Bicycle Shifting trends in the bicycle market The sustainable growth trajectory of the bicycle market Overweight (Initiate) Total bicycle sales in Korea reached roughly 1.93mn units in 2014, growing at a CAGR of Industry Report 2.1% over the previous five years (since 2009). By revenue, the market expanded 7.3% CAGR to around W513bn during the same period. This underscores that market growth June 30, 2015 has been driven more by price than by volume. We believe Korea’s bicycle market remains underpenetrated at 29%, far lower than the 60-80% penetration rates seen in Daewoo Securities Co., Ltd. Europe and Japan. Hence, we see potential for long-term sustainable growth, backed by increasing domestic penetration and entry into export markets. [IT Mid-Small Cap] Major changes in market trends Will Lee +822-768-4168 1) The primary users of bicycles are shifting from teenagers to more financially capable
[email protected] people in their thirties or older. Consequently, the main product group is moving from Chuljoong Kim low-end bikes to higher-end ones. The resulting rise in prices has become the key driver +822-768-4162 of overall market growth.
[email protected] 2) Domestic bicycle manufacturers are diversifying their product portfolios beyond standard bicycles to tricycle strollers, electric bikes, and equipment and accessories. 3) In line with market growth and shifting trends, the government is expected to continue introducing supportive policies, including the development of related infrastructure. Initiate with Overweight; Top pick is Samchuly Bicycle We initiate coverage on the bicycle industry with an Overweight recommendation.