SharkNinja will go public independently in the US in July

In February 2023, JS Global Life announced a proposal to split SharkNinja (SN) and go public independently in the US. Following the spin-off, JS Global Life will divest SN's North America and Europe business (accounting for 70% of revenue and profit in 2022) and retain the Joyang business and SN Asia Pacific business. In June 2023, the company's proposed spin-off plan came into effect. The company announced that SN's European and American business is directly listed in the US, will not issue new shares, and there is no sales limit period, so the shares of the original shareholders will not be diluted. The company expects SN to begin trading on the US stock exchange at the end of July 2023. The original shareholders of JS Global Life will become shareholders of SN and obtain shares of SN listed in the US on a 1:1 ratio from their original shares. JS Global Life will no longer hold any shares in SN, and the two will operate as independent listed companies. JS Global Life will hold 67% of the shares in Joyang (002242 CH), as well as SN's Asia Pacific business.

SharkNinja is optimistic about business growth in the Asia Pacific region

In 2022, SN Asia Pacific achieved revenue of about 100 million yuan (US dollars, same below) and profit after tax of about 7 million yuan, accounting for 2.1% of JS Global Life's net profit before the spin-off. According to management estimates, the total value of the small home appliance market in Japan is 3 billion yuan, and SN's sales growth in Japan is relatively optimistic. The company has restructured its business in the Asia-Pacific region: it has recently cooperated with new distributors in Korea; it also recently completed the acquisition of dealer Mann&Noble Group's SN distribution business in the four Asia-Pacific countries. Through this acquisition, the company was able to launch a direct sales model in Australia, New Zealand, Singapore and Malaysia, which is conducive to increasing the brand's popularity in the region and promoting business growth. Due to the small size of the business in the Asia Pacific region, management expects high visibility of high growth over the next 3-5 years.

Share buybacks boost market confidence

The company plans to launch a share repurchase. No more than HK$400 million will be used to repurchase and cancel shares on the open market to give back to shareholders and boost market confidence. We believe that the company's share buyback shows management's confidence in the company's long-term development and increased return per share.

Establishing trusts for Hong Kong Stock Connect investors

The company will set up trusts for investors in Shanghai, Shenzhen, and Hong Kong Stock Connect and establish a plan to reduce holdings with brokerage firms. Within 90 days of SN listing, the company will sell shares held by investors in Shanghai and Shenzhen Hong Kong Stock Connect at an average price as much as possible. If not all of the shares are sold after 90 days, SN will buy back the remaining shares within 10 days at the average price of the shares sold during the period. After the repurchase is completed, the brokerage firm then hands over the amount of the proceeds to the original investor.

A spin-off is beneficial to unlocking group value

We believe that the official implementation of the spin-off plan will help stabilize stock prices. From a group perspective, SN's listing in the US is beneficial to enhancing the company's value. Without considering the impact of the spin-off, we maintained our original profit forecasts and valuations.