MLB Benefits from Inbound Demand, F&F Performance Also on Track [Click e-Stock]

Benefiting from Increased Demand from Foreign Tourists Visiting Korea
Sustained Performance Growth... Expectations for Further Growth in China

F&F's flagship brand MLB has continued to show growth in performance, benefiting from the increase in foreign tourist numbers.

On July 21, Hanwha Investment & Securities maintained its target price for F&F at 105,000 won and its "buy" investment rating, citing these favorable factors. The closing price on this day was 76,000 won.

For the second quarter of this year, the company is expected to record sales of 402.6 billion won and operating profit of 97.5 billion won. These figures represent year-on-year increases of 7% and 16%, respectively, and are expected to meet market consensus estimates.

The core driver is MLB. It is estimated that MLB’s domestic sales grew by 15% year-on-year in the second quarter, thanks to robust domestic consumption combined with increased inbound foreign demand. Foreign tourist demand is especially strong in key flagship and department store locations, including Myeongdong, Seongsu, and Hannam. Foreigners account for around 15% of domestic sales. Duty-free store sales, which account for a shrinking portion, are estimated to have remained at last year's level.

The Chinese subsidiary is also believed to have continued its growth trend. Sales at the Chinese subsidiary in the second quarter are estimated to have increased by 9% compared to the previous year. While sales in yuan slowed due to proactive inventory shipments in the preceding quarter, yuan appreciation supported growth rates when converted to won. The Hong Kong subsidiary is expected to achieve 20% sales growth, driven by strong inbound demand from Chinese travelers to Hong Kong and Macau.

However, the report notes that the growth potential in China still requires further confirmation. The company continues to focus on inventory management at the local level in China, and results from the Discovery business in China have yet to become meaningful. Discovery’s domestic sales in the second quarter are estimated to have declined by 5% year-on-year, although the scale of decline has narrowed compared to last year.

The possible acquisition of TaylorMade was also cited as a variable. Hanwha Investment & Securities determined that pursuing an acquisition would be an appropriate strategic decision, rather than selling a stake.

Jinhyub Lee, a researcher at Hanwha Investment & Securities, stated, "Among listed fashion companies, only a few brands benefit significantly from the increase in inbound tourist numbers, and F&F's MLB is one of them. As MLB’s strong brand power in Korea and overseas is already being demonstrated, we expect the Chinese subsidiary to show a clear upward trajectory after the inventory adjustment phase is complete."

This content was produced with the assistance of AI translation services.