Core Viewpoint - The competition in the domestic diaper market has intensified, leading some brands to focus on international markets for growth, with Leshu Shih's rapid rise in emerging markets being a notable example [1][2]. Company Overview - Leshu Shih Limited is a leading hygiene products company focused on emerging markets in Africa, Latin America, and Central Asia, having separated from the Sen Da Group in 2022 [2]. - The company has established eight factories and 51 production lines in Africa, with an annual production capacity exceeding 6.3 billion diapers and nearly 2.9 billion sanitary pads [2]. Business Model and Strategy - Leshu Shih's success is attributed to its localized production model, which significantly reduces costs, allowing it to offer products at prices approximately one-third of those of European and American competitors [3]. - The company has adopted a channel penetration strategy that covers both urban and rural markets in Africa [3]. Financial Performance - Revenue growth for Leshu Shih is projected to increase from $320 million in 2022 to $454 million in 2024, with net profit rising from $18 million to $95 million during the same period [4]. - Despite growth, revenue and net profit growth rates are expected to slow down significantly in 2024, raising concerns about future growth momentum [4][5]. Revenue Composition - The revenue share from baby diapers has decreased from 78.4% in 2022 to 71.8% in 2024, indicating a shift in the company's revenue structure [7]. - The sanitary pad segment has emerged as a new growth driver, with a compound annual growth rate of 30.6% from 2022 to 2024 [7][8]. Market Dynamics - The African market for hygiene products is characterized by intense competition from both local brands and international giants like Procter & Gamble and Kimberly-Clark [14][15]. - Local brands are gaining traction by offering products tailored to regional preferences and at lower price points, posing a challenge to Leshu Shih's market share [14][15]. Pricing and Profitability - Leshu Shih's pricing strategy targets the mid-range and mass markets, with diaper prices ranging from $0.09 to $0.20 per piece, and sanitary pads priced between $0.045 and $0.085 [10]. - The company's gross margin has improved from 23.0% in 2022 to 35.2% in 2024, but it remains lower than competitors like Procter & Gamble, indicating room for improvement in cost control and brand positioning [11]. Research and Development - Leshu Shih's R&D expenditure is notably low, with a research expense rate of only 0.1%, which may hinder its ability to innovate and compete effectively in the long term [12][13]. - The company has only four R&D personnel, which is insufficient for its diverse product lines and international operations [12]. Production Capacity and Expansion Plans - The utilization rate of Leshu Shih's diaper production capacity is 77.9%, indicating that over 20% of its capacity is underutilized [16]. - The company plans to expand its production capacity significantly through its IPO proceeds, which may lead to challenges in market absorption if demand does not keep pace with increased capacity [17].