20210122-招银国际-JS环球生活-01691.HK-Upbeat_SharkNinja_growth_is_likely_in_2H20E_7页_1mb

JS Global Lifestyle (1691 HK) Summary

Core Content

JS Global Lifestyle (1691 HK) is a company with a strong growth trajectory, particularly in the second half of 2020 (2H20E). The stock is currently rated as BUY, with a target price of HK$22.64, representing a 19.2% upside from the current price of HK$19.00. The company's valuation is considered attractive, with a 25x/21x FY21E/22E P/E compared to the industry average of 35x/26x for China and international peers.

Main Points

1. Stock Performance & Valuation

• The stock has shown strong performance, with a 246.5% 12-month return.
• The current P/E ratio is 25x for FY21E and 21x for FY22E, which is lower than the average of its peers.
• The company's P/B ratio is 3.4x for FY21E and 2.8x for FY22E, also lower than the industry average.
• The target price increase reflects confidence in the company's growth prospects and improved earnings estimates.

2. SharkNinja's Growth Outlook

• SharkNinja is expected to drive significant growth, with a forecasted 31% YoY sales growth in 2H20E, 20% in FY21E, and 15% in FY22E.
• Factors contributing to this growth include:
  • Successful launch of new products (e.g., Ninja Foodi Indoor grills, Shark IQ Robot Self-Empty).
  • Strong digital marketing presence on social media.
  • Robust growth in China's home appliance export market.
• The company has also expanded into new markets such as France, Germany, Japan, and Australia.
• The GP margin for SharkNinja is expected to improve, while Joyoung's GP margin is projected to decline slightly.

3. Joyoung's Resilience

• Joyoung is expected to remain resilient, with a 20% YoY sales growth in 2H20E, 13% in FY21E, and 9% in FY22E.
• Its performance has improved in both online and offline channels in 4Q20, with +71% YoY growth during the Double 11 event.

4. Earnings Revisions

• The FY20E/21E/22E EPS estimates have been revised upward by 6%/9%/12%, respectively.
• The adjusted EPS is expected to grow from USD 0.081 to USD 0.116.
• The adjusted NP att. is projected to increase from USD 283 to USD 415.
• The P/E ratio is expected to decline from 29.3x to 21.1x.

5. Shareholding Structure

• Mr. Wang Xuning and his concert party hold 56.52% of the shares.
• CDH Fund holds 9.42%.
• Mr. Mark Rosenzweig holds 7.87%.
• RSU Holding entity holds 4.88%.
• Mr. Mark Adam Barrocas holds 2.09%.
• Free Float is 19.22%.

6. Key Financial Metrics

• Revenue is projected to grow from USD 3,771 mn in FY20E to USD 4,970 mn in FY22E.
• Gross profit is expected to increase from USD 1,565 mn in FY20E to USD 2,060 mn in FY22E.
• EBIT is projected to rise from USD 441 mn in FY20E to USD 610 mn in FY22E.
• Net profit att. is expected to increase from USD 298 mn in FY20E to USD 415 mn in FY22E.

7. Peer Comparison

• The company is compared to peers like Joyoung (002242 CH), Vesync (2148 HK), Zhejiang Supor (002032 CH), and others.
• Its P/E ratio is significantly lower than its peers, making it more attractive.
• The ROE is expected to increase from 9.9% in FY20E to 12.3% in FY22E.

Key Information

• Auditor: Ernst & Young
• IPO Performance: The stock has achieved a 277% return since its IPO.
• Recent Placement: A 22.6 mn share secondary placement by CM Kinder at HK$ 18.85, a 3.7% discount to the last price, but this is not considered a concern.
• Target Price: Raised to HK$22.64, based on a 30x FY21E P/E.
• Growth Drivers: New products, digital marketing, and regional expansion are key drivers for growth.

Summary Table

Conclusion

JS Global Lifestyle is a strong growth company with a promising outlook for 2H20E and beyond. Despite a recent secondary placement by a cornerstone investor, the company's fundamentals remain intact, and its valuation is considered attractive compared to its peers. The SharkNinja brand is expected to drive much of the growth, with the Joyoung brand also showing resilience. The target price reflects a 19.2% upside, and the company's earnings and profit margins are projected to improve. The shareholding structure is concentrated, with the chairman and his associates holding the majority of shares. The financial metrics indicate a healthy cash flow and positive net cash from operating activities. The company is well-positioned for continued growth in the home appliance sector.