20211111-招银国际-JS环球生活-01691.HK-Hope_for_the_best_and_prepare_for_the_worst_6页_1mb

JS Global Lifestyle (1691 HK) Summary

Core Content and Key Information

JS Global Lifestyle (1691 HK) is a company that operates in the small appliance sector and has demonstrated resilience despite macroeconomic headwinds. The company's sales growth in 3Q21 was in-line with guidance, indicating strong performance even under challenging conditions. The management has maintained its guidance for 4Q21E and FY22E, expecting double-digit sales growth and consistent net profit growth.

The stock is currently trading at a P/E ratio of 12x for FY22E, which is below the average of 20x for China peers and 22x for international peers. This low valuation suggests that the market has already priced in a pessimistic scenario, leading to a recommendation to maintain the "BUY" rating and the target price of HK$22.35, which is a 54.6% upside from the current price of HK$14.46.

Main Points

• Sales Performance:

  • 3Q21 sales growth was $19.3%$, aligning with guidance.
  • Despite challenges such as supply chain disruptions, port congestion, and rising raw material costs, the growth is considered admirable.
  • Management has kept the guidance for 4Q21E and FY22E unchanged, indicating confidence in the company's ability to overcome these issues.

• New Product Launches:

  • SharkNinja, a key brand, launched products in multiple new categories including ice cream maker, coffee maker, cooking ware, knife set, hair dryer, and air purifier.
  • New regions were also expanded, such as France, Germany, Italy, Spain, Japan, and Australia.
  • These expansions are part of the company's long-term strategy to become the largest small appliance company globally.

• Valuation and Performance:

  • The current P/E ratio is 12x for FY22E, significantly lower than the industry average.
  • The target price remains at HK$22.35, based on an 18x P/E ratio, which is not demanding.
  • The company is expected to maintain a strong margin profile, with adjusted EPS showing consistent growth.

Financial Highlights

Revenue and Earnings

Earnings and Profit Margins

• Gross Margin: Expected to increase from 40.0% in FY21E to 41.1% in FY23E.
• EBIT Margin: Projected to rise from 12.8% in FY21E to 13.9% in FY23E.
• Net Profit Margin: Anticipated to grow from 9.2% in FY21E to 9.9% in FY23E.

Operating and Financial Expenses

• Selling & Distribution Costs: Expected to decrease from 17.8% in FY21E to 16.9% in FY23E.
• Administrative Expenses: Projected to decrease from 11.8% in FY21E to 10.6% in FY23E.
• Finance Costs: Expected to remain relatively stable, decreasing slightly from 7% in FY21E to 6.7% in FY23E.

Shareholding and Market Data

• Shareholding Structure:

  • Mr. Wang Xuning & concert party: 56.43%
  • CDH Fund: 10.66%
  • Mr. Mark Rosenzweig: 7.87%
  • RSU Holding entity: 4.88%
  • Mr. Mark Adam Barrocas: 2.09%
  • Free Float: 11.63%

• Stock Performance:

  • 1-month return: -17.9%
  • 3-month return: -26.5%
  • 6-month return: -37.1%
  • 12-month return: -9.7%
  • Relative performance: -17.8%, -22.1%, -27.5%, -5.4% for the respective periods.

• Market Cap: HK$50,532 million

• Avg. 3 months Turnover: HK$141.96 million

• 52-week High/Low: HK$26.50 / HK$12.98

Peer Valuation Comparison

Conclusion

Despite ongoing macroeconomic challenges, JS Global Lifestyle maintains a strong growth trajectory and is well-positioned for long-term success due to its robust R&D, marketing capabilities, and global supply chain. The company's current valuation is considered attractive, and the recommendation to maintain the "BUY" rating and target price of HK$22.35 is based on its potential for future growth and the current undervaluation.