20140718-光大证券-Juvenile_products_pioneer_via_M_A_22页_443kb

Goodbaby Intl (1086 HK) Summary

Core Content

Goodbaby Intl is a leading manufacturer and supplier of durable juvenile products, including strollers, children's safety car seats, toy cars, bicycles, tricycles, and cribs. It is the largest stroller supplier in China and a major OEM for European and US brands. The company has established a strong presence in both domestic and international markets through strategic brand development and overseas acquisitions.

Main Points

• Company Overview: Goodbaby is a pioneer in the juvenile products industry, with a focus on R&D, production, and marketing. It operates under its own brands "Goodbaby" and "Happy Dino" and collaborates with international brands such as Dorel, Maxi Cosi, and Britax.
• Market Position: In China, Goodbaby holds 45%–50% of the stroller market share. It is the largest stroller supplier in North America and Europe, with long-term partnerships and OEM contracts.
• Product Portfolio: The company's product range includes strollers, safety car seats, and other durable juvenile products. It emphasizes high-end and safety-focused offerings.
• Strategic M&A: Goodbaby has acquired Cybex (a German safety car seat brand) and is in the process of acquiring Evenflo (a North American baby care brand), aiming to enhance brand recognition, R&D capabilities, and distribution channels.
• Market Growth Drivers: The "second-child" policy, increasing birth rates, and rising consumer awareness of child safety are key factors driving growth in the juvenile products market. Additionally, the expansion of stroller usage from first-tier cities to second and third-tier cities is expected to boost demand.
• Regulatory Trends: Increasing regulations on child car safety in various countries are expected to raise the demand for safety seats, with China showing potential for stricter rules in the future.
• Distribution Channels: Goodbaby has a vast retail network in China, with over 5,000 self-owned outlets. It also has a strong e-commerce presence, with significant growth in online sales.
• Financial Performance: Despite a decline in 2013 due to delayed overseas orders, the company showed strong recovery in 1H14 with expected 30%–40% order growth. It has a solid financial foundation with a "Buy" rating and a target price of HK$4.60.

Key Information

Revenue and Profit

• 2013 Revenue: HK$4.19bn, down 8.0% YoY.
• 2013 Profit: HK$171m, down 5.5% YoY.
• 1H14 Revenue: HK$2.077bn, showing significant improvement.
• 2014E Revenue: Expected to reach HK$8.298bn.
• 2014E EPS: HK$0.23.
• 2014E Target Price: HK$4.60, corresponding to 23x 2014E PE.

Market Share and Expansion

• Stroller Market Share: 45%–50% in China.
• Overseas Markets: Goodbaby is the largest stroller OEM in Europe and North America, supplying to major brands.
• Acquisitions:
  • Acquired Cybex (Germany) in January 2014 for HK$751m.
  • Planned acquisition of Evenflo (North America) for HK$1.109bn.

Consumer Trends

• Birth Rate: Expected to peak in 2015 due to the second-child policy and a baby boom among young families.
• Demand for Juvenile Products: Rapid growth in second and third-tier cities, driven by improved living standards and rising consumer awareness of safety and quality.
• Safety Seats: Expected to see rapid growth due to increasing regulations and consumer demand for safer transportation options for children.

Distribution and E-commerce

• Retail Outlets: Over 5,000 in China, with 85% in provinces and 63% in counties.
• E-commerce Growth: 19.7% of total revenue in 2013, increased to 20.7% in 1Q14.
• Online Presence: 761 retail terminals on Taobao.com, including 483 franchise stores and 278 consignment stores.

Investment and Growth

• "Buy" Rating: Based on expected EPS growth and strong market potential.
• EPS Projections:
  • 2014E: HK$0.23
  • 2015E: HK$0.30
• Valuation Metrics:
  • PE: 17.3x in 2014E.
  • PB: 1.6x in 2014E.
  • EV/EBITDA: 15.3x in 2014E.

Conclusion

Goodbaby Intl is well-positioned to benefit from the growing demand for juvenile products in China and globally. Its strategic M&A, strong R&D capabilities, and extensive distribution networks are key drivers for long-term growth and profitability. The "second-child" policy and increasing consumer awareness of safety and quality are expected to further boost its market share and revenue.