Casio’s recent strength in China continues-Sandalwood

Casio’s stock price is up more than 50% YTD in 2019, as the Japanese company’s Watch sector has surpassed people’s expectations as well as the industry as a whole, and China is the primary region driving the surprise recently.

From Casio official reporting, China business was the growth driver in F2Q20 and previous few quarters, not only for its revenue but also OP margin. We estimate China accounts for >15% of the total revenue and >35% of total OP margin; And Casio China eCommerce accounts for roughly 50% of its China revenue, therefore Sandalwood online sales data is very relevant to the company’s China growth story as well as its global growth story.

Sandalwood historical data shows good correlation with the company reported China sales (Chart 1), suggesting strong prediction power.

4Q19 promotions from China eCommerce platform was very intense and Casio also did aggressive push on its G-shock and Baby-G series. The strength of Baby-G was partly driven by more posts on Xiaohongshu, one of the top pinterest-like social media App in China.

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