Zhejiang Natural Outdoor Goods Inc(605080) (605080)
TPU inflatable mattress segment leader, with rapid revenue and profit in the first three quarters of 2021: Zhejiang Natural Outdoor Goods Inc(605080) was born in 1992 and mainly provides OEM of inflatable mattresses, outdoor bags, pillows, cushions and other products for outdoor brands. In 2020, the revenue of inflatable mattresses accounted for more than 70%, which is the main source of revenue of the company. As the leader of TPU inflatable mattress segment track, It has a leading advantage in TPU composite materials and welding processing, and has been recognized by many global outdoor brands. In the first three quarters of 2021, the revenue was 665 million yuan, a year-on-year increase of + 47%, and the net profit attributable to the parent company was 183 million yuan, a year-on-year increase of + 43%.
The upstream OEM of functional products has certain barriers, and the products have differentiation: outdoor products have strong functional attributes and certain supply chain barriers. The cooperation relationship between OEM and brand is relatively stable, and the industry competition pattern is good. With the gradual improvement of consumers’ awareness of outdoor sports, the overall end consumer market of outdoor products is growing steadily, which is expected to drive the continuous growth of orders from upstream OEM.
The company has formed an integrated production supply chain with stronger anti risk and anti cycle ability: the raw materials purchased by the company mainly include TPU particles, TPU film, cloth, TDI, polyether polyol, etc. the company has formed an integrated supply chain, including raw material processing, grey cloth customization, dyeing, printing, cutting and other production links, so that the company can maintain a high profit margin, High operation efficiency, strong price transmission ability and stronger anti risk and anti cycle ability.
Bind decathlon and other high-quality customers, and maintain high order growth: in the process of long-term production and operation, the company has accumulated global customer resources such as decathlon, seatosummit and Kathmandu, and formed a long-term and stable cooperative relationship. Decathlon, the largest customer, accounted for about 33% of the revenue in 2020. When selecting suppliers, international well-known customers have a set of strict qualification standards, and their process is complex, which often takes up to 1-2 years or even longer. The certification process of the customer to the supplier is complex and the cost is high. Therefore, after certification, the two sides usually maintain a long-term and stable cooperative relationship, with high cooperation viscosity and difficult to be replaced.
Other outdoor products have great potential: other brands such as inflatable mattresses for home use, Outdoor water sports (such as standing water skateboard), outdoor luggage, etc. the market space is larger and the market pattern is relatively scattered. In the future, the company still has great hope of successfully expanding categories. From the perspective of capacity planning, the company’s new capacity in Southeast Asia is basically dominated by outdoor aquatic products and outdoor luggage. After the reconstruction of China’s new factory, the planned capacity continues to increase and the degree of automation is further improved , will effectively ensure the supply of high-quality orders.
Profit forecast and investment rating: the company is the leader of TPU inflatable mattress segment track among outdoor sports brands, has entered the supply chain system of the world’s leading brand, and the order revenue continues to increase and will remain high. At the same time, the company is expected to maintain high flexibility in other segments in the future. We expect that the company will realize a net profit attributable to the parent company of RMB 220 / 3.1 / 400 million from 2021 to 2023, corresponding to 32 / 23 / 18 times of PE from 2021 to 2023. It will be covered for the first time and given a “buy” rating.
Risk tips: repeated outbreaks, changes in international trade policies, fluctuations in raw material prices, etc.
