Soochow Securities Co., Ltd.: The industry scale is expected to double in the next five years, optimistic about opportunities in the outdoor apparel industry chain

According to the Zhitong Finance APP, Soochow Securities has released a research report stating that it is optimistic about the opportunities in the outdoor apparel industry chain. Currently, the domestic outdoor industry is in a period of accelerated growth catalyzed by multiple positive factors, with the industry scale expected to double in the next five years and long-term growth potential exceeding three times, which will bring opportunities for the entire outdoor apparel industry chain. Among them: 1) Downstream brands/retailers: brand assets and operational management capabilities are core competitive factors; 2) Upstream manufacturing: production technology and customer resources are core competitive factors. The main viewpoints of Soochow Securities are as follows: Seeing the small reveals the big: A review of China's first outdoor stock "Toread" The domestic outdoor apparel industry has produced listed companies such as Toread and SANFO OUTDOOR, but they have all experienced performance fluctuations after going public. By reviewing Toread and the industry's changes, it can be seen that the domestic outdoor apparel industry has gone through three development stages: rapid growth from 2010 to 2014, adjustment and slowdown from 2015 to 2019, and accelerated growth since 2020. The main reasons for the adjustment and slowdown in the industry from 2015 to 2019 were the shift in macroeconomic growth rates, uneven industry development, and intensified competition. With the standardization of industry norms, the pandemic catalyzing an explosion in outdoor demand, and the youthfulness of outdoor consumers, the domestic outdoor apparel industry is once again entering a period of accelerated growth. Learning from the past to understand the present: The outdoor apparel space is vast, with positive factors catalyzing accelerated growth Industry characteristics: High-performance outdoor apparel has high functional requirements, with production difficulty and costs relatively higher than other categories. Currently, well-known production technologies in the industry are mainly held by overseas suppliers, while domestic technologies are gradually making breakthroughs. In terms of total volume: The domestic high-performance outdoor apparel market is expected to reach 102.7 billion yuan in 2024, with a compound annual growth rate of 13.8% from 2019 to 2024. It is expected to double in the next five years, with long-term growth potential exceeding three times. In terms of structure: The categories of jackets, online channels, and domestic brands are growing rapidly. In terms of competitive landscape: In 2024, the domestic market CR10 is 27.2%, indicating a relatively dispersed market, where international brands dominate, while domestic brands gradually increase their market share through strategies such as cost-effectiveness positioning and fashionable design for differentiated competition. BergHaus: A young domestic brand is breaking through upward BergHaus was established in 2012 and is currently the seventh largest brand in domestic high-performance outdoor apparel retail, with a market share of 1.7%. It is positioned as a mid-to-high-end brand with a focus on quality-price ratio, with most product pricing concentrated at or below 1,000 yuan, creating a price differentiation from international outdoor apparel brands. From 2022 to 2024, revenue is expected to increase from 378 million yuan to 1.766 billion yuan, and net profit attributable to the parent company is expected to rise from 24 million yuan to 283 million yuan, with CAGRs of 116% and 241%, respectively. The firm believes that the high growth is driven partly by the rising popularity of outdoor activities in China and partly by the company's choice of a differentiated development path suitable for domestic brands in terms of channels, positioning, and marketing strategies, gradually achieving a breakthrough from mid-range to high-end. Risk Warning: Extreme weather affects outdoor activities, industry competition intensifies, and the upgrading of domestic brands is hindered