The Overseas Luggage Market Sees a Rebound in Demand

China Securities News (Wang Luo) Recently, with the recovery of demand in the overseas luggage market, many domestic luggage export orders have increased significantly. It is understood that from January to May this year, my country's luggage exports reached 12.7 billion US dollars, accounting for about 40% of the global luggage market. Looking forward to the future, the export of luggage and bags is expected to continue to maintain a steady trend. As the only A-share listed luggage company, Korrun will account for 64.87% of its overseas revenue in 2021. Benefiting from the recovery of overseas demand and the rapid recovery of orders, the company's revenue increased significantly in the first quarter of this year. The company achieved an operating income of 612 million yuan in the first quarter, a year-on-year increase of 35.56%, the highest growth rate since 2020.

Korrun's main business is the research and development, design, production, and sales of leisure bags, suitcases, business bags, apparel, and related accessories. The company started as a luggage OEM business in 2005 and established stable cooperative relations with world-renowned brands such as Nike, Decathlon, VF, Dell, HP, etc. In 2015, it began to cooperate with Xiaomi to deploy a brand management business. "The Differentiated Brand Matrix of "Paul Frank". From 2015 to 2019, driven by the brand business, the company's revenue and net profit attributable to the parent company achieved high-speed compound growth of 52.82% and 35.91% respectively. Since the outbreak of the new crown pneumonia, the brand management business has declined significantly, and it is still in the adjustment cycle; while the OEM business has shown strong performance resilience. In 2021, the company's OEM business revenue will be 1.464 billion yuan, which has exceeded the level in 2019. Accounting for 63.98% of revenue, it will become the basic and main source of the company's performance growth in the future.

The company's OEM business has grown steadily and faces important historical development opportunities. From 2015 to 2019, as the company deepened the cooperative relationship with old customers, acquired Indonesian factories, and developed high-quality customers such as Nike, the company's OEM business revenue increased from 445 million yuan to 1.319 billion yuan, with a CAGR of 29%. In 2020, under the influence of the epidemic, the OEM revenue fell by 10.48%, mainly due to the decrease in orders from some new retail brand customers, while the orders from customers such as Decathlon and Nike were relatively stable, showing a strong resilience of high-quality customers. In 2021, with the steady performance of old customers and the entry of new customers such as VF Group, the company's OEM business revenue will recover rapidly by 24.02%, which has exceeded the scale in 2019. In 2021, the company's customer resources will be further enriched, and high-quality customers such as Jansport, Dickies, and Li Ning will be expanded. The customer structure will be continuously improved, which will provide good support for future performance. The company's OEM manufacturing capacity is located in Chuzhou, China, Indonesia, and India. In 2021, overseas capacity will account for 60%. The Indonesian luggage production base and industrial park project, and the Chuzhou Mirun high-quality travel soft bag manufacturing project are progressing in an orderly manner. The company's production capacity is expected to expand further. At the same time, the company's joint fund purchased the equity of Shanghai Jiale Co., Ltd. and officially entered the clothing OEM industry chain. Shanghai Jiale can vertically integrate the industrial chain of knitted fabrics and ready-to-wear. Its customers include Uniqlo, GU, Champion, etc. Among them, it has cooperated with Uniqlo for 15 years. Through this equity purchase, the company has extended the OEM category from luggage to clothing and fabrics, opening up a broader market space. At the same time, luggage and apparel fabrics have certain interoperability in terms of the manufacturing process, supply chain management, R&D and design, and customer resources, and the two businesses are expected to further generate synergies.

The company's 2C brand side faces certain challenges. In 2020, the company's brand business will decline by 43.06%. In 2021, the global travel market will recover, and the domestic market is still affected by the spread of the epidemic. The company's brand operating revenue has increased by 3.19% to 756 million yuan. It has not yet recovered to the epidermic situation. previous level. Luggage is strongly related to the travel market. The outbreak of the epidemic has caused a great impact on the luggage industry, but it also objectively contributes to the elimination of backward production capacity and the improvement of industry concentration. In the long run, as the impact of the epidemic on the travel consumer market gradually diminishes and disappears, the global travel and luggage market space is still large. According to Euromonitor data, the global luggage market is expected to reach US$194.9 billion in 2025. The size of China's luggage market will reach 337.9 billion yuan. Compared with the mature markets of developed countries, my country's luggage industry market is still fragmented, and the industry concentration is expected to continue to increase. In the context of the increasingly mature industry chain, domestic manufacturing and independent brands will usher in important opportunities of the times.

As a leading enterprise in the travel luggage industry, Korrun attaches great importance to organization and talent development and has a cross-border management team with differentiated advantages in the industry. The founding team of the company comes from well-known IT companies such as Lenovo and Hewlett-Packard. In the process of development, it has introduced several senior talents in the industry, talents from Fortune 500 companies, and talents in the Internet industry, consumer goods industry, and retail industry. Systematic construction is also at the forefront of the industry. The company's announcement shows that based on the competition pattern of the talent market and the principle of systematic construction, combined with the salary situation of the regional market and industry, the company has established a comprehensive salary system based on the contribution of job value and centered on employee competency and performance appraisal. , including short-term immediate incentives (such as cash, subsidies, various benefits, etc.), and long-term delayed incentives, that is, equity incentives such as employee stock ownership plans. In the employee stock ownership plan, the participants are required to undergo strict job screening and ability assessment and be identified by adhering to the company's important strategic direction, focusing on screening and assessment from the dimensions of the entry, performance, promotion, etc., and mainly motivate personnel to be newly introduced by the company. High-level talents who play an important role in promoting future operation and development, outstanding key employees with outstanding historical performance and important contributions to the company in the past, and in the annual regular promotion, through promotion nomination, 360 all-round evaluation, job debriefing, and questions from judges After a series of strict promotion processes such as comments, back-to-back voting and scoring, and publicity, the rank is promoted to senior director and above employees. The diversified comprehensive salary allocation model of cash plus shares makes the comprehensive salary income of the company's core outstanding talents in line with the market level and seizes the advantage in the fierce talent market competition environment, which is conducive to the company's construction of an organizational system to attract and retain talents. It is beneficial for the company to closely bind and grow together with core talents, maximize the advantages of the company's organizational talents, improve the company's operation and management efficiency, and promote the company's business development and growth.