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Recent IPO ON Holdings AG (ONON) Draws Put Sales into Weakness

by | Sep 28, 2021

ON Holdings AG (ONON) a recent IPO that has seen bullish puts over the last week including 1,500 October $35 puts sold on 9/23 and 2,500 November $35 puts sold for $3.05 on 9/27. Shares priced at $24, well above the expected range of $18-20. ON is a Swiss- maker of footwear and sports apparel products including ultralight and stretchable fabrics. The company was started in 2010 around their unique technology for running shoes called ‘cloudtec’ an adaptive surface that allows for cushioning on the landing but not on push off.  And, in the years since, the company has expanded their in-house tech into new areas like superfoam soles, mission-grip, and zero gravity lightweight soles. Their singular focus on premium performance-wear has attracted some big-name athletes, most notably Roger Federer, which has helped brand awareness and customer acquisition at a lower cost. The $9.77B company trades 17X sales with 85% annualized growth from 2010 to 2020. This continued in the 1H of 2021 with 84.6% sales growth. And, being within the premium channel, they’ve been able to have more pricing power in recent years which has helped gross margins expand as well to around 54%. In the 1H of 2021, adjust EBTIDA margins grew to 15%. ONON has a relatively balanced mix of regional sales with 49% in the US and 44% in Europe and a lot of opportunity for them to expand into Asia-Pacific where premium brands tend to thrive. They entered China in 2018 and saw net sales go from CHF1.8M to CHF5.5M in 2020. They have a true omnichannel brand with over 8,000 retail contacts and yet nearly 40% of sales coming from DTC including sales across Tmall and JD.com in China. ONON has benefitted in the last year from the bigger thematic shift towards personal health, outdoor activities, and athleisure. And, as they expand into new product verticals and apply their same premium-focused, innovation-first approach to design, they’re likely to carve out a very successful niche. Shares trade at a hefty premium today but ONON is one to keep on the radar as a fast-growing player within the space and at the right price could be a nice pick-up.