[Click eStock] "F&F, Domestic Sales Sharp Decline... Target Price 120,000→100,000"

MLB Domestic Sales, MLB Kids, Discovery Revenue Decline
Operating Profit Margin Also Down Due to New Business Impact
"Recovery of Consumption and Performance Momentum Is Key"

Hana Securities lowered the target price for F&F from 120,000 won to 100,000 won on the 25th due to downward revisions in earnings estimates and valuation. The investment rating of 'Buy' was maintained. F&F's closing price on the previous trading day was 64,900 won.

Seo Hyun-jung, a researcher at Hana Securities, said, "Valuation derating has continued due to concerns about growth, with the 12-month forward price-to-earnings ratio (12MF PER) dropping to as low as 5.9 times," adding, "While further downside is limited, stock price momentum can only be formed if brand competitiveness is strengthened and meaningful earnings visibility in new business sectors is secured."

Consolidated sales for the first quarter are expected to be 503.7 billion won, and operating profit 130.6 billion won, in line with market expectations. Compared to a year ago, MLB domestic sales fell by 17%, MLB Kids by 10%, and Discovery by 3%, resulting in a 10% decrease in domestic sales. On the other hand, the Chinese subsidiary grew by 9% to 227.3 billion won. Researcher Seo said, "Operating profit margin is expected to fall to 25.9%, due to sluggish domestic department store sales with a high rate of full-price sales and investments in new brands (Supra, Duvetica, Enter)," adding, "Although the slowdown in growth of the Chinese subsidiary is a concern, uncertainty in earnings due to weakening brand power domestically has also increased."

For 2024, consolidated sales have been revised downward to 2.105 trillion won, and operating profit to 546.6 billion won. It was analyzed that the decline in performance could be greater than expected due to consumption slowdown, intensified competition, and deterioration of brand competitiveness. Researcher Seo said, "Meaningful recovery in earnings momentum is likely when domestic and international consumer markets recover, brand awareness improves, and business diversification (Enter business, TaylorMade IPO) becomes visible."