Goodboy International (01086) privatized, and shareholders' exit at high premiums ushered in an opportunity

The Zhitong Finance App learned that on September 27, Goodboy International (01086) and the offender Crystal Aurora International Ltd., jointly announced the privatization offer plan. The offeror will pay a cancellation price of HK$1.5 billion per planned share in cash to the plan shareholders, including the share option portion. The total cost including the share option portion will be up to HK$1,322 million. After the plan comes into effect, all plan shares will be cancelled and removed, and it is proposed that the listing status on the Stock Exchange be withdrawn.

The offender is wholly owned by Mr. Song Zheng Huan. Song Zheng is also the founder of the company and serves as the company's chairman and executive director. The offeror and those acting in concert together hold a total of 883300915 shares, accounting for about 52.78% of the issued share capital.

The price of this privatization is HK$1.5, which is a very high premium. The premium is about 38.89% from the closing price reported on the Stock Exchange on the last trading day of the announcement, the average closing price premium of 53.06% over 30 trading days, and the closing price premium of 61.29% over 60 trading days. Affected by this, on the second trading day of the announcement, the company's stock price opened higher and increased by a huge amount. The highest increase was over 35%, and the closing price was HK$1.345, and the increase was still as high as 24.54%.

Notably, the company expects court meetings and special shareholders' meetings to be held in or around November 2026. All independent shareholders have the right to attend the special shareholders' meeting and vote on ordinary resolutions approving the continuation arrangements. The privatization plan is likely to be approved for two main reasons:

First, the actual trading price and average daily trading volume of the company's shares in recent years are low. In the past 6 and 12 months, the average daily trading volume only accounted for about 0.13% and 0.16% of the issued share capital, respectively. Long-term trading is sluggish, mainly due to investors' pessimistic expectations of the current macroeconomic environment and the consumer sector, leading to a lack of liquidity in the sector and individual stocks and distorted value discoveries, and valuations have been lower than their value for a long time.

Second, the price premium for this privatization is high. Compared with the 30, 60, and 120 days before the announcement, the premium is over 50%, and higher than every closing price since March 26, 2025. In the absence of liquidity, direct selling in the market will seriously suppress stock prices, making it impossible to obtain an exit at a reasonable price. However, the current privatization of bidders allows small and medium shareholders to withdraw at a higher level of return, and they are highly willing to accept it.

Furthermore, the offeror is willing to privatize with a premium and full cash payment, which also conforms to the best interests of small and medium shareholders. So, why did Song Zheng privatize Good Boy International at this time with the concerted actors?

As mentioned above, the company lacks liquidity and value discovery is distorted. Currently, the PB value is only 0.3 times, and the dividend ratio is over 15%. For listed companies, undervaluation of market capitalization actually reduces the status of listed platforms, providing very little help in financing, and drastically reducing investment and financing capabilities; for founders and concerted actors, they want the company to develop better. Listed platforms are reduced to an empty shell, and the market value does not match, weakening the brand image and value.

Moreover, maintaining a listed platform requires certain costs. Privatization can save large expenses, including administration, compliance, and other expenses related to listing. If privatization is successfully completed, these expenses will no longer be generated, thus enabling the company to allocate more resources for business development. If this privatization goes well, Goodboy International will apply to withdraw its Hong Kong stock listing status, and will focus more on growing performance and improving profit targets.

Goodboy International's fundamentals have rebounded. Its business includes wheeled carts and car seats. It has diversified brands, including CYBEX, Evenflo, and GB, driving overall revenue of HK$4.551 billion, an increase of 5.8% over the previous year. Among them, the CYBEX brand accounted for the majority of revenue. The first half of 2026 was HK$2.71 billion, up 10.52% year on year, accounting for 59.6% of revenue. The company also has a globally balanced omnichannel distribution platform. Revenue was mainly distributed in Asia Pacific, America, Europe, Africa, Middle East and India, with revenue shares of 20.3%, 32.4% and 47.3% respectively in the first half of the year.

In the first half of 2026, the company's profitability improved. Gross profit increased 19.7%, gross margin increased 6.6 percentage points to 56.2%, and various expenses were clearly optimized. Operating profit of HK$431 million, up 113.4% year on year, net profit of HK$277 million, up 162.3% year on year, and operating margin and net interest rate increased to 9.47% and 6.09% respectively. More importantly, the company insisted on dividends. In March 2026, it announced a year-end interest of HK$0.05/share and an interim dividend of HK$0.2 per share in August. The two dividends totaled HK$0.25, with a dividend rate of over 18% at current prices. However, it is important to note that although the net profit is approximately HK$277 million, of which HK$198 million is refunded from US tariffs. After deducting this factor, its core business performance is actually not strong on the surface. As for dividends, other listed companies have recently increased their dividends after announcing overseas trust policies domestically, but it is estimated that they may not be able to maintain this high dividend ratio for a long time.

Generally speaking, Goodboy International's current privatization is a three-win situation for the offender, company, and shareholders. Small and medium shareholders can withdraw with the help of the offeror's high premium returns; the offender can obtain more shares, put resources into the company's development, and share the company's long-term development results; and for the company, focusing on the business and market, and achieving growth and profit goals with gradual restoration can lead to value discovery.