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Polygiene - YKK Group – a partnership with potential

23 september 2020

YKK is the market leader for zippers
Italian market first out, more may follow
Global zipper market CAGR of 4.1% ’21e-’26e
YKK has a market share of ~20% globally
Polygiene announced yesterday that it has entered into a partnership with the YKK Group, which has developed a line of zippers using tape treated with Polygiene's ViralOff. To our understanding the partnership is initially for the Italian market, but it is likely that Polygiene will try to develop the partnership in more countries if the product sells according to its expectations. The YKK group is a huge organization founded in Japan, which holds a market-leading position in the global zipper market. The estimated market share for YKK is ~20%. The Group produced over 10 billion zippers last fiscal year and is present in 71 countries around the globe. If this partnership develops globally, there is major potential.

Low initial volumes, but the long-term potential is there
YKK produced roughly 1.3 zippers for each person in the world in its last fiscal year. We argue that average zipper consumption is higher in Italy than the global average. If we assume that the yearly zipper demand is 2.5 zippers per person in Italy, that would mean 150 million zippers sold on the Italian market (the country has ~60 million inhabitants). YKK reported sales from its zipper division of JPY 332.8bn, or SEK 28bn, meaning that YKK charges on average SEK 2.8 per zipper. Reported COGS was 65% of sales, meaning a production price of SEK 1.8 per zipper. We assume that the addition of Polygiene will add an additional 5% to the production costs, or SEK 0.09 per zipper, and that 5% of the Italian zipper market can be penetrated. Using the above assumptions, we arrive at a yearly order value of SEK ~0.7m. However, if we assume that the partnership will be enhanced to cover 20% of the total zipper volume, and that 10% of those zippers will be sold with the ViralOff functionality, that could mean about SEK 18m p.a.

YKK produced over 10bn zippers last FY
According to MarketWatch, the global zipper market is projected to reach USD 21.4bn by 2026, up from USD 16.8bn in 2020, representing a CAGR of 4.1%. We think that the partnership with YKK has the potential to be very beneficial, and strengthens the long-term outlook for ViralOff.

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