1、 Taiwan Bicycle Sector Beyond the pandemic: Riding on the modal shift to cycling Consumer Discretionary | Initiation Figure 1: We believe global bicycle growth will continue to benefit from strong e-bike demand cycle for the next 3-4 years on still low penetration in Europe and the U.S. Source: Bike
2、 Europe, TBA, Credit Suisse estimates E-bike demand cycle is set to continue. Since 2015, e-bike sales volume in Europe has doubled to 3 mn p.a., with penetration rate rising to 16.7%, while US e-bike sales also saw 35% CAGR, though penetration rate is still low at 2.9%. We believe the growth moment
3、um is set to continue, driven by the EUs increased policy support and the US push for a uniform regulatory guideline that enables promotion of e-bikes. The e-bike penetration rate in Europe that accounted for over 65% of global e-bike sales, will double again to 37% by 2025E, with US penetration to
4、accelerate to 9.5%.These trends are highly favourable for Giant/Merida that we believe are among the best positioned to capture this e-bike cycle, given: (1) strong brand positioning in global mid-to-high-end market (+30% share), with (2) extensive distribution channel, backed by (3) Taiwans supply
5、chain strength in higher-end product innovations, and (4) diversified and flexible production sites across Asia/Europe. COVID-19 to stimulate new regular bike demand and add to the sustainability of e-bike cycle. We believe the increased use of bicycles for commute and recreation will be one of the
6、“new normal” post the pandemic. Since the COVID-19 outbreak, bicycle ridership has surged globally, and is expected to continue in 2021, driven by the increased awareness that cycling is eco-friendly and provides the benefit of social-distancing. In addition, the impact of the response to COVID-19 i
7、s re-shaping our cities with better mobility plans, thanks to more spending on cycling infrastructure and subsidies for bike purchase, which we believe will continue to spur sales across all bike segments and also add to the sustainability of e-bike upcycle on expanding TAM. Initiate on Merida with
8、Outperform and Giant with Neutral. We initiate coverage on Merida with OUTPERFORM and a TP of NT$240, based on 25x FY21E P/E. We believe Merida is the most leveraged to the strong e-bike cycle, backed by its leading position in the global high-end market. We expect the valuation gap between Merida (
9、20 x P/E) and Giant (26x P/E) to narrow, as we expect the e-bike growth cycle to outlast regular bike recovery. We initiate coverage on Giant with NEUTRAL and a TP of NT$270, based on 27x FY21E P/E. Giant is trading at 26x FY21E P/E, which we believe largely reflects the benefits of the modal shift
10、to cycling, and we see limited upside. Key risks: Weaker-than-expected e-bike cycle; larger/weaker-than-expected regular bike recovery globally, unfavourable forex. 1.6%2.9%9.5%11.6%16.7%37.1%0.0%10.0%20.0%30.0%40.0% - 10.0 20.0 30.0 40.0201720182019E2020E2021E2022E2023E2024E2025ERegular bike market
11、 value for Europe and U.S.E-bike market value for Europe and U.S. (LHS)U.S. e-bike sales volume penetration rateEurope e-bike sales volume penetration rate(US$ bn)30 June 2020 Equity Research Asia Pacific | Taiwan DISCLOSURE APPENDIX AT THE BACK OF THIS REPORT CONTAINS IMPORTANT DISCLOSURES, ANALYST
12、 CERTIFICATIONS, LEGAL ENTITY DISCLOSURE AND THE STATUS OF NON-US ANALYSTS. US Disclosure: Credit Suisse does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the Firm may have a conflict of interest that could affect the objectivit
