We hosted a NDR with JS Global Lifestyle (1691 HK/HK$10.68, BUY) on 13 January 2023, during which the management shared the latest update on business operations. The key message is that there were some headwinds in the overseas market during 4Q22, but the company expected that the situation may improve in 2023. China’s Joyoung performance may also turn better thanks to the relaxation of COVID-19 restrictions.
　　Headwinds Existed in North America and Europe’s 4Q22
　　JS Global Lifestyle commented that 4Q22 could be more challenging than 3Q22 for the US and Europe market. Performance of other peers suggested that the industry faced headwinds such as deeper retail discounts and higher inventory levels. Given weaker economy of these developed markets, there were signs that consumers turned more cautious. For example, during the Black Friday sales, consumers brought more low-end air fryers, while consumers were more likely attracted by promotions.
　　However, JS Global Lifestyle also saw some positive factors rolling out in 4Q22, which could support the gross margin for its SharkNinja segment. For example, freight costs and raw material costs recorded decline in 4Q22. Also, US dollar also turned weaker after months of strong rally. As JS Global Lifestyle reports its financials in US dollar, this will be more favourable to the performance in other regions outside the US, where sales are denominated in local currency.
　　Committed to Shifting Production Lines to Avoid Tariff
　　Despite the recent wavier of tariff on Chinese imported goods by the US, JS Global Lifestyle continues to see the geopolitical risks associated. In 2023, it will target to move all the production of goods which relate to US export from China to Southeast Asia.
　　More Positive on China Market
　　Thanks to the relaxation of COVID-19 restrictions, JS Global Lifestyle turned more positive on the performance of China market, mostly the Joyoung brand. The pandemic weighed on the performance in China, but Joyoung seized the opportunity to adjust its products, channels and its management. In 2022, Joyoung has shifted its focus to more mass market-friendly products, which could be more appealing to consumers when there is still economic uncertainty. Meanwhile, Joyoung also developed high-end products in water appliances. JS Global Lifestyle is confident that it could capture the business opportunities when the consumer demand recovers in 2023.
　　New Management Change to Drive Reforms
　　In 2022, JS Global Lifestyle also underwent some notable management changes, which reflected its dedication to become a global leader in small home appliances.
　　Particularly, on 28 December 2022, Joyoung announced it employed Martin Guo as the general manager of the company. Previously, Mr. Guo was the president of Greater China region at Dyson. The company expected that with Mr. Guo’s experience, he will lead the company to be more internationalised and well organised.