Main points of investment
Good Boys International is the world's leading brand of baby strollers and car safety seats. Good Boys International was founded in 1989 as a baby stroller, expanding into the baby products market such as children's car seats and non-durable goods, listed on the Hong Kong Stock Exchange in 2010, and transformed from a contract manufacturer to a brand with its own brand through self-construction and acquisition. The three strategic brands gb/Cybex/Evenflo serve the China / Europe / North American market respectively, while the OEM brand forms a blue-chip business.
In 2022, the income of Cybex/gb/Evenflo/ blue-chip business reached HK $33 million, 15 pounds, 2.3 billion Hong Kong dollars respectively. With the gradual recovery of travel consumption in 2023, the company's multi-brand sales are expected to be repaired.
European and American demand is steadily rising, Asia-Pacific demand is expected to rebound: 1) strong brand potential, high market share of the company. Baby products have the characteristics of strong functionality and low repurchase rate, and the company extends steadily to the brand according to the high-quality supply chain. Gb/Cybex/ Evenflo brand awareness is high, occupying the brand highland to infiltrate downward, and the group's global market share in baby strollers and safety seats in 2018-2020 is about 11% and 6%. 2) in the short term, Europe and the United States are steadily rising, and demand in the Asia-Pacific region is expected to rebound to the bottom.
From 2019 to 2022, the company's revenue CAGR in the Americas / Europe, Africa, the Middle East / Asia-Pacific region was + 6.35%, 9.14% and 13.2%, the revenue in Europe and the United States increased steadily, and the demand in the Asia-Pacific region decreased due to the decline in fertility and the impact of the epidemic on sales channels. With the recovery of the post-epidemic market in the Asia-Pacific region, demand is expected to rebound. 3) in the long run, the market for baby carriages and safety seats is growing steadily, and the utilization rate of child safety seats in China is expected to increase. The number of newborns in Europe and the United States has maintained more than 7 million. Although the overall number of newborns in China has shown a downward trend, middle and high-end baby durable goods are still favored by more consumers. From 2017 to 2022, the sales of baby carts / child safety seats CAGR reached 5.23% and 5.39%, and the global market for baby durable goods is showing an expanding trend. With the promulgation and improvement of the laws and regulations on child safety seats in China, there is still much room for the development of child safety seats in China in the future.
Profit forecast and investment rating: good Boys International, as the leader in the children's durable goods industry, has diversified brands to meet the needs of consumers in different markets. With the steady growth of the European and American markets and the bottoming out of the Asia-Pacific market, the company's profitability is expected to improve gradually. We forecast that the return net profit of good Kids International from 2023 to 2025 will be HK $0.80 trillion, respectively, corresponding to the valuation of PE in 12-6-4, which is reasonably lower than that before the outbreak and significantly lower than that of comparable companies, covering "overweight" rating for the first time.
Risk tips: domestic offline sales recovery is not as expected risk, industry scale expansion is not as expected risk.