[Click eStock] "F&F, Unstable China Economy and Macro Situation"…Target Price ↓

On the 30th, Kiwoom Securities announced that it is lowering the target price for F&F from the previous 195,000 KRW to 174,000 KRW, considering the unstable economic situation in China and the stock price deviation rate. However, it maintained a buy rating and stated that the China-centered growth trend is expected to continue for the time being.

F&F's sales in the third quarter of this year reached 491.9 billion KRW, an 11% increase compared to the same period last year, and operating profit was 148.5 billion KRW, up 7%, meeting market expectations. Although domestic and duty-free sales were sluggish, the China business led the growth.

Domestic and duty-free sales were weak as expected. Duty-free sales decreased by 34% year-on-year to 37.1 billion KRW, and domestic sales fell by 11% to 135.9 billion KRW. Duty-free sales declined due to reduced business-to-business (B2B) operations and volume adjustments, while domestic sales dropped due to a contraction in the domestic apparel market and unfavorable weather conditions.

The growth in the Greater China region was solid, but the weak yuan was a downside. Sales from the China subsidiary increased by 29% to 260.5 billion KRW. The China subsidiary maintained growth due to channel expansion and strong brand demand. As of the end of the third quarter, there were 1,069 stores in China. The Hong Kong subsidiary recorded sales of 17.5 billion KRW, a 54% increase from the same period last year, driven by an increase in tourists to Hong Kong.

For the fourth quarter, consolidated sales are expected to increase by 12% year-on-year to 624 billion KRW, with sales in China projected to rise 60% to 193.3 billion KRW.

Sojeong Cho, a researcher at Kiwoom Securities, explained, "The domestic market has limited potential for a rebound, but China is expected to continue its growth trend thanks to steady channel expansion and strong brand demand. By the end of this year, offline stores in China are planned to expand to over 1,100 MLB stores, 25 Supra stores, and 23 Duvetica stores by early next year."

She added, "Currently, investment sentiment has weakened significantly due to risk aversion toward China. However, there is no doubt about the growth potential of the Chinese channels, and thanks to solid demand for existing brands, the growth trend is expected to remain robust next year as well."

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