[Click eStock] "Undervaluation Resolution Phase... F&F, Target Price Maintained"

Hana Securities maintained a buy rating and a target price of 90,000 won for F&F on the 25th, stating, "Domestic sales have bottomed out, and with the slowdown in China's growth rate coming to an end, the weakening trend in performance momentum is expected to conclude next year." The closing price on the previous day was 60,500 won.

On the same day, Seohyeon Jeong, a researcher at Hana Securities, said, "The current stock price is only 5.6 times the 12-month target price-to-earnings ratio (PER). From a mid- to long-term perspective, it is an effective time for bottom-fishing."

F&F's consolidated sales for the third quarter are expected to be 472.1 billion won, and operating profit 121.5 billion won, down 4% and 18% respectively compared to the same period last year, slightly missing market expectations.

Researcher Seo said, "Domestic sluggishness continued in the third quarter. Apparel consumption such as MLB and Discovery was weakened by the domestic economic consumption downturn and the late heatwave last month," adding, "however, domestic sales are expected to gradually enter a recovery trend starting from the third quarter. The negative growth rate of MLB and Discovery is gradually narrowing, and Discovery's sales expansion is expected in the outdoor peak season of the fourth quarter."

Growth rate of the Chinese subsidiary is expected to be only 3% due to difficult local consumption conditions. Researcher Seo said, "Although the slowdown in growth rate has led to continued declines in performance and valuation (stock price level relative to corporate value), the slowdown in growth rate is expected to come to an end starting next year," adding, "As restructuring of underperforming stores is underway, the efficiency effect of stores is expected to lead to a rebound in growth rate of existing MLB stores."

She also said, "Additionally, Discovery is scheduled to newly enter China starting next month. They plan to open 4 to 10 stores by the end of the year and 100 stores by next year," adding, "It is expected that store openings alone will add 30 billion won in sales."