Huafu Securities issued a research report forecasting that GOODBABY INTL's (01086) net profit attributable to shareholders for 2025-2027 will be HKD 150 million, HKD 344 million, and HKD 385 million, respectively, representing growth rates of -58%, +129%, and +12%. The current market capitalization implies a PE ratio of approximately 12X for 2025 and 5X for 2026. The report notes the company's Cybex brand demonstrates strong growth potential, while its Evenflo and gb brands possess earnings optimization flexibility for 2026. Given that its valuation is below the average of comparable companies and the current valuation is low, with cash flow and EBITDA providing a safety margin for the market cap, an improvement in future profits could lead to a valuation re-rating. Consequently, Huafu Securities initiates coverage with a "Buy" rating.

The domestic infant and child products industry shows differentiation by category and tier, while the scale and competitive landscape of overseas markets remain relatively stable. In the domestic market, the size of China's parenting products market (including durable goods and consumer goods segments) grew from CNY 121.8 billion in 2020 to CNY 144.1 billion in 2024, achieving a CAGR of 4.3%. Within China's infant and child products sector, the durable goods segment recorded a CAGR of approximately 7.2% from 2020-2024, outpacing the 2.6% CAGR for consumer goods during the same period. The mid-to-high-end parenting products market achieved a CAGR of about 7.4% from 2020-2024. Regarding channel structure, offline channels account for roughly 60% of infant and child durable goods sales in China, while competition on e-commerce platforms has intensified recently, leading to a decline in market share for the gb brand.

GOODBABY INTL is a globally leading enterprise in infant and child durable goods, having successfully transitioned from an ODM model to a global brand operator, with clearly differentiated business segments. Founded in 1989, the company's founder, Mr. Song Zheng Huan, independently developed and designed the first stroller and established the self-owned brand "Goodbaby," which became the top stroller brand in China by 1993. The company initiated its internationalization strategy in 1994, gradually entering the US and European markets, and became the largest stroller manufacturer in major global markets by 2009. Prior to 2014, the company's business was primarily ODM-based. Between 2014 and 2017, through acquisitions including Cybex, Evenflo, and its China business, it evolved into a branded infant and child durable goods company operating with multiple brands across multiple countries. Currently, overseas business contributes approximately 80% of revenue, with Europe and other markets accounting for about 50%, and the remainder primarily from the North American market.

On the profitability front, the company has benefited from business adjustments, achieving a record high net profit in 2024; while 2025 is affected by multiple external disruptions, improvement is anticipated for 2026. Historically, the company's net profit attributable to shareholders has been highly volatile. During 2021-2022, profitability fell to a historical low, primarily due to global supply chain disruptions amid the pandemic, significant fluctuations in raw material and ocean freight costs, which amplified pressure on its ODM business and domestic brand operations. In 2024, as these disruptions eased and the company deepened operational optimizations for its gb brand, revenue growth recovered, and net profit attributable to shareholders reached a historical high of HKD 356 million. However, in 2025, due to impacts from US tariff policies and changes in child safety seat regulations, the company's North America-related operations are under pressure again, with 1H25 net profit attributable to shareholders declining 43% year-on-year.

Looking ahead to 2026, as US tariff policies normalize and show signs of easing, the profit disruptions experienced in 2025 are expected to diminish. Coupled with operational optimizations for the gb brand and Cybex maintaining high-quality growth, the company's profitability is expected to recover from the low point of 2025, continuing the improvement trend seen since 2024. Risks include fluctuations in overseas market demand and industry policies, and potential underperformance of domestic operations.