Axonkids AB, the new kid on the block…

Posted: 28 November, 2015 in Published Investment Calls
Tags: , , , , , ,
When the share price plunged after the November 27 2015 Q3 report, CESI quickly purchased Axon kids AB shares, despite reported lower revenues SEK 4.7 million (6.1), and negative result, SEK -1.1 million (-0.8). Why? Well, a number of new distributors have very recently been contracted. CESI is convinced the facts stated below will have a major near future impact…
“In Q3 we have been focused on securing agreements with distributors in key strategic markets. Previously, we have pursued sales activities in these markets without distributors, whitout potential for rapid growth and expansion that is our goal. In the short term, this strategy change has had a negative impact on sales for the period due tot that deliveries to these areas has been offset in time but we are now looking forward to capitalize from this work. Above all, I am delighted to see that we can reach agreements with major distributors and markets, which ensures that we have taken us to the next level and that the Swedish car safety thinking regarding rearward facing has gained momentum in the world [CESI: Read Swedish tradition and long term Swedish development within Child car safety technology]. When I was involved during the Axonkids business launch in 2009, we did not believed that the opportunities outside the Nordic countries would be as big as they currently are. For me, this is a fantastic realization. For the remainder of the year, with the new distribitors out on the field, the outlook for a good year end outcome, appears very positive” (edited and translated by CESI, reference link to quote and Q3 interim report in Swedish here!)
In Q3, Axonkids has signed an agreement with a new distributor, Kool Trade, an UK and France distributors. Kool Trade is one of the three largest distributors in child and infant industry for the region, reaching over 1,700 stores with its sales force. Initial orders were directly obtained (contracts of about SEK 1,000,000) which shows the market size and attractiveness of the products.Kool Trade, founded 1983, is a reputable company and one of the strongest distributors in the market with strong brands. Babyjogger, 4moms and Mychild, being a few portfolio examples. According to the latest metrics from 2012, the market for children’s car seats in the UK alone is worth 1.8 billion and subsequently has increased sharply as interest in more expensive products such as rear-facing child seats have grown in the regional area.To these numbers, the France market numbers should be added and these are approximatelt equivalent.
In Q3, Axonkids secured CCC approval for its products in China. In September 2014, CCE certification was introduced as a legal requirement for Chinese children car seats! The CCC approval is China’s equivalent to the European ECE and with the introduction, the Chinese government intends to assure the quality of the car seats that reach the market. Because of uncertainties in the market, this is an important step for Axonkids. The certification proves that the Axon kids AB products are of high quality and secures opportunities for a continued and expected expansion in China.
In Q3, Axonkids signed an agreement with the EKgroup. EKgroup access the chain stores Happy Baby and Probaby. Furthermore, the EKgroup access another 100 independent stores in Germany and also the Switz- and Austrian store chain Baby Rose. Now, Axonkids will reach all these shops with their product family. Ekgroup has a turnover of approximately SEK 2 billion and in recent years, the EKgroup has expanded greatly.
In Q3, Axonkids participated at the Kind & Jugend trade fair in Cologne, which is the largest fair in Europe on child and baby items and a meeting point for all the major manufacturers and buyers in Europe. Axonkids distributors for all markets respectively also attended to meet its key customers and highlight product catalouge updates.
In Q3, the company continued their focused efforts to increase the revenue margins of their products. The manufacturing process is screened in respect to cost savings.
In Q3, two new booster seats have been launched: The isofix seat “Apollo” that fills a segment gap, as well as “Metro”, which is an innovative new booster seat that grows with the child in both length and width. However, the first deliveries of these took place after the end of the Q3 period.
Events after the Q3 period
Axonkids has announced Leto as a new distributor for Greece. Leto is highly reputed and one of the largest distributors of the current Greece market. Leto has placed its first container orders and a sales conference will be arranged in Athens in January 2016.
After the period, Axonkids participated at the exhibition in Italy with Real Baby, where the entire product range was demonstrated. To Axon kids AB delight, the National Italian television recorded a reportage about rearward riding as well Axonkids products.

Most recently, Axonkids has implemented a new share issue which was subscribed to nearly 200%. The capital will be used to secure global market shares of the business.

Regulations call for all car seats sold in China to be certified, reference link:

“According to the 2014 China Child Safety Seat Market Report issued by Market Research, the demand for child safety seats in China will post a compound annual growth rate (CAGR) of 68 percent from 2014-2017.

In conclusion, the UK based ICSC (In car safety centre) quotes: “Axkid may be considered the new kids on the block” and CESI share this statement. Most interestingly, we all know that kids tend to grow fast 😉

And. Congrats Axon kids AB /  minikid for the top grades in the recent Swedish best in test (see link below)!ä 

Future triggers: New markets. The CEO has mentioned a number of countries, Russia and US included.

Best regards, CESI

The author, Cutting Edge Science Invest, is currently an Axon kids AB share holder. Cutting Edge Science Invest can not guarantee, or take into accountability, the content of truth and accuracy of the information in this article/post.Thus, Cutting Edge Science Invest requires that a possible reader gather complimentary information if any type of investment in the company described above is considered. Cutting Edge Science Invest provides personally biased information and at best also “general information and opinions”. The article/post does not contain professional investment advice. 


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