[Click eStock] "Fila Holdings, Stock Price Expected to Rise on Earnings Improvement Outlook"

On the 29th, Daishin Securities maintained a buy rating and a target price of 44,000 KRW for Fila Holdings, forecasting a stable rise in stock price due to expectations of improved earnings.

Yoo Jung-hyun, a researcher at Daishin Securities, stated, "Although a downturn was expected in the Korean and U.S. subsidiaries that directly operate the Fila brand business, the prolonged sluggishness beyond expectations is considered a painful issue. However, if the inventory adjustment in the U.S. is successfully completed as the company anticipates this year, the profit and loss improvement in 2024 is a predetermined course, so it will be important to monitor the pace of performance recovery in the second half."

He added, "Apart from the Korean and U.S. subsidiaries, the global business is all performing well, and nearly 300 billion KRW in cash is flowing in annually from these divisions. Through these resources, efforts are being made to enhance shareholder value by investing in the brand and increasing dividends. The steady share purchases by the major shareholder have recently contributed to a stable stock price trend, and with expectations of a performance bottom this year and the onset of the dividend season, it is highly likely that the stock price trend will become more prominent toward the end of the year."

Fila Holdings' second-quarter sales are projected to decrease by 2% year-on-year to 1.1436 trillion KRW, and operating profit is expected to drop by 35% to 99.1 billion KRW. Due to the impact of clearing low-priced channels, sales declines continue in the domestic and U.S. subsidiaries, and brand resilience has yet to be detected. The U.S. subsidiary is focusing on inventory disposal this year, with many losses expected to be reflected in the second quarter. The domestic segment is expected to see operating profit at the break-even point level, similar to the first quarter, as cost burdens remain unresolved while sales recovery takes time.

However, it is estimated that royalty income, increased commission income from China, and the strong performance of subsidiary Acushnet will partially offset the sluggishness of the domestic and U.S. subsidiaries.

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