{"text":[[{"start":7.08,"text":"This article only represents the author's own views."}],[{"start":10.32,"text":"Little fish or big catch?"}],[{"start":12.44,"text":"That’s the big question behind a new acquisition by Ridge Outdoor International Ltd. (2720.HK), the world’s largest maker of fishing equipment. Despite its big claim as top tuna in the fishing arena, Ridge actually derives very little revenue from the sale of fishing rods that people usually associate with this pastime."}],[{"start":31.56,"text":"Instead, it gets most of its money from the sale of fishing accessories like chairs and bedchairs, which collectively account for more than half of its revenue; and bags, which account for about a quarter. But that could change with the company’s newly announced purchase of the British Harrison Advanced Rods brand."}],[{"start":48.56,"text":"Under the deal announced last week, Ridge will acquire Suremag Ltd., whose main asset is the Harrison fishing equipment brand. Founder Stephen Harrison will stay on as CEO of the brand following the deal."}],[{"start":60.8,"text":"Harrison appears to be squarely focused on fishing rods, with a product portfolio featuring float rods, fly rods and carp rods. The announcement points out that Harrison, based in the city of Liverpool, is a leader in long range carp rod design and active in research involving the lightweight carbon fiber materials used in the most advanced rods."}],[{"start":80.2,"text":"Reflecting that prowess, an angler using a Harrison Acurix rod set a British record for carp fishing in May this year, according to the announcement. A report in the Angling Trust identified the fisherman as Mike Nixon, and featured a photo of him with a carp weighing 68 pounds 8 ounces that he caught on May 1 at the Waterside Fishery in Chesham, Buckinghamshire."}],[{"start":101.84,"text":"Ridge Outdoor didn’t provide any terms on the purchase. But corporate information website open.endole.co.uk shows the company is quite small, with less than 10 employees, annual revenue of less than 1 million pounds ($1.32 million) and total assets of less than 500,000 pounds. By comparison, Ridge Outdoor pulled in a far larger 301 million yuan in revenue in the first half of this year ($45 million)."}],[{"start":129.32,"text":"Investors weren’t particularly impressed by the acquisition, though they still bid up the company’s shares by 1% in the next trading day last Friday. Truth be told, the stock is already quite richly valued, and investors are probably waiting for bigger news before valuing the company any higher."}],[{"start":146.52,"text":"Ridge Outdoor floated its shares in February this year, raising HK$285 million ($36.3 million) in the process after selling shares for HK$12.25 apiece. The stock roughly doubled on its first trading day, but has largely traded flat since then, closing at HK$22.32 on Friday. At that level it trades at a relatively rich price-to-earnings (P/E) ratio of 25 and price-to-sales (P/S) ratio of about 3.7, based on its 2025 results. By comparison, Globeride (7990.T), the second largest fishing gear maker, trades at a P/E of 10 and a P/S of just 0.43."}],[{"start":191.12,"text":"At least part of Ridge Outdoor’s premium probably owes to its industry-leading status. The company controlled 23.1% of the global market for fishing equipment in 2024, compared with just 3.9% for Globeride, the second-largest player. In fact, Ridge Outdoor’s market share in the space is roughly double the total for the second to fifth largest players combined."}],[{"start":191.62,"text":"Avid angler"}],[{"start":214.44,"text":"Ridge Outdoor is the brainchild of Yang Baoqing, who was 57 at the time of the IPO and started out his career in the leather and plastics industries. But it seems that Yang was also an avid angler, based on the company’s IPO prospectus, which says he had “a deep-rooted passion for fishing” and was committed to making the experience more accessible to ordinary people."}],[{"start":237,"text":"That’s not difficult to believe, since China has quite a lot of fishing hobbyists, as evidenced by the presence of anglers at many lakes and streams in both cities and in the countryside. China is the company’s second-largest market, though it only accounted for 12% of its revenue in the first half of the year, well behind Europe, which was the biggest contributor with 83% of sales for the period."}],[{"start":259.36,"text":"Ridge’s move into Europe dates back as early as 2009, when the company’s parent opened an office in Britian in pursuit of developing the global market. In 2017 it acquired Solar UK, a well-known British fishing brand established in 2004, for 410,000 pounds. Ridge previously made all its products for other brands under an OEM/ODM business model, and called the Solar UK purchase the official launch of its own-branded business."}],[{"start":289.64,"text":"Many Chinese companies have been making a similar shift in recent years, having developed their product expertise over years of manufacturing for other brands. The self-operated brand business typically carries much higher profit margins than OEM work, though it also requires much bigger spending on sales, marketing and distribution."}],[{"start":308.32,"text":"All of those factors show up in Ridge Outdoor’s latest financial report, which also includes a slightly worrisome 9.8% revenue decline in the first half of 2026. The company blamed a range of negative factors for the decline, including escalating geopolitical conflicts, inflation and increased transport costs, which caused order cycles to be prolonged for its core OEM business as consumer confidence stumbled."}],[{"start":332.92,"text":"On a more positive note, the company said that revenue from its own-brand business rose 59% year-on-year in the first half of 2026 to 34.9 million yuan, accounting for 11.6% of the total. The company’s gross margin was roughly flat for the period, ticking down slightly to 26.6% from 26.7% a year earlier."}],[{"start":356.16,"text":"Its bottom line looked far worse, as its profit tumbled 43% to 23 million yuan. But a closer look shows the drop was largely due to higher selling and distribution costs, probably due to the increased focus on own-brand sales, as well as forex-related losses that are beyond its control."}],[{"start":373.72,"text":"The bottom line for this company seems to be that it’s currently navigating some difficult waters due to factors largely beyond its control. But its growing focus on own-brand products, which is reflected in its latest results and new acquisition, looks like a savvy strategic move that could eventually justify its relatively rich valuation."}],[{"start":397.68,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1791887027_8480.mp3"}