New stock interpretation | Lexin Outdoor: Resonance of stable fundamental base and high growth track to create a scarce target for outdoor equipment investment.

Against the backdrop of uncertainty in the global macroeconomy and structural differentiation in the consumer market, capital is increasingly inclined to seek scarce assets that combine "high certainty fundamentals" with "high growth prospects." The global fishing equipment industry, with its stable existing customer base and clear room for consumption upgrade growth, meets this standard. As the absolute leader in the equipment manufacturing segment of this industry, LeXin Outdoor not only benefits from industry beta growth but also from its significant alpha growth capability demonstrated through its unique strategic positioning. Of note is that the company's listing process has entered a crucial stage. According to the latest disclosure, the pricing range for LeXin Outdoor's IPO has been set at HK$11.25 to HK$12.25, with plans to officially list on February 10. This move signifies the company's imminent debut on the capital market, and its value growth trajectory will enter a new stage. Balancing offense and defense: the "weak cycle" attributes of a stable customer base and the "golden subdivision" of value growth The core logic of LeXin Outdoor lies in its occupation of a high-quality track, balancing offense and defense: on one hand, it holds an unshakable leading position in the existing market, establishing a strong defensive moat through steady operations; on the other hand, the company strategically positions itself in high-growth subdivision tracks, where it has built strong capabilities to capture incremental value. This dual strategy provides a double guarantee for achieving sustainable growth in an uncertain environment. The stability of LeXin Outdoor's customer base stems from the unique attributes of the track it operates in and the dominant market position the company has established, forming a defensive advantage against cyclic fluctuations and a foundation of sustained profitability. First, from the demand perspective, fishing activities have a deep cultural embedment and stable social popularity, showing significant "weak cyclical" characteristics in consumer demand, providing the company with high visibility and stable operational cash flow across economic cycles. Secondly, in terms of competitive landscape, the company holds a structural leadership position in the fishing equipment manufacturing industry with a 23.1% global market share. This market dominance gives the company strong bargaining power and profit stability in the existing market, making its business fundamentals difficult to disrupt. LeXin Outdoor's strong growth momentum comes from its precise strategic positioning in the incremental market and its excellent value capture capabilities. On one hand, the industry is entering a new phase of accelerated growth. Frost & Sullivan data shows that the global fishing equipment market size growth rate is expected to significantly increase from 3.2% in the past five years to 7.1% in the next five years, steepening the industry's growth curve. Leveraging its established global channel network, renowned brand partnerships, and scalable capacity, LeXin Outdoor is poised to capture the industry beta dividend brought by this market expansion and achieve scale expansion in line with industry trends. On the other hand, the company's real value enhancement lies in its focus on high-growth structural tracks. The fishing equipment subdivision market, the core focus of the company, has significantly outperformed the industry average in recent years with a compound annual growth rate of 9.5%. This is not a result of homogeneous expansion but a value-driven structural growth, supported by the shift of demand anchors towards "experiential value", aligning with the trend of the "experience economy". This shift directly drives shortened product lifecycles, increased average selling prices, and higher consumption frequencies, opening up the volume and price ceiling of the market. Additionally, the company's product profit model has inherent advantages. The multi-dimensional competitiveness of fishing equipment significantly increases the product's added value, creating higher potential gross margin space. As a result, this sector becomes a strategic value anchor for the company to optimize its revenue structure and achieve a leap in profitability. Based on this, LeXin Outdoor not only benefits from the industry's overall growth acceleration but also delves deeper into a more lucrative and rapidly growing value track. Through its market leadership position and strategic focus, the company systematically translates market opportunities into tangible financial growth. From a global manufacturing leader to a brand ecosystem builder: LeXin Outdoor's dual value transition path The investment value core of LeXin Outdoor lies in its successful execution of a profound strategic evolution: transitioning from a "global manufacturing leader" relying on scale and cost, to a "global leisure fishing lifestyle solutions provider" controlling brands and channels, undergoing a systematic value transition. This process is driven by two core pillars that mutually empower each other - an inherent upgrade of the business model and the construction of a global ecosystem, forming a complete loop of sustainable growth and valuation reshaping. The first pillar involves the elevation of LeXin Outdoor's business model - completing the crucial transition from "efficiency premium" to "brand premium". The company's growth momentum has shifted from merely enjoying the scale dividends of manufacturing to creating structural value through brand operations. A landmark move was the strategic acquisition and successful integration of the UK-based professional carp fishing brand Solar in 2017. LeXin Outdoor injected its globally leading supply chain efficiency, modular R&D system, and multi-channel management capabilities into the Solar brand, achieving a threefold increase in the brand's sales by 2024 compared to 2018. This successful move validated the company's core capability of "empowering manufacturing with brands". LeXin Outdoor's shift towards OBM (Original Brand Manufacturing) is more conducive to transitioning the valuation logic from the traditional manufacturing industry price-to-earnings ratio (P/E) to a more growth-oriented brand consumer goods valuation system (such as PEG or EV/EBITDA). By replicating this "empowerment-reshape" paradigm and expanding its own brand matrix, the company