Key points of investment

Steady management and continuous emphasis on investor returns

Supor is a well-known small household appliance leader. After SEB Group took control in 2007, the two have carried out comprehensive collaboration, and Supor's domestic and foreign sales business have both made great strides: on the one hand, benefiting from SEB's global manufacturing order transfers, the export business has contributed nearly 30% of revenue, which is a significant increase; on the other hand, Supor has a rich domestic brand heritage and significant channel advantages, and with SEB technical support, the domestic sales category has expanded smoothly, and the scale of domestic sales continues to grow; compared with SEB's various sub-industry leaders and domestic companies in the home appliance sector, Supor's growth rate continues to grow., operational soundness, and ROE are all significantly leading .

Furthermore, in recent years, against the backdrop of a weak consumer environment, the company has continued to raise the level of dividends and focus on investor returns.

Domestic sales: leading small kitchen appliances in China for 30 years

Supor's domestic sales business has maintained steady growth in the past, mainly due to the broad market space for small kitchen appliances, the company's strong brand strength and channel strength, and category expansion brought about by collaboration with SEB. Standing at present, the steady growth of the company's domestic sales is expected to continue; on the one hand, Supor's dominant categories are all in demand. Among them, the small kitchen appliances and cookware sold by the company account for nearly 60% of sales, and the basic market is steady; on the other hand, the company is actively developing new businesses. Although the retail share of other household/chef/mother and child terminals has reached more than 20%, the company's share is still very low, and there is room for improvement; in addition, channel adjustments continue to release dividends from cookware channel adjustments.

Export sales: SEB collaboration continues to contribute significantly

Supor's associated foundry has a CAGR of 23% in 2007-2023, which continues to drive overall growth; furthermore, the cooperative pricing is fair, the gross margin center is 18%, and the net margin performance is also expected to be strong. Considering that SEB Group is already a global leader, growth is expected to be faster than the industry. Although it has high growth, it can be expected to be steady; Supor's related foundry business space mainly comes from the expansion of cooperative categories. Supor is the main force of the Group's own production capacity in Asia, accounting for 32% of production capacity. At the same time, 38% of the Group's outsourced production capacity is also distributed in Asia, and the categories are mainly concentrated in the fields of home and personal care. Considering that Supor's own manufacturing strength continues to grow, there is room for continuous expansion of categories, and long-term growth can be expected.

A high-dividend leader with steady management, given a “buy” rating

We expect the company's 2024-2026 revenue to +7%/+9%, respectively, and performance +8%/+11%/+11%, respectively. The compound growth rate of revenue and performance for 3 years is +8%/+10%, respectively. We believe that based on strong domestic sales strength, collaboration with leading global parent companies, and long-term governance mechanisms, Supor will still balance steady growth and quality of operations in the future. Referring to the dividend level of the past 2 years, assuming that the company's dividend rate is 100% in the future, the dividend rate will reach 5.5%. Taking into account the steady nature of the company's operations and high dividend rate levels, the first coverage gave the company a “buy” rating.

Risk warning: 1. Demand falls far short of expectations; 2. Industry competition has greatly intensified; 3. Raw material prices fluctuate greatly.