[Click eStock] "F&F, the point where expectations materialize... Target price 72,000 won"

Coverage Initiated with a 'Buy' Investment Recommendation

Yuanta Securities initiated coverage on F&F on the 27th, stating that the time has come for the anticipated factors to materialize, with a 'Buy' investment rating and a target price of 72,000 KRW.

Researcher Kwon Myung-jun of Yuanta Securities explained, "We initiate coverage with a target price of 72,000 KRW by applying F&F's 2023 average price-to-earnings ratio (PER) of 8.6 times to the expected 2025 earnings per share (EPS) of 8,366 KRW," adding, "Although concerns such as slowing sales growth in China and lawsuits remain, this is a time to focus on growth factors as the anticipated factors are coming to fruition."

Researcher Kwon identified expected performance growth drivers as temperature, Discovery China, and MLB's expansion outside China. He said, "We believe there is a high possibility of a cold winter as the climate shifts from El Ni?o to La Ni?a in 2025," and added, "Especially during the cold winter period marked by COVID-19 and El Ni?o, purchases of outerwear products with high average selling prices (ASP) are expected to increase."

F&F acquired the Discovery Expedition license for major Asian countries including China last July. Starting with store launches within China this year, the company plans to open 100 stores by the end of 2025. Researcher Kwon stated, "F&F has the DNA for success in launching and expanding MLB stores in China," and explained, "It is expected to conduct Discovery China marketing based on well-known Korean celebrities with high recognition in China."

MLB's expansion into India and the Middle East is also anticipated. Researcher Kwon forecasted, "Considering the global recognition of K-brands and the high awareness of MLB among international students, the MLB growth story in China could be replicated in other regions."

Yuanta Securities projects F&F's performance next year to reach sales of 1.93 trillion KRW and operating profit of 414.2 billion KRW, representing growth of 1.6% and 0.8% respectively compared to the previous year.