Prince Frog International Holdings Ltd (HKG:1259) is benefiting from the growth of disposable income in China as families are spending more buying products specifically for their children, says Eric Brock, Portfolio Manager at Clough Capital Partners, L.P.
“Inside of our consumer themes we like a company called Prince Frog. Now, Prince Frog is one of the leading providers of children’s lotions and shampoos. And as we talk about the consumer, there is one theme what we are trying to focus on, which is the growth of disposable income. It’s well-known that income growth has been very high in China, but it’s less appreciated that disposable income growth has been even higher,” Brock said.
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Prince Frog is an example of a company that is selling what was once a luxury item that is now becoming a staple, Brock says, and the company is building a solid brand within this transition into higher discretionary income for China’s families.
“Spending power for premium products is enhanced with smaller families in China. In the past, people would just use the same soap or shampoo they use for themselves, but now because they have the ability to spend more, they are actually buying products specifically for their kids. Prince Frog is a big beneficiary of that trend and is building a very nice brand,” Brock said.
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