is expected to systematically improve its return on assets and overall valuation center. The second pillar is the construction of its ecosystem - building a global, high-viscosity strategic value network. Supporting and accelerating the above business model transformation is the global strategic customer network that the company has built over decades. On one hand, the company has deeply penetrated markets such as the UK, US, France, and Japan, leveraging its deep fishing culture, stable high-end demand, and regulated business environment to generate high-quality profit cash flow, providing stable resource support for strategic transformation. On the other hand, the company strategically expands into markets in China and Southeast Asia, capturing exponential growth opportunities brought by the popularization of outdoor sports and consumption upgrades, contributing significant performance elasticity and future valuation imagination space. Furthermore, the company's customer base includes leading companies from various segments of the global outdoor industry supply chain, such as top channel partners like Decathlon, vertical domain giants like Rapala VMC and Pure Fishing, and authoritative brands in the subdivision market like Ardisam. Collaborating with Decathlon and other 85+ brands for over five years has created a high conversion cost and trust moat. The reputation and data accumulated from serving top clients have become a "credibility currency" for exploring new markets, and the synergy of the network provides invaluable channel insights, consumer validation, and trust transfer foundation for the company's own brand business. In summary, LeXin Outdoor's dual transition is not isolated but constitutes a self-reinforcing strategic cycle: its excellent global manufacturing capabilities (foundation) support the success of the brand empowerment model (transition); and its global top-tier customer network (ecosystem) not only provides a stable foundation for the manufacturing business but also serves as a market testing ground and credibility endorsement for the brand business. The success of the brand business further consolidates and enhances its core position and bargaining power within the manufacturing ecosystem. This closed-loop system enables the company to simultaneously capture the scale efficiency of manufacturing and the value premium of branded consumer goods, demonstrating rare strategic resilience and growth acuity in an uncertain environment. Realizing the financial indicators of strategic effectiveness and establishing value coordinates Observing LeXin Outdoor's financial performance has become a key empirical evidence of its internal logic of strategic transformation and provides solid coordinates with a time-series validation for the reconstruction of its valuation system. Looking at the financial performance, the company's profitability has continued to improve, with significantly enhanced growth quality. The company witnessed a slight decline in revenue from 2022 to 2023, primarily due to the optimistic consumer market demand amidst the pandemic and the digestion of previous demand from clients, aligning with the overall trend in the outdoor industry. By 2024, this impact had largely disappeared, with total revenue reaching HK$573 million, a 23.8% increase from the previous year. In the first eight months of 2025, revenue had already reached HK$460 million, close to 80% of the total revenue for 2024, demonstrating a steady growth pace. Driven by the increase in gross margin, the company achieved operating profit of HK$77.695 million in the first eight months of 2025, restoring the operating profit margin to 16.9%, nearing its historical peak in 2022 and showcasing excellent cost control capability and operational leverage. Net profit for the first eight months of 2025 reached HK$56.241 million, maintaining a healthy net profit margin of 12.2%, providing a solid capital foundation for the company's strategic expansion. The most crucial financial highlight is the systematic and sustained increase in LeXin Outdoor's gross margin - rising from 23.2% in the 2022 fiscal year to 26.6% in 2024, further reaching 27.7% in the first eight months of 2025, accumulating an increase of over 4.5 percentage points. The improvement in financial data is not without cause, as its root lies in the successful execution of the company's product strategy. An analysis of the data from the three core product categories (beds/chairs accessories, bags, tents) reveals a clear path towards high-end product differentiation. As a cornerstone business that contributes 50% of annual revenue, the beds, chairs, and accessories category has seen a consistent increase in average selling price from HK$531.7 in 2023 to HK$672.5 in the first eight months of 2025 for high-end product series priced over $50 USD. Additionally, mid-range products (priced between $20-50 USD) have also shown a steady increase in average price. This indicates that the company has successfully enhanced the value proposition of this category through product innovation and upgrading, serving as a core driver of the overall gross margin increase. As a growth engine, the bags category's revenue share has increased from 24.2% in 2022 to 28.6% in the first eight months of 2025, with sales volumes and average prices increasing across high, mid, and entry-level price bands. Furthermore, data from all product categories point towards a clear direction of high-endization and high value-added, aligning with the strategic shift towards OBM. In conclusion, LeXin Outdoor's financial trajectory is deeply intertwined with its strategic narrative. The certain upward trend in gross margin and clear strategic roadmap constitute the dual financial pillars for the company's value transition from a "high barrier manufacturer" to a "high-growth brand operator". In summary, LeXin Outdoor presents a clear growth path: leveraging its stable global manufacturing leadership position to achieve a value transition through product structure optimization and brand strategy. The company not only benefits from the structural growth dividend of the industry but also demonstrates alpha capabilities surpassing the industry through its strategic execution. The continuous rise in gross margin and trend towards product high-endization mutually affirm each other, indicating that the company's transformation has entered a phase of reaping rewards. Against the backdrop of consumption upgrades and the flourishing outdoor economy, LeXin Outdoor is poised to continue enjoying the double impact of valuation and performance.