[Click eStock] "F&F Target Price 110,000 Won... Acquires Licenses in 11 Countries"

Daishin Securities on the 18th set the target price for F&F at 110,000 KRW. The previous day, F&F announced that it had decided to acquire the Discovery license for 11 regions in China and Southeast Asia. The contract period extends until the end of 2039, including South Korea, with a priority negotiation right for an additional 15-year extension. F&F invested approximately 52.4 billion KRW to acquire goodwill and assets from the existing operator of the China and Southeast Asia license business.

Yoo Jeong-hyun, a researcher at Daishin Securities, stated, "Discovery's overseas expansion will contribute to resolving the severe undervaluation of the company's value." A store is scheduled to open in Shanghai, China, within this year, but specific store plans for this year and next have not yet been disclosed. This contract was evaluated very positively as it expands the overseas brand business, which had been focused on MLB, to include Discovery. Since the capability to operate brands in overseas markets has already been verified, it is expected to reduce trial and error during the initial market entry.

However, the current sales from Discovery's duty-free channel are in the mid-10 billion KRW range, which is small compared to the 128 billion KRW sales in 2018 when MLB decided to enter China directly. Also, unlike MLB’s hit products such as hats, Discovery lacks representative products, so it may take time to show initial results.

Since specific details such as store openings or sales plans have not been disclosed, it is still too early to estimate how much this contract will immediately contribute to performance. However, considering the severe undervaluation due to sluggish domestic sales despite favorable growth in the Chinese market, this contract is expected to help partially resolve the undervaluation. The stock price surged 26% the previous day on growth expectations from Discovery’s overseas market expansion. The price-to-earnings ratio (P/E) based on expected performance 12 months later is around 6.5 times. Researcher Yoo forecasted, "As specific plans are disclosed and actual results are confirmed, the trend of resolving undervaluation is likely to continue."

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