[Click eStock] "Fila Holdings Requires Long-Term Approach... Acushnet Shows Steady Growth"

On the 15th, Kiwoom Securities maintained its investment opinion of 'Outperform' and a target price of 40,000 KRW for Fila Holdings, stating that it is unlikely for additional stock price momentum to appear immediately, but it does not mean there is no change at all.

Fila Holdings' consolidated sales for the first quarter of this year amounted to 1.1086 trillion KRW, a 3% increase compared to the same period last year, while operating profit decreased by 5% to 160.4 billion KRW. Although the market expectations were exceeded, the weak performance of Fila and the strong results of its subsidiary Acushnet offset each other, resulting in a slight decrease in profit.

Fila's sales dropped 32% to 233.2 billion KRW, and operating profit fell 91% to 4.1 billion KRW. The domestic and U.S. businesses were evaluated as underperforming. Domestic business sales decreased by 32% to 79.9 billion KRW, and operating profit dropped 99% to 100 million KRW. Sales and profits significantly declined due to ongoing channel adjustments aimed at enhancing brand value.

U.S. sales decreased by 28% to 85.2 billion KRW, with an operating loss of 28 billion KRW. Losses continued due to discount sales strategies to reduce inventory. On the other hand, the royalty business showed steady growth. Global royalty sales increased by 10% to 19 billion KRW, and China DSF sales rose 7% to 17.1 billion KRW.

Acushnet's sales increased by 20% to 875.4 billion KRW, and operating profit grew 27% to 156.3 billion KRW. High demand for golf products led to increased sales across all categories, with North American sales notably rising 25% compared to the same period last year.

Sojeong Cho, a researcher at Kiwoom Securities, explained, "To break out of the current undervaluation phase, either the rebranding effect of the domestic business or a recovery signal in the U.S. front market needs to be detected. For the domestic business, the effects of new product launches, channel adjustments, and rebranding efforts are expected to gradually appear from the second half of the year at the earliest. The U.S. inventory levels are also gradually easing, so we recommend a long-term approach."