1 billion market capitalization Shubao International (02569): Will chips continue to attack after a 110% increase?

Recently, Shu Bao International (02569) has gained the attention of investors as a new entrant in the Hong Kong stock capital market that went against the wind. As of the close of trading on June 10, the company reported HK$1.07, up 110% from the offering price of HK$0.51, with a total market value of approximately HK$1.07 billion.

At a time when the market is in turmoil, why is Shu Bao International strongly attracting funds? What kind of growth code is hidden behind it?

The “main” game behind all the ups and downs?

About two months after listing, Shu Bao's international trends can be summarized as “four ups and downs”.

In the first phase, from March 27 to April 24, Shubao International completed the first round of ups and downs in 18 trading days, which ended with a 48.98% increase.

This period began on the first day of the company's listing. After opening nearly 4% lower in early trading, it surged more than 56% to close at HK$0.67, 31.37% higher than the offer price. It traded 273 million shares throughout the day, with a turnover of HK$170 million. Excluding handling fees, each lot earns HK$800 on the book for 5,000 shares. The company then continued to decline, as low as HK$0.43. After the decline washed up the market, an upward trend began.

Overall, during this period, the turnover rate reached 63.76%, and the average daily turnover was 35.422 million. It can be seen that capital was active, and mainstream capital did not reach a high level of market control.

The second phase was from April 28 to May 15. Shubao International achieved an increase of 25.71% in 12 trading days. It is worth noting that mainstream funding is showing signs of control at this point. First, although the increase was small, the period of this round of growth was shortened to 12 days. Second, in terms of volume, the average daily turnover was 113.16,700, and the turnover rate was 13.58%. It is worth noting that on May 15, the profit ratio of chips reached 99.72%, and the average cost was 0.62. When a large number of chips were profitable, it meant that mainstream capital needed to find a way out. At this point, the third phase of ups and downs began.

The third stage, from May 16 to May 28, can really be called “the hustle and bustle is for outsiders to see.” Although the stock price experienced five ups and downs, the increase or decrease in the stock price was zero. The turnover rate at this stage was 8.51%, and the average daily turnover was less than 10 million. At this stage, mainstream capital is trying to attract capital to enter with rising and falling rates, so stock price increases are controlled at a small cost. Also, as of May 28, the profit ratio of chips was still as high as 98.7%, and the average cost was 0.64. The degree of coincidence in the range was as high as 72.22%, which shows the concentration of chips.

The fourth phase is another round of growth after three stages of gaining momentum. That is, 5/29 to 6/9. At this stage, the turnover rate has been reduced to 4.46%, and the average daily volume has shrunk further to 5.575,800, with an increase of 28.41% over 8 trading days. It can be seen that at this stage, the degree of mainstream capital control has deepened once again.

In summary, behind the four ups and downs, Shu Bao International's doubling increase is also the goal of deepening control of the market through the movement of mainstream capital up and down in chips. Today, the stock price dropped after four consecutive days, which is probably also a sign of the beginning of a new round of ups and downs.

“Small but beautiful” baby care faucet

Shubao International's ability to be favored by capital may be inseparable from its small market capitalization and excellent fundamentals, that is, a “small but beautiful” infant care leader.

Shubao International was founded in 2010 and is headquartered in Jinjiang, Fujian. Its core business is R&D, production and sales of disposable hygiene products. Its products cover the three major fields of infant care, female care and adult incontinence. According to Frost & Sullivan's report, according to the 2023 export value, Shubao International is the second-largest exporter of disposable baby care products exported from China to Russia. According to the 2023 export value of disposable hygiene products for infant care in China, the company accounts for about 3.7% of the market share.

According to the latest financial report, in 2024, Shubao International achieved revenue of about 753 million yuan, an increase of 15.01% over the previous year, but the growth rate slowed significantly from the previous two years. From 2021 to 2023, its revenue increased from 263 million yuan to 655 million yuan, with a compound annual growth rate of 57.7% during the corresponding period.

Baby care products are still the absolute mainstay. In 2023, the business contributed 468 million yuan in revenue, of which more than 300 million yuan came from the Russian market. In Moscow's “Dmitry Me” (Children's World) chain of stores, diapers manufactured by Shu Bao are often placed on the second floor of the shelf — this is the “golden position” that Russian parents can easily reach.

The women's care business is showing ambition for transformation. The private brand “May Whispers” avoided competition with Sophie and Hu Shubao in first-tier cities and instead penetrated the sinking market through live broadcasts from Pinduoduo and Douyin. A set of comparative data is intriguing: the unit price of menstrual pants products on Douyin is 29.9 yuan/package, which is 20% lower than traditional e-commerce platforms, but the repurchase rate is 37%, showing the explosive power of new media channels.

Judging from the growth prospects, the women's care products market has become a 100 billion racetrack. According to public data, the global market for feminine hygiene products is expected to reach about US$89.29 billion by 2033, with a compound annual growth rate of about 7.8% from 2024-2033. Asia Pacific has the largest market share, and North America is growing the fastest. In terms of segment segments, the 2024 global sanitary napkin market is about US$28 billion, dominating the market.

In the context of this development, Shubao International's intention to shift its business direction is quite remarkable: Currently, Shubao International's production base is located in Jinjiang City, Fujian Province, and there are 17 production lines that produce the company's core products. In the first five months of 2021-2023 and 2024, the average utilization rates of baby care products were about 51.0%, 68.9%, 84.1% and 56.4%, respectively, while the average utilization rates of women's care products during the same period were about 1.5%, 34.9%, 138.3% and 113.5%, respectively.

What has really attracted the attention of the capital market is the adult incontinence circuit, which has yet to fully develop. There are more than 42 million incontinent people aged 60 and over in China, yet the market penetration rate is less than 5%. Shu Bao International quietly upgraded the “Kang Shubao” production line in 2023 to launch products for different levels of incontinence.

It is worth noting that as a Jinjiang company, the company superimposes the concept of “going overseas+mother and child”, which is in line with the current preference of Hong Kong stocks for high-growth emerging consumer stocks. Its stock price continued to rise after listing, reflecting the market's valuation premium on segmented track leaders.

In summary, since its listing, Shu Bao International's sharp rise is the result of mainstream capital, remarkable fundamentals, and resonance in market sentiment, but its long-term performance still requires observing the stability of its performance, and this may also influence whether the company's stock price is trending “upward” or “downward.”