Recently, massage instrument brandsSKGFuture Wearable Technology Co., Ltd., the parent company(hereinafter referred to as Future Wear)The prospectus has been officially submitted, and the company plans to list on the ChiNext of the Shenzhen Stock Exchange. This follows2021In [year], after Bairen became the 'first smart massage device company', another massage device company made a dash for successIPO listing.
What are the strengths and weaknesses of each of the two companies? How do you view them?SKGThe phenomenon where product sales have been growing but profits have not? FutureSKGHow can this phenomenon be changed?SKGsprintIPO listingWhat are your views on the results? Frost & SullivanFrost & Sullivan,Lou Lei, Executive Director of Frost & Sullivan Greater China, was interviewed by China Power Grid to discuss the future development of leading companies in the massage instrument industry.
State Grid of China
Health preservation has become a key word in the lives of contemporary people, especially young individuals. This lifestyle has also become the cradle for the growth and development of many industries, with massage devices being one of the most typical representatives. In recent years, driven by the combination of social media influencer partnerships, celebrity endorsements, and product recommendations, the massage device market has seen tremendous economic effectiveness.
Recently, massage instrument brandsSKGFuture Wearable Technology Co., Ltd., the parent company(hereinafter referred to as Future Wear)The prospectus has been officially submitted, and the company plans to list on the ChiNext of the Shenzhen Stock Exchange. This follows2021In [year], after Bairen became the 'first smart massage device company', another massage device company made a dash for successIPO listing.
Image source: State Grid of China
SKG VSBai Liangjing, who is the king of massage instrument categories??
As a leading brand in the smart massage device category, this Future Wearable SprintIPO listingIt inevitably makes people compare it with the previously successful launch of Beiliaoqiao. After all, they even chose Wang Yibo and Xiao Zhan, who became popular for the same movie, as their endorsers.
Lou Lei
Executive Director, Greater China, Frost & Sullivan
"SKGAs two leading companies in China's current market, Frost & Sullivan and Harmony Relaxation have both gained the favor of investors in the capital market. The products of these two enterprises also have their own advantages and disadvantages.' Lou Lei, Executive Director of Greater China at Frost & Sullivan, analyzed to a reporter from State Grid China,SKGIts advantage lies in its more lightweight and compact product, allowing consumers to easily carry the massager out for use. However, becauseSKGThe product mainly uses pulsed current technology, so not all consumers can accept this relatively new massage method.
The products of Bélibaby mainly use physical massage technology. The vast majority of consumers in the market have a higher acceptance level of physical massage devices, and their comfort level is also more easily accepted by the public. However, physical massage instruments are usually large in size and quite heavy, making it difficult for users to carry them around and use them frequently.
And for those positioned as high-tech enterprisesSKGFor HarmonyOS, how strong its R&