13、y of this report. Investors should consider this report as only a single factor in making their investment decision. Research Analysts Chien Po Huang 886 2 2715 6342 chien-po.huangcredit- Chung Hsu, CFA 886 2 2715 6362 chung.hsucredit- 群内每日免费分享5份+最新资料 群内每日免费分享5份+最新资料 300T网盘资源+4040万份行业报告为您的创业、职场、商业、投
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15、群关注公众号获取更多资料关注公众号获取更多资料30 June 2020 Taiwan Bicycle Sector 2 Focus charts Figure 2: We estimate Europe/the US accounted for close to 80% of global e-bike sales volume (ex China) Figure 3: We believe the e-bike penetration rate in Europe will double to 37% by 2025 (from 16.7% in 2019) Source: CONEBI,
16、Bike Europe, Credit Suisse estimates Source: CONEBI, Bike Europe, TBA, Credit Suisse estimates Figure 4: We estimate the US e-bike penetration rate could reach 9.5% by 2025 on 25% sales volume CAGR in 2020-25 Figure 5: We estimate Merida/Giant together account for more than 25% of e-bike market shar
17、e in the US Source: CONEBI, Bike Europe, Credit Suisse estimates Source: TBA, QYR, Bike Europe, Credit Suisse estimates Figure 6: Giant is the key beneficiary of the modal shift to cycling, given its larger exposure to mid-to-low-end bikes Figure 7: Merida is the most leveraged to e-bike demand grow
18、th cycle, thanks to its larger e-bike exposure Source: MOEA, TBA, QYR Research, Credit Suisse estimates Source: TEJ, company data, Credit Suisse estimates Figure 8: We expect Meridas valuation gap against Giants to gradually narrow Figure 9: .as we expect the e-bike cycle to outlast regular bikes re
19、covery for the medium-to-longer term Source: TEJ, company data, Credit Suisse estimates Source: TEJ, company data, Credit Suisse estimates E-bike market share by unitChinaEuropeU.S.JapanOthers7.3%16.7%18.7%37.1%0.0%5.0%10.0%15.0%20.0%25.0%30.0%35.0%40.0%201520162017E2018E2019E2020E2021E2022E2023E202
20、4E2025EEU e-bike sales volume penetration in 2014-2025ESales volumegrowth: 19% CAGR in 2015-2019ESales volumegrowth: 15% CAGR in 2020-2025E - 200 400 600 800 1,000 1,200 1,400 1,600 1,80020152016201720182019E2020E2021E2022E2023E2024E2025EU.S. e-bike sales volume (k unit)(k unit)Sales volume growth:3
21、5% in 2015-2019ESales volume growth:25% in 2020-2025E18%16%15%11%4%4%3%2%2%1%0%0%2%4%6%8%10%12%14%16%18%20%TrekSpecialized(MeridaOEM)PedegoGiantAccellRaleighProdecotech EasymotionYadeaAIMASunraU.S.U.S.U.S.TaiwanDutchDutchU.S.SpainChinaChinaChinaU.S. e-bike market share by major brands-6%-9%-2%2%3%13
22、%9%12%5%5%4%6%-9%9%13%10%9%-15%-10%-5%0%5%10%15%1Q172Q173Q174Q171Q182Q183Q184Q181Q192Q193Q194Q191Q202Q QTD2H20E2021E2022EGiants YoY sales growth2Q20 QTD:sharp increasein bike demands boosted by paradigm transportshift to cycling1Q20 sales mainly hurt by supply and logistics disruptions in China and
23、Europe05,00010,00015,00020,00025,00030,00035,00040,000201520162017201820192020E2021E2022EMeridas revenue breakdown by productRegular bikese-bikesOthers(NT$ mn) - 10.0 20.0 30.0 40.0 50.0 60.0Jan-05Jul-05Jan-06Jul-06Jan-07Jul-07Jan-08Jul-08Jan-09Jul-09Jan-10Jul-10Jan-11Jul-11Jan-12Jul-12Jan-13Jul-13J
24、an-14Jul-14Jan-15Jul-15Jan-16Jul-16Jan-17Jul-17Jan-18Jul-18Jan-19Jul-19Jan-20Giants 1 year forward P/EMeridas 1 year forward P/E(x)24%23%26%30%42%49%59%71%65%67%65%62%53%44%36%24%0%10%20%30%40%50%60%70%80%90%100%20192020E2021E2022E20192020E2021E2022EE-bike salesRegular bike salesOthersGiants revenue
25、 breakdown by productMeridas revenue breakdown by product30 June 2020 Taiwan Bicycle Sector 3 Beyond the pandemic: Riding on the modal shift to cycling E-bike demand cycle is set to continue We believe global bicycle growth will continue to benefit from the strong e-bike demand cycle. Since 2015, e-
26、bike sales volume in Europe has doubled to 3 mn p.a. in 2019, with the penetration rate rising to 16.7%; while the US e-bike sales also witnessed a 35% CAGR, but with its penetration rate still very low, at 2.9%. The growth momentum will continue for a few years, driven by: (1) the EUs increased pol
27、icy support that will continue to stimulate e-bike demand from markets that already have large mid-to-high-end traditional bike exposure, as well as in European countries with still-low e-bike penetration rate; and (2) the US push for a uniform regulatory guideline that will enable more effective pr
28、omotion of e-bikes to consumers Thus, we believe the e-bike penetration rate in Europe (that accounted for more than 65% of global e-bike sales), will double again to 37% by 2025, and the US markets penetration rate will accelerate to 9.5%. These trends, in our view, are highly favourable to Taiwans
29、 leading bicycle companies (Giant and Merida) that we believe are among the best positioned to capture this e-bike growth cycle, given: (1) both have successfully transformed into OBMs (from OEMs) with top-notch international brands that account for more than 30% market share in global mid-to-high-e
30、nd bicycles built over the past 20 years, with well-established distribution channels, supported by (2) the well-established supply chain strength in Taiwan, focusing on higher-end product innovations, as well as (3) diversified and flexible production sites across Asia/Europe. COVID-19 to stimulate
31、 new regular bike demand and add to the sustainability of e-bike cycle Since the COVID-19 outbreak, bicycle ridership has surged around the world, with Taiwans two major bicycle companies seeing a sharp increase in bike demand, which is expected to continue well into 2021, thanks to the increased aw
32、areness that cycling is eco-friendly and also provides the benefit of social distancing. The impact of the response to COVID-19 is reshaping our cities with better mobility plans, driven by accelerated increase in government spending to: (1) build more cycling infrastructure and (2) provide addition
33、al subsidies for bicycle purchases. This, in our view, has boosted: (1) higher demand to commute on bikes and also (2) the shift from indoor to outdoor activities that will spur sales across all bike segments (from commuting bikes to recreational bikes) and also accelerate the e-bike demand upcycle
34、with more supporting factors having emerged post COVID-19 (i.e. enlarged e-bike TAM with more subsidy, better infrastructure for cycling, and also awareness of social distancing). We believe the increased use of bicycles for commuting and recreation will be one of the “new normal” post the pandemic.
35、 In the near term, the boom in bicycle demand will help offset some cyclical headwinds for Taiwan OEMs, such as unfavorable forex headwinds (strong TWD against USD and EUR), weak global economy, and supply chain disruptions). Initiate on Merida with OUTPERFORM and Giant with NEUTRAL We initiate cove
36、rage on Merida with OUTPERFORM and a TP of NT$240, based on 25x FY21E P/E. We believe Merida could benefit the most from this round of e-bike growth, backed by its leading position in the global high-end bicycle market. Merida is trading at 20 x FY21E P/E, which we see as reasonable against a strong
37、 e-bike demand cycle. Importantly, the valuation gap between Merida (20 x P/E) and Giant (26x P/E) should narrow as we expect the e-bike growth cycle to outlast regular bike recovery. We initiate coverage on Giant with NEUTRAL and a TP of NT$270, based on 27x FY21E P/E. We believe Giant is well-posi
38、tioned to ride on the modal shift to cycling globally, given its relatively larger exposure to mid-to-lower-end bikes. Giant is trading at 26x FY21E P/E, which we believe reflects the benefits of the modal shift to cycling, and we see limited upside for the stock at this point. Key risks: Stronger (
39、or weaker)-than-expected recovery in regular bikes, unfavourable forex.We believe global bicycle growth will continue to benefit from the strong e-bike demand cycle, which is highly favorable to Taiwan leading bicycle companies, that we believe are among the best positioned to capture this e-bike cy
40、cle COVID-19 is reshaping cities around the world with better mobility plans with more government spending on cycling infrastructure and subsidies on bike purchases, which we believe should further enhance the recovery in regular bike demand and accelerate the e-bike cycle We believe the valuation g
41、ap between Merida and Giant should narrow as we see the e-bike growth cycle outlasting regular bike recovery in the medium-to-longer term 30 June 2020 Taiwan Bicycle Sector 4 Figure 10: Taiwan bicycle-sector peers valuations and Taiwan non-tech coverage valuations table Note: NC = Not covered. Sourc
42、e: Company data, the BLOOMBERG PROFESSIONALTM service estimates for not covered companies, Credit Suisse estimates for covered companies CompanyReuters 12mLast closeTPUpsideMkt capNameCodeRating(LC$)(LC$)(%)(US$ mn)2020E2021E2020E2021E2020E2021E2020E2021ETaiwan and global bicycle chainsMerida9914.TW
43、OPFM193.0240.0241,9552520-6223.93.516.418.3Giant9921.TWNTRL261.5270.033,3233026-4164.23.814.315.3KMC5306.TWON.C.147.5NCNC6301916-5193.23.017.518.9Topkey4536.TWN.C.139.5NCNC4291514-5142.2n.a.14.6n.a.Cheng Shin Rubber2105.TWN.C.34.5NCNC3,7895426-401101.51.42.75.6Accell GroupACCG.ASN.C.22.2NCNC66819251
44、040-231.71.611.513.2Shimano7309.TN.C.20,520.0NCNC17,7533734-1103.63.311.011.2Taiwan non-tech coverageRetail and F&B8454.TWNTRL725.0515.0(29)3,4416253171715.514.625.728.3PCSC2912.TWNTRL300.0250.0(17)10,5682927368.27.928.929.4Poya5904.TWOOPFM584.0600.031,933282481512.010.8n.a.46.8OEMNien Made8464.TWOP
45、FM297.0280.0(6)2,9492219-13146.05.427.729.2Eclat1476.TWUPFM338.0220.0(35)3,1423027-27105.14.717.218.3Makalot1477.TWUPFM159.090.0(43)1,1843031-39-13.83.712.712.3Feng Tay9910.TWNTRL180.0136.0(24)4,4812622-18177.06.128.929.5Taiwan Paiho9938.TWOPFM66.090.0366661413-9122.01.914.415.1Merida9914.TWOPFM193.
46、0240.0241,9552520-6223.93.516.418.3Giant9921.TWNTRL261.5270.033,3233026-4164.23.814.315.3ConglomerateFENC1402.TWOPFM27.831.8155,0331715-23120.70.74.04.5P/E (x)EPS growth (%)P/B (x)ROE (%)30 June 2020 Taiwan Bicycle Sector 5 Table of Contents Focus charts 2 Beyond the pandemic: Riding on the modal sh
47、ift to cycling 3 E-bike demand cycle is set to continue . 3 COVID-19 to stimulate new regular bike demand and add to the sustainability of e-bike cycle . 3 Initiate on Merida with OUTPERFORM and Giant with NEUTRAL . 3 E-bike demand cycle is set to continue 7 Europe will continue to lead global e-bik
48、e growth . 7 US market to see accelerated growth off a low base . 9 Taiwan bicycle companies are among the best positioned to capture this wave of e-bike demand11 We estimate Giant and Merida together account for 30% and 27% of Europe and US e-bike share . 16 Accelerated e-bike demand becomes the ma
49、in driver for Taiwan bicycle export growth with Europe and US accounting for 90% of total e-bike exports . 17 COVID-19 to stimulate new regular bike demand and add to the sustainability of e-bike cycles 20 COVID-19 accelerated the modal shift to cycling due to changing attitudes and behaviours20 COV
50、ID-19 spurs the bicycle boom under the new normal across the globe . 26 Expect strong restocking demand from mid-3Q20 for regular bikes as well as e-bikes . 28 Regular bikes see sharp recovery from 2Q20, expected to continue into 2021 . 29 E-bike demand remains resilient, and will further accelerate
