When it comes to Jiayi shares, everyone may be a little unfamiliar, but its OEM product, Stanley thermos cup, has long become a global Internet celebrity item.
Last November, Stanley's popularity skyrocketed after a striking piece of news: a woman's car caught fire, but the Stanley straw cup in her car was miraculously intact, and the ice in the cup had not melted......
According to sorftime data, Stanley sold 1.17 million units in all categories in December 2023, an increase of 135% month-on-month and 64% year-on-year, and 5.81 million units for the year, an increase of 125% year-on-year.
As the main foundry of the Stanley brand, Jiayi's performance and market performance are closely related to the continuous hot sales of Stanley thermos cups in the North American market.
According to the company's 2023 annual report released on March 29, the company's annual operating income was 1.78 billion, a year-on-year increase of 41%, and the net profit attributable to the parent company reached 470 million, a year-on-year increase of 74%. In terms of quarterly data, the operating income in the fourth quarter was 547 million, a year-on-year increase of 29.2%, and the net profit attributable to the parent company was 158 million, a year-on-year increase of 51.6%.
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Of particular note, Pacific Market internationl (Stanley's parent company) brought in sales of 1.51 billion, accounting for 85% of total revenue, an increase of 75% year-on-year, and the proportion of increasing year by year has become the main source of the company's performance.
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Accounting for 85% of large customers "global viral explosion"
In recent years, domestic involution, enterprises have gone overseas to seek the second growth curve of performance.
Relying on China's strong manufacturing supply chain and rapid response mechanism, the light industry sub-category is an important category with top sales on cross-border e-commerce platforms such as Amazon and Temu. Amazon data shows that in the past year, the number of products sold by Chinese sellers to consumers and enterprise customers through Amazon's global site increased by more than 20% year-on-year, and the number of Chinese sellers with sales exceeding $10 million increased by nearly 30% year-on-year.
Jiayi shares are the typical beneficiaries of this trend. According to the financial report, developed countries such as Europe, America, Japan and South Korea are its main sales areas, and overseas revenue accounts for 95.07% of revenue.
Last year, Stanley, the largest customer in North America, spread "virally" on social media, which drove Jiayi shares to take off together.
An accidental car fire unexpectedly became the starting point of the Stanley Straw Cup legend. In this accident, the Stanley straw cup in the car actually survived, this miraculous incident quickly sparked heated discussions on social networks, and the Stanley CEO immediately caught the traffic and presented the person with a new car and a new cup.
Subsequently, through the viral marketing of KOLs and influencers on TikTok, the Stanley straw cup quickly became a top fashion item among white American women, successfully breaking the circle from the professional outdoor market to the mass consumer market. Its fashion attributes and strong social attributes have significantly increased the unit value and repurchase rate of products, bringing continuous growth momentum to the brand.
(Stanley's traffic only began to climb in 23 years, and it rose sharply at the end of the year due to a car crash, source: Picture Worm Creative)
Amazon's data shows that in November and December 2023, the sales of Stanley thermos cups reached 712,000 and 1.168 million respectively, a year-on-year increase of 125.8% and 135%, respectively. By mid-January 2024, the Stanley thermos cup still occupies the first place in the category of sales, with a share of up to 40%.
With the increase in the volume of Stanley's popular large-capacity water cup Quencher series, its average sales price has also increased from about $30 to more than $50, far exceeding the average price of other brands of about $20-30.
For example, the best-selling Quencher H2.0 FlowState 40-ounce capacity on Stanley's website is priced at $45-$50, while its competitor, Yeti's most-rated RAMBLER series, has a 20-ounce capacity list price of $35-$38.
As the main foundry of Quencher cup, Jiayi shares also enjoy higher premium rights and profit margins, and the gross profit margin far exceeds that of its peers. In terms of volume and price, in 2023, the company's sales volume of thermos cups will be 38.13 million, a year-on-year increase of 17.6%, the production volume will be 38.885 million, a year-on-year increase of 19.8%, and the average ex-factory price will be 46.6 yuan, a year-on-year increase of 19.8%.
(The gross profit of Jiayi shares far exceeds that of peers, and the wisdom of research and mapping)
Driven by huge demand, the company's capacity utilization rate has reached an unprecedented height, and the production and sales rate in the first three quarters of 2023 has even exceeded 140%, according to the information on the Amazon platform on March 3, the current Quencher thermos cup is still in a state of limited purchase of two in the whole series, and the color of the small capacity (14 ounces and 20 ounces) cup type is still out of stock, and the production and sales are still tight.
In this regard, the company has planned to raise 398 million yuan through the issuance of convertible bonds to expand production for the production and construction project of 13.5 million stainless steel vacuum vacuum cups in Vietnam. Domestic production capacity is expected to be released in 2024, and the Vietnam plant will start to contribute to the increase in production capacity in 2025. With the expansion of production capacity, the company's ability to receive orders will be further improved, further releasing the potential of performance.
The vulnerability of foundry
However, the market is still concerned about the vulnerability of foreign trade OEMs and the sustainability of Stanley's growth.
Some market views believe that the business model of foreign trade OEM enterprises is inherently fragile, such as Luxshare Precision to Apple, once it loses such a large customer, the disruption of the enterprise is devastating.
(PMI accounts for nearly 85% of Jiayi's revenue, source: Jiayi's 2013 annual report)
Although the company is the leader in the OEM industry, its success does not only depend on the OEM ability, but thanks to the hot sales of its OEM products - Stanley Quencher series in the market. However, Hals, who is also a PMI OEM (its first largest customer is YETI, and its second largest customer is PMI), has fallen into the different fates of different production lines of the same brand.
Due to its high dependence on Stanley, the company's prosperity is also largely constrained by Stanley's market dynamics.
Drawing on Yeti's development path, since the launch of the first iconic cup product in 2014, it has continued to launch different cup shapes, and at the same time, it has been actively expanding overseas markets since 2017, with a CAGR of 101% in non-US market revenue from 2017 to 2023, and 15.5% of Yeti's revenue in non-US markets in 2023.
Similarly, Stanley has strengthened the marketing of its new series IceFlow since 2023, and data from Amazon US shows that the monthly sales of this series of products continue to increase month-on-month, and by February 2024, the sales proportion of the IceFlow series has reached 20%, a year-on-year increase of 16 percentage points.
However, there are also concerns about a possible decline in sales after high growth. According to the TOP100 product data of Amazon's US station, in February 2024, the sales volume of the Stanley brand will be 570,000 units, a year-on-year increase of 70%, while the sales volume of the YETI brand will be 230,000 units, a year-on-year decrease of 18%. From January to February, the cumulative sales volume of Stanley reached 1.36 million, a year-on-year increase of 115%; YETI was 530,000, down 1% year-on-year.
The business model of deeply binding a single large customer makes Jiayi shares closely linked to the fate of the Stanley brand. But going overseas is undoubtedly more profitable than the domestic market.
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