[Edaily Reporter Kim Kyung-eun ] #F&F shares are plummeting by more than 20% after the company reported second-quarter earnings that fell short of expectations.

According to MP Doctor on the 3rd, as of 9:23 a.m. today, F&F is trading at 63,800 won, down 16,700 won (20.75%) from the previous trading day.

The sharp drop in the stock price is attributed to second-quarter earnings falling short of market expectations. On the 31st of last month, after the close of regular trading, F&F announced that it recorded consolidated revenue of 399.6 billion won and operating profit of 86.5 billion won for the second quarter of this year. While these figures represent increases of 5.5% and 2.9%, respectively, compared to the same period last year, they fell short of the consensus (market forecasts) by 3% and 12%, respectively.

In particular, the fact that the growth rate of its Chinese subsidiary remained at around 4% is cited as the main cause of the weak performance. The Chinese subsidiary had initially been expected to achieve double-digit growth, driven by factors such as the strengthening of the yuan, but posted significantly weaker results due to inventory adjustments implemented by the headquarters.

HANWHA INVESTMENT & SECURITIES lowered its target price for F&F from 105,000 won to 100,000 won on the same day.

Lee Jin-hyeop, an analyst at HANWHA INVESTMENT & SECURITIES, stated, “Expectations for the growth rate of the Chinese subsidiary should be lowered,” adding, “This is because the headquarters is maintaining its inventory management policy in China, which could lead to a decoupling from the local consumer market.”

He continued, “We believe that share price momentum in the second half will depend more on whether the TaylorMade merger and acquisition (M&A) is finalized than on earnings,” adding, “We believe the company needs to exercise its right of first refusal for TaylorMade to increase its enterprise value. If the company decides to sell rather than acquire, it will need to enhance its shareholder return policies, such as increasing dividends.”