1,912.4 billion KRW and operating profit of 564 billion KRW this year, growing 29% and 33% respectively compared to the previous year,” adding, “We judge that the premium segment is valid due to strengthened brand power from diversification of domestic and overseas distribution channels.”

Researcher Jung forecasted that F&F will show a growth rate higher than the average in the domestic market, which grows about 2% annually. This year, the domestic growth rates by brand are expected to be 7% for MLB adults, 9% for Discovery, and 9% for MLB Kids.

He explained, “In the case of MLB Kids, a favorable trend offsetting the base effect is expected due to the normalization of school attendance, demand for premium products, and expansion of duty-free channels.”

He also estimated that sales in China will grow 71% year-on-year to 657 billion KRW this year. By channel, offline sales are expected to grow 73% and online sales 60%.

He said, “Offline expansion will continue with the opening of 300 stores,” adding, “Tmall events such as the Mid-Autumn Festival and Singles’ Day in the second half of the year are also worth looking forward to due to improved consumer sentiment in China.”

Furthermore, he analyzed, “Although the recent spread of COVID-19 in China and uncertainties in China relations remain, the expected price-to-earnings ratio (PER) for this year based on the current stock price is 14 times, making the valuation attractive, and there is about 29% upside potential.”

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