Southwest: SAMSONITE (01910) firmly occupies the leading position in the luggage industry. Growth drivers include the recovery of international tourism, among other factors.

Southwest released a research report stating that SAMSONITE (01910) is the leading company in the global travel luggage industry, with a strong brand portfolio, strong product capabilities, leading market share, and rapid revenue rebound after the epidemic. The Asian region, especially the Chinese market, has become its largest source of revenue, with growth far exceeding other regions. The company's core brands have all achieved double-digit growth, with the high-end brand experiencing the fastest growth, driving the overall profitability of the company. The global tourism market is showing significant recovery, with the luggage market share continuing to grow, faster growth in the Asia-Pacific region, and room for improvement in market concentration in China. Growth drivers include increasing travel demand, great potential in the Chinese market, brand expansion of product categories and accelerated innovation, celebrity effect, and cross-border joint marketing to expand visibility. Southwest's main points are as follows: Fundamentals: The company is a leading global travel luggage company, with a strong brand portfolio and product capabilities. 1) Leading market share, high revenue performance elasticity repair. As the leader in the international travel luggage industry, SAMSONITE has a global market share of 18% including its various brands, according to data from the China Report Hall, solidifying its leading position. After the epidemic, the company's revenue performance rebounded quickly, with a revenue CAGR of 33.7% from 2020 to 2023, and revenue and net profit both exceeding the levels of 2019. 2) Revenue in the Asia-Pacific region surpasses North America, with China driving overall growth. In 2023, revenue in the Asia-Pacific region reached $1.43 billion for the first time, surpassing North America as the largest revenue contributor, with a growth rate of 55.8% far exceeding other regions. China, in particular, grew by 78.7%, being the fastest-growing country in the Asia-Pacific region and driving overall regional revenue growth. 3) Core brands all achieved double-digit growth, with high-end brands leading the way. In 2023, the company's three core brands Samsonite, Tumi, and American Tourister all achieved double-digit growth, with growth rates exceeding 20%. The high-end brand Tumi experienced the fastest growth, with a year-on-year increase of +34.3%, accounting for 24% of the market, driving the overall profitability of the company due to increased demand for high-end products, with a 3.6pp increase in gross profit margin in 2023. Travel luggage industry: 1) The global tourism market is showing significant recovery, leading to increased demand for travel luggage. According to data from the IATA website, both global RPK and ASK indices in 2024 have returned to pre-epidemic levels, with civil aviation flights approaching the levels of 2019 and average passenger load factors exceeding 80%. In addition, domestic tourism in China has significantly recovered, with domestic RPK indices surpassing the levels of 2019, but international civil aviation flights still need further recovery and are currently at around 90% of 2019 levels. 2) Luggage market share continues to grow, with strong demand for suitcases. According to Statista data, the global luggage market is expected to reach $212.6 billion in 2027, with a CAGR of 6.5% from 2021 to 2027, maintaining a stable growth trend. In terms of categories, travel luggage accounts for about 25% of the overall luggage market and is expected to have a CAGR of 12% from 2022 to 2026, surpassing the overall market growth rate as well as popular categories like backpacks and business bags, with the hot tourism market driving the increased demand for luggage. 3) The Asia-Pacific region has the fastest growth in luggage sales, with room for improvement in market concentration in China. By region, the Asia-Pacific region has the fastest-growing luggage market size due to the rapid recovery of the tourism market, with China being the main market. In 2023, the CR5 of luggage in China was 17.6%, with a relatively low brand concentration compared to regions like North America, a large proportion of local white-label brands, and room for further improvement in market share. Growth drivers: Continuing increase in travel demand, great potential in the Chinese market: According to data from the Ministry of Culture and Tourism, there were 4.89 billion domestic tourist trips in 2023, an increase of 93% year-on-year, with a total tourism consumption of 4.9 trillion yuan, an increase of 140% year-on-year, Cross-provincial travel has become the preferred way of travel for people. With strong demand for domestic tourism, China became the company's second largest market in 2023, accounting for 8% of overall revenue, 21% in the Asia-Pacific region, with revenue growing by 79% year-on-year, showing huge potential in the Chinese market and being an important strategic layout for the company. Broaden the product range of each brand, accelerate innovation and product launch: According to a Morgan Stanley survey, 49% of consumers in 2023 plan to increase travel budgets compared to pre-epidemic levels, which will drive demand for travel luggage. Starting in 2021, the company's major brands have increased their focus on product design and updates to attract more consumer attention. For example, in March 2023, the main brand Samsonite partnered with New Balance to launch a multi-scene use suitcase, where the inner bag can be taken out separately and used as a shoulder bag, greatly increasing consumer usage frequency and versatility. In addition, Samsonite has launched a large number of super small Mini suitcases for daily travel, camping, travel photography, and play. Celebrity effect reaching fans, cross-border joint marketing to increase visibility: The company has implemented multiple marketing strategies, first signing multiple celebrities as brand spokespeople, many of whom are popular celebrities with large fan bases and strong purchasing power, to help drive sales of celebrity-endorsed products and related products, and reach more consumer groups. In addition, the company actively seeks cross-border collaborations, including partnerships with British museums, artist brands, sports brands, etc., to not only enhance the fashionability and collectability of the products but also develop and launch new innovative products with wider applications and audience demographics, helping to expand brand visibility. Risk warning: The recovery of the tourism market is slower than expected, increased market competition, and risks from global economic fluctuations.