Founder, Riedel Research

David Riedel

Founder

Independent equity research on GEM Markets

Riedel Research

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Equity Bottom-Up

Goodbaby International / Equity Bottom-Up

<ul><li>Through a series of acquisitions in recent years and organic growth Goodbaby is the largest supplier of strollers in US, Europe and China and the largest baby products producer and retailer in China.</li><li>As the company has shifted from OEM to a focus on their own brands revenues have declined but margins are up.</li><li>Revenues declined 12% YOY in 1H16 but operating profits increased 50% YOY in 1H16.</li><li>We believe the transition from OEM to a focus on their own brand will lead to higher margins.</li><li>We also believe the closure of non-core low-margin businesses in China is a correct decision.</li><li>We assume revenues will grow 13% in 2017 versus a decline of 4% in 2016, as we believe its transition to own brands is successful</li><li>We also assume the operating margin will improve to 8.5% in 2017 versus 5.5% in 2016.</li></ul>

Through a series of acquisitions in recent years and organic growth Goodbaby is the largest supplier of strollers in US, Europe and China and the largest baby products producer and retailer in China.As the company has shifted from OEM to a focus on their own brands revenues have declined but margins are up.Revenues declined 12% YOY in 1H16 but operating profits increased 50% YOY in 1H16.We believe the transition from OEM to a focus on their own brand will lead to higher margins.We also believe the closure of non-core low-margin businesses in China is a correct decision.We assume revenues will grow 13% in 2017 versus a decline of 4% in 2016, as we believe its transition to own brands is successfulWe also assume the operating margin will improve to 8.5% in 2017 versus 5.5% in 2016.

Goodbaby – Higher Margins and Business Model Transition Offset Lower Revenues – 100%+ Upside - BUY

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Event-Driven

<a href="https://www.smartkarma.com/entities/12790" target="_blank" data-smartkarma-citation="entities:12790">Samsonite</a> &amp; <a href="https://www.smartkarma.com/entities/10474" target="_blank" data-smartkarma-citation="entities:10474">Tumi</a> sitting in a tree, K - I - S - S - I - N - G. First comes love. Then comes marriage. Then comes baby in the <a href="https://www.smartkarma.com/entities/9467" target="_blank" data-smartkarma-citation="entities:9467">Goodbaby</a> <a href="https://www.smartkarma.com/insights/this-goodbaby-stroller-has-taken-social-media-by-storm" target="_blank" data-smartkarma-citation="insights:2884">carriage</a>, Sucking his thumb, pooping his pants Trying to do the boogie dance and that’s not all, that’s not all he’s also drinking alcohol!With apologies to the great brands of Samsonite and Tumi, these are the words of a playground song for Americans where boys and girls tease each other about liking a member of the opposite sex. At the age of seven.<h2>THE NEWS</h2>The news…

Samsonite &amp; Tumi sitting in a tree,  K - I - S - S - I - N - G. First comes love. Then comes marriage. Then comes baby in the Goodbaby carriage, Sucking his thumb, pooping his pants Trying to do the boogie dance and that’s not all, that’s not all he’s also drinking alcohol!With apologies to the great brands of Samsonite and Tumi, these are the words of a playground song for Americans where boys and girls tease each other about liking a member of the opposite sex. At the age of seven.THE NEWSThe news…

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

Smartkarma

Smartkarma unites the fragmented investment industry, connecting institutional investors, independent research providers, and corporates within a single network.

Research Reinvented

Equity Capital Markets

AAB International / Equity Capital Markets

AAB International Holdings Limited (AAB) is one of the largest manufacturer of baby disposable diapers in China. AAB plans to raise US$300m through its IPO, which is slated for 2Q16, as per media reports.Our aim in this insight is to take an early look at some of the factors that could impact the deal.The company enjoys strong tailwinds from the change in one child policy. However, the track record leaves a lot to be desired. While the company's efforts to move towards the premium segment remain in early stages.

AAB International Holdings Limited (AAB) is one of the largest manufacturer of baby disposable diapers in China. AAB plans to raise US$300m through its IPO, which is slated for 2Q16, as per media reports.Our aim in this insight is to take an early look at some of the factors that could impact the deal.The company enjoys strong tailwinds from the change in one child policy. However, the track record leaves a lot to be desired. While the company's efforts to move towards the premium segment remain in early stages. 

AAB International Pre-IPO Review - Stuck with a Dirty Diaper

Goodbaby China Holdings / Equity Capital Markets

Goodbaby China Holdings plans to raise upto US$160m through an issuance of primary shares. The company's sister firm Goodbaby International (1086 HK) provides exposure to sales in China, along with other markets as well. We spoke to Goodbaby International to understand delineation of the business between the two firms. The scales appear to be tilted firmly in favour of Goodbaby International, while valuations for the two firms appear similar. In addition, the deal scores a negative score on our framework as valuation looks fair at best and operational outlook doesn't appear too rosy.

Goodbaby China Holdings plans to raise upto US$160m through an issuance of primary shares. The company's sister firm Goodbaby International (1086 HK) provides exposure to sales in China, along with other markets as well. We spoke to Goodbaby International to understand delineation of the business between the two firms. The scales appear to be tilted firmly in favour of Goodbaby International, while valuations for the two firms appear similar. In addition, the deal scores a negative score on our framework as valuation looks fair at best and operational outlook doesn't appear too rosy. 

Goodbaby China IPO - International Vs China, There Is Only One Brand Owner

China

Goodbaby International Holdings Ltd. is a world-leading company specializing in the design, research, development, manufacturing, marketing, and sales of durable juvenile products. Its key offerings include children's car safety seats, strollers, cribs, and other baby products. The company was founded in 1989 and is headquartered in Kunshan, China.

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Goodbaby International (1086 HK)

Goodbaby – Higher Margins and Business Model Transition Offset Lower Revenues – 100%+ Upside - BUY

Through a series of acquisitions in recent years and organic growth Goodbaby is the largest supplier of strollers in US, Europe and China and the...

David Riedel

Samsonite & TUMI... Sitting in a Tree

Samsonite & Tumi sitting in a tree, K - I - S - S - I - N - G.First comes love.Then comes marriage.Then comes baby in...

Travis Lundy

AAB International Pre-IPO Review - Stuck with a Dirty Diaper

AAB International Holdings Limited (AAB) is one of the largest manufacturer of baby disposable diapers in China. AAB plans to raise US$300m through...

Sumeet Singh

Goodbaby China IPO - International Vs China, There Is Only One Brand Owner

Goodbaby China Holdings plans to raise upto US$160m through an issuance of primary shares. The company's sister firm Goodbaby International (1086...

Sumeet Singh

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