How to view the value of “the Retained Group” of JS Global Lifestyle  (1691.HK)

How to view the value of “the Retained Group” of JS Global Lifestyle  (1691.HK)

 

Since JS Global Lifestyle announced the Spin-off of SharkNinja’s European and America business for listing on the U.S. Exchange, there has been no lack of discussion in the capital market.

 

Essentially, the Spin-off helps different players to focus on different markets. As leading small household appliance brands in the European and American markets, Shark and Ninja are better understood by investors there about their recognition and value. After the Spin-off, JS Global Lifestyle can also focus more on the exploration and development of opportunities in the Asia Pacific market, create new growth logic of the Group and continue to improve the overall value.

 

The author also believes that after the Spin-off, there are more highlights about the value of “the Retained Group” of JS Global Lifestyle, which should not be ignored but should be paid more attention and concern.

 

Specifically, in the Future, the Retained Group shall mainly cover SharkNinja’s  business in the Asia Pacific and Greater China and Joyoung’s business in mainland China, which itself means that SharkNinja’s advantages and market-tested growth strategy can be “replicated”.

 

The former President of Asia Pacific region of Dyson, joined JS Global Lifestyle in 2022 to serve as the Head of Asia Pacific region of the Company, and the business team he built has begun to take shape; Nowadays, JS Global Lifestyle is in a Asia-Pacific small household appliances market featuring with both scale and growth, especially the growth rate ahead of other global markets, making it full of opportunities and imagination space. All these constitute the long-term growth logic of JS Global Lifestyle .

 

With regarding to the future growth strategies of the Retention Group of JS, the author summarized as follows.

 

1. Grabing share with new products

 

It can be seen from the past achievements that SharkNinja’s products and brands are very competitive. In the first quarter of this year, for example, despite the fact that small household appliances industry in the US was at the bottom of the cycle, SharkNinja continued to gain more market share in the three categories of cleaning, food preparation and cooking.

 

This means that under the unique business model (such as consumer insight, R&D collaboration and supply chain collaboration) of JS Global Lifestyle, the Asia Pacific team can take advantage of SharkNinja’s leading brand power and successful experience of existing categories, and some of SharkNinja’s existing products may can be directly marketed in the Australian-New Zealand market in the Asia Pacific region. After localized development, some products can also be sold in more Asia Pacific markets, so as to seize a larger market share.

 

In addition, SharkNinja’s experience in developing the Japanese market shows that it has strong consumer insight, which enables its products to achieve rapid localization and in turn win the market.

 

Looking at Joyoung business sector, in April this year, Joyoung released a series of high-tech new products, including zero-coating non-stick rice cooker N1S, quick-baking air fryer V1Fast, variable frequency and light-sounded blender B1. By “redefining” the category and brand with science and technology to lead the development direction of the industry, it may achieve the improvement of market share again.

 

For example, in 2022, Joyoung launched zero-coating rice cooker 40N1 through innovation, which drove the high-speed growth of Joyoung’s rice cooker category throughout the year, performing far better than the industry, and also rapidly increased Joyoung’s market share in rice cooker category.

 

2. Expanding new business lines

 

It is widely known that for small household appliance enterprises, the innovation ability of expanding categories is one of the key factors to maintain sustainable growth, especially the Asia-Pacific small household appliance market represented by China is still in the rapid development period of category expansion.

 

Constantly maintaining a fast speed of effectively launching new categories, SharkNinja is undoubtedly expected to grasp the new opportunities in the Asia Pacific market by virtue of the expansion of new categories. For example, in 2022, SharkNinja entered the hot-air molding machine category for the first time, which led to a rapid increase in the market share of hair dryer.

 

It is reported that SharkNinja has planned to launch a brand new category of products in the Asia Pacific market this year. Its Asia-Pacific team is also researching and exploring how to launch other categories (excluding cleaning category) of Shark and Ninja’s kitchen electrical appliances line of products.

 

For Joyoung, it has also begun to expand from the past single category of kitchen appliances to water appliances , cleaning appliances, cookwares and other categories, so as to realize the “1+3” growth strategy.

 

It is worth noting that there has been a big change in the senior management of Joyoung. In December last year, the Board of Directors of Joyoung appointed Mr. GUO Lang (former president of Greater China Region of Dyson) to server as the General Manager of Joyoung. This appointment is expected to fully empower the development of market of the Retained Group of JS in mainland China, especially open a new situation in many fields such as the mainstream category for rigid demand and cleaning electrical appliance category. By doing so, it can achieve high-quality growth and also better play SharkNinja’s synergic advantages in the field of cleaning electrical appliances and release potential.

 

3. Exploring new markets in Asia Pacific region

 

Last but not least, the Retention Group of JS is developing new markets in the Asia Pacific region in an orderly manner and reshaping the Asia Pacific sales model.

 

It is understood that the Retention Group of JS has recently started cooperation with new distributor in Korea. At the same time, JS Global Lifestyle has also completed the acquisition of Mann&Noble Group, a distributor in the Australian and New Zealand market, and quickly realized the direct operation in four Asia Pacific countries (Australia, New Zealand, Singapore and Malaysia).

 

On the one hand, the Retention Group of JS can enter new market to develop, “superimposedly” opening more incremental space; on the other hand, the switch from distribution mode to direct sales mode is also expected to improve the popularity of SharkNinja brand in the region, so as to promote business development and improve the income and profit margin of the Retention Group of JS.

 

It is more noteworthy that due to the cultural diversity and the differentiation of consumer habits of countries in the Asia Pacific region, there are certain market barriers in the Asia Pacific small household appliances market to some extent, and there are certain thresholds and requirements for new entrants. But it also means that only a few powerful “players” may be able to achieve cross-regional market scale operation and deeply share their growth dividends.

 

To this end, the Retention Group of JS has developed different marketing plans for different markets, efficiently developing various markets by integrating different consumption scenarios and lifestyles of various countries.

 

The performance of SharkNinja in the Japanese market has also proved the effectiveness of the above strategies. In the first quarter, its business in Japan and elsewhere had a good performance against the trend with gross revenue up about 10.0% at fixed exchange rates, and its growth figures in Japan alone is more excellent. 

 

In conclusion, the Retention Group of JS has a high visibility to achieve long-term growth. Regardless of the significant impact of the Spin-off and focusing on the long-term value logic of its own business, it will also be a small household appliance group that cannot be ignored in the Asia Pacific market.