[Click eStock] "F&F, Disappointing Domestic Performance Contrasted by Better-than-Expected China Results"

[Asia Economy Reporter Oh Ju-yeon] NH Investment & Securities expects that F&F's domestic performance will be sluggish in the fourth quarter of this year due to the resurgence of COVID-19, but China's results are expected to exceed expectations thanks to the expansion of agency stores and strong sales during the Singles' Day shopping festival. They also forecast that next year will see remarkable growth in China and diversification of domestic and international lineups, including footwear.

According to NH Investment & Securities on the 24th, F&F's sales in China next year are expected to reach approximately KRW 181.9 billion, a 201% increase compared to KRW 60.5 billion this year. The number of agency stores is set to increase nearly fourfold from 50 stores this year to 200 stores next year, and Tmall traffic is on an upward trend, indicating that daily online sales will steadily rise.

Expansion of lineups such as footwear is also expected to continue. Despite difficulties caused by COVID-19 this year, the number of footwear units sold has increased by 25% compared to the same period last year. Next year, more new products are expected to be launched, especially from Discovery.

For the fourth quarter of this year, consolidated sales are forecasted at KRW 326.4 billion, and operating profit at KRW 49 billion, down 1% and 30% respectively compared to the same period last year.

Researcher Lee Ji-young analyzed, "In the case of MLB Korea, sales are estimated at KRW 100.7 billion, down 23% year-on-year, due to the unfavorable business environment caused by the resurgence of COVID-19. Meanwhile, MLB China has surpassed 50 agency stores as of December, and sales related to the Singles' Day festival this year nearly doubled to around KRW 10 billion, resulting in an expected sales increase of 321% year-on-year to KRW 29.5 billion."

Accordingly, the investment opinion of 'Buy' and the target stock price of KRW 120,000 for F&F were both maintained.