Overseas demand for thermos cups continues to grow

Insulated cups and kettlesspecifically refer to cups and larger-capacity kettles that can keep drinks or food warm (hot and cold) through vacuum insulation. my country is the production center of thermos cups. 65% of the world's stainless steel thermos cups are produced in China. In 2021, my country's total production of thermos cups will be 650 million pieces, with a five-year CAGR of +6%. Although it is a big manufacturing country, my country's domestic thermos cup market still has broad development space. In 2021, the global thermos cup market size is 52.8 billion yuan, and the domestic market size is 17.2 billion yuan. It is the main thermos cup consumer country, but the per capita consumption is only 12 yuan, which is low. At 27 yuan in North America and 16 yuan in Europe, there is huge room for improvement. It is estimated that my country's thermos cup market will reach 26.8 billion yuan in 2025, with per capita consumption reaching 19 yuan.

1) “Re-pricing” of the prosperity track

Supported by strong export fundamentals and the continued decline of raw materials, the thermos cup track has shown obvious excess returns. Since July, as the above-mentioned positive factors have continued, the market has continued to revise its performance expectations for related targets, and the upward slope of the target stock price has exceeded that of Mugaodi . Although the valuations of the two have converged, there are still certain differences in the core, mainly due to the growth expectations of the domestic market.

Behind the strong fundamental performance of thermos bottles, the main reason is the continued recovery of the outdoor theme in overseas markets, while the demand for rework and abnormal weather have promoted the acceleration of market expansion. Strong downstream orders have strengthened the replenishment needs of brand owners and supported the growth rate of product exports. toughness. Since the production capacity of thermos bottles is relatively flexible, production expansion can usually be achieved through increased production scheduling. Therefore, even if the industry did not have large-scale production capacity reserves in the past, the downstream prosperity was still smoothly reflected in the company's statements, boosting market pricing confidence, and this year's performance The full expression of this may cause disturbance to the slope of future growth rate.

Regarding the catalyst on the raw material side, Huachuang Securities believes that due to the lag in the price adjustment mechanism and the low cost weight under the OBM model, the significant increase in profits may continue for several quarters. After the price adjustment, due to the business pricing model that favors a fixed unit gross profit, the cost reduction will naturally drive the gross profit margin to rise, but the impact is relatively insignificant.

Therefore, if the price of raw materials decreases and the unit price decreases by the same amount, and because the gross profit is stable, the gross profit margin will naturally increase (the numerator remains unchanged and the denominator becomes smaller), and the company will show a higher profit level on the report side. In actual situations, due to the low weight of cost factors in OBM pricing and the lag in price transmission determined by the price adjustment mechanism under the OEM model (continuous fluctuations up to a certain proportion, non-real-time adjustment), we expect that in the short term we will be more inclined to keep the selling price unchanged. The situation is that the stainless steel price drops by 10% in the static dimension, which corresponds to the gross profit margin of the thermos cup +3.6pct (not considering the impact of the inventory cycle).

2) New product attributes promote "quick digestion", and the epidemic catalyzes the growth of the outdoor industry

The core logic of the future growth of the thermos cup industry is the "quick digestion" of product positioning. In recent years, the development opportunities of the outdoor industry have brought important catalytic effects, and the potential of the domestic market has also brought more room for industry growth.

①Transformation of product attributes: Driven by consumption upgrades and process improvements, thermos cups have been endowed with more features such as green, environmentally friendly, fashionable appearance, customization, and intelligence. The product positioning has gradually changed from traditional durable goods to one with faster iteration and more demanding needs. Advance in refined FMCG products.

②The epidemic catalyzes the development of the outdoor industry: Under the repeated influence of the global epidemic, outdoor can meet people's needs for sports, social interaction, leisure and entertainment, etc. In recent years, the participation rate in outdoor entertainment in the United States has increased year by year. The expansion of user groups and the refinement of product application scenarios will support the steady growth of the outdoor products industry. my country's outdoor products industry has developed rapidly, with retail sales increasing from 320 million yuan in 2002 to 25.02 billion yuan in 2019, with a compound growth rate of 29.23%, and the popularity of various outdoor projects has increased significantly since March this year.

③Development potential of the domestic market: In addition to the vigorous development of overseas markets, the domestic market also has potential because its penetration rate is still at a low level. The per capita ownership of stainless steel vacuum insulated utensils in Japan is as high as 1.43, while the per capita ownership of this product in my country is only 0.53.

3) The domestic supply chain is expected to enter a new growth cycle, and the depreciation of the RMB will benefit export companies

China is the main artery for the production and export of thermos cups, contributing to the world

With an output of 64.7%, the industry is relatively fragmented. The high-end market is occupied by internationally renowned brands, and domestic brands mostly cooperate with them through OEM business. Among them, Hals/Jiayi shares accounted for 81.8%/87.3% of export sales in 21 years. As overseas controls have been relaxed and demand from core customers has increased, the performance of each company has increased.

my country's export volume of thermos cups has grown steadily. In the first seven months of 2022, the export volume of thermos cups reached US$1.4 billion, YoY +24%. The depreciation of the RMB benefits export companies on both the revenue and performance sides. The performance side benefits from the exchange gains generated by the depreciation of the RMB; the revenue side benefits from the short-term active stocking of overseas brands stimulated by the depreciation of the RMB. The RMB continued to depreciate in the third quarter, which is expected to continue to benefit related export companies.