[Click eStock] F&F Boasts One of the Largest Profits in Domestic Consumer Goods... Top Pick

[Asia Economy Reporter Lee Seon-ae] Meritz Securities maintained its buy rating on F&F on the 4th and raised the target price from 240,000 KRW to 270,000 KRW. It also maintained its opinion as the top pick within the industry. Hanuri, a Meritz Securities researcher, emphasized, "Stock prices are determined by performance," adding, "We believe that not only relative sales growth but also the absolute profit scale will reach the highest level among domestic consumer goods."

Amid the continued high growth trend of all F&F brands, local sales in China are expected to reach an all-time high. Sales in the third quarter of 2022 are projected to be 424.7 billion KRW, operating profit 125.6 billion KRW, and net profit 92.8 billion KRW. This represents increases of 29.1%, 31.1%, and 30.5%, respectively, compared to the previous year.

Researcher Han said, "Domestic MLB is expected to perform well based on brand power," and noted, "China MLB will set a new record with sales of 174.7 billion KRW as offline sales are driven by new store openings and strong performance of existing stores, while the addition of SKUs boosts online results."

He added, "In 2022, China MLB's retail sales are expected to reach 1.364 trillion KRW, surpassing LG Household & Health Care (917.1 billion KRW) and Amorepacific (906.8 billion KRW) just three years after entering the market," and forecasted, "China sales in 2023 are expected to reach 1.0315 trillion KRW."

He continued, "Operating profit in 2023 is expected to be 837.9 billion KRW, twice that of Amore (401.4 billion KRW)," and emphasized, "Operating profit in 2024 will surpass 1 trillion KRW, challenging LG Household & Health Care (1.1706 trillion KRW), but currently, F&F's market capitalization is 5.27 trillion KRW, significantly lower than Amorepacific (5.97 trillion KRW) and LG Household & Health Care (9.89 trillion KRW)."