Joy Kie Corporation Limited(300994) (300994)
Industry characteristics: the pattern is loose, and the electric bicycle has become a new growth point
The global demand for bicycles is about 120 million, and the market scale is expected to be about 280 billion yuan. The industry structure is loose. The giant machinery is a world-famous bicycle manufacturer, accounting for about 3.7% of the sales in 2020. The reasons for the low concentration are: 1) the high degree of product personalization (such as application scenarios, brand preferences, purchasing power, etc.) 2) the bicycle standards of various countries are different.
Compared with electric vehicles, electric bicycles bring new increment to the bicycle industry. Europe: in 2020, the sales volume of electric bicycles was 4.537 million, with a compound growth rate of 27% from 2015 to 2020. United States: the sales volume will be about 500000-600000 in 2020, doubling year-on-year. American electric bicycle is in the early stage of development. With the implementation of electric bicycle regulations, the growth rate of electric bicycle is expected to reach 50% in the next three years.
Light asset operation, focusing on design, brand and channel
Although bicycle belongs to manufacturing industry, it has the attribute of consumer goods. Brand and channel are important moats. From the three fee composition of Jiuqi and giant machinery, the sales cost is much higher than the management and R & D cost. Although giant machinery is a relatively mature brand, the sales expense rate is still high. In 2020, the sales expense rate will reach 9.3%, much higher than the management expense rate of 2.6% and the R & D expense rate of 1.3%.
Jiuqi is familiar with the characteristics of the industry, focusing on key links such as design and development, brand and channel construction, neglecting asset operation, focusing on outsourced production and supplemented by independent production.
Jiuqi's growth focus: expanding categories and new channels & increasing the proportion of independent brands
Extension category: Jiuqi extends from adult cars and baby carriages to electric bicycles. In 2020, the average unit price of Jiuqi electric moped is 1613 yuan, which is 3.6 times that of adult cars and 6.8 times that of children's cars. Electric moped ASP is much higher than adult car and stroller, which can bring greater performance flexibility to the company.
New channels: compared with offline consumption, online consumers pay more attention to variety and high praise rate, which provides the possibility for new brands to enter consumers. The online gross profit margin is much higher than the offline gross profit margin. In 2020, the online and offline gross profit margins of stroller business are 74.1% and 16.7% respectively.
Independent brands: from 2018 to 2020, OBM accounted for 10%, 11% and 16% of the company's revenue respectively. The company has its own brands such as Hiland and joystar, which has a certain popularity in North America. Private brands directly face end consumers and can obtain higher gross profit margin without going through links such as brand manufacturers and agent factories.
Growth path of giant machinery and Merida: from OEM to private brand, focusing on high-end market
Giant machinery and Merida started from OEM in the early stage of their establishment, accumulating production, R & D and other capabilities. Jiuqi's growth path is relatively similar. Giant machinery adopts its own brand + direct sales mode, and Merida adopts the joint venture + distribution mode. After 2017, the performance of the two companies has increased again.
At present, Jiuqi is close to the strategy of giant machinery, and adopts multi brand development strategy for different markets and people. In terms of ODM, Jiuqi has also accumulated profound experience. ODM and its own brands are expected to become double engines for Jiuqi's development, and electric bicycles are also expected to significantly increase the profit level.
Profit forecast and valuation
For a long time, we have seen the expansion of categories, the layout of new channels and the increase in the proportion of private brands. In 2025, we expect that the sales volume of Jiuqi electric bicycles is expected to reach 1.5-2 million, contribute a net profit of 300 million yuan, and have broad medium and long-term growth space. It is estimated that the net profit attributable to the parent company in the 21st and 22nd years will be RMB 210 million and RMB 300 million. Pe45x in 2022, corresponding to the share price of 69.6 yuan, is given the "buy" rating for the first time.
Risk tips: the development of private brands is less than expected, the demand of the bicycle industry has decreased significantly, the shipping cost remains high, trade friction, product sales are less than expected, etc.
