[Click eStock] "F&F, Operating Profit Estimates Lowered"... Target Price ↓

On the 27th, KB Securities downgraded F&F's operating profit estimates for this year and next year by 11% and 8%, respectively, lowering the target stock price from 230,000 KRW to 200,000 KRW. However, the target stock price rating was maintained as a buy.

F&F's consolidated sales in the fourth quarter of last year recorded 558.9 billion KRW, down 1% year-on-year, and operating profit decreased by 16% to 154.5 billion KRW. With stagnant sales, the operating profit margin fell by 5 percentage points compared to the previous year due to a decline in the contribution of high-margin sales from China.

MLB Korea's pure domestic sales decreased by 6% to 76.1 billion KRW, and duty-free sales dropped by 15% to 62.0 billion KRW. Discovery's sales declined by 2% due to a high base effect and mild weather. MLB KIDS' duty-free sales fell by around 20%, but domestic sales showed a favorable growth trend. The Chinese subsidiary's sales decreased by 20% to 121.0 billion KRW. Due to inventory clearance in stores and adjusted deliveries, offline sales fell short of market expectations at 88.6 billion KRW, while online sales increased by 12% to 32.4 billion KRW.

F&F's consolidated sales for this year are expected to increase by 18% year-on-year to 2.1348 trillion KRW, and operating profit is forecasted to rise by 18% to 618.3 billion KRW.

Shinae Park, a researcher at KB Securities, explained, "Domestic domestic channels are expected to show somewhat slower growth this year due to a high base effect. Meanwhile, the China-related subsidiaries and channels are expected to see improved growth momentum in the second half of the year."

She added, "Duty-free channel sales are expected to show an increasing trend quarter-on-quarter throughout the year, and although the Chinese subsidiary's sales growth rate will be only 7% in the first quarter, it is estimated that the growth rate will noticeably increase each quarter from the second quarter onward."

She further noted, "In the short term, rapid recovery in Chinese sales will dispel concerns, and in the mid-to-long term, trend growth based on business diversification effects is expected."

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