Zhejiang Natural Outdoor Goods Inc(605080) (605080)
Core view
In the past 30 years of development, the company has deeply cultivated the subdivided field of automatic inflatable mattresses and formed good cooperative relations with more than 200 customers around the world through excellent products and services. We believe that the company is actively expanding its categories and is expected to open the second growth curve in the future. The specific reasons are as follows:
In the post epidemic era, overseas outdoor sports tracks maintained a high boom. According to the research of the outdoor foundation, during the epidemic in 2020, the participation rate of outdoor sports in the United States reached a new high in recent ten years, reaching 52.9%. The corresponding American outdoor sports retailers performed well after 2020, driving the high growth of China's ODM / OEM performance. In addition, the survey shows that new participants have a strong willingness to continue to participate in outdoor sports after the end of the epidemic. We expect the high prosperity of the track to have good continuity.
Vertical integrated supply chain is one of the important foundations of category expansion. Through years of accumulation, Master the upstream TPU fabric and polyurethane (PU) soft foam foaming and other core technologies have successfully created a vertically integrated industrial model and formed differentiated competition in the market. Its main advantages are: 1) obtaining upstream profits and stronger profitability; 2) reducing the impact of rising raw materials on gross profit margin by improving upstream production efficiency; 3) ensuring product quality and better meeting customers' quick reaction New product development needs.
The new category has broad market prospects and huge space. The expansion of the company's new categories mainly focuses on its own core technology and key customers, which has a good guarantee in production and order acquisition. After listing, better capital and platform advantages will further accelerate the pace of the company's new product expansion. In the medium and short term, thermal insulation and waterproof bags, aquatic products and household inflatable mattresses are the expansion direction of the company's main categories. It is roughly estimated that the total market scale of new products is at least about 30 billion, and it is expected to maintain rapid growth in the future. Under the trend of environmental protection consumption, the process of TPU replacing PVC is accelerated (TPU is the company's strength), which provides a broader space for the company's development in the future.
Financial forecast and investment suggestions
We are optimistic about the certainty of the company's future expansion of new categories under the mode of "vertical integration + deep binding of key customers", and slightly increase the company's earnings per share from 2021 to 2023 to 2.21 yuan, 2.98 yuan and 3.9 yuan (original 2.13, 2.84 and 3.75 yuan). Referring to the average valuation level of comparable companies, we give the company 27 times of PE in 2022, corresponding to the target price of 80.5 yuan, maintaining the company's "buy" rating.
Risk tips: high customer concentration, repeated impact of epidemic situation on overseas demand and transportation, fluctuation of raw materials and less than expected launch of new production capacity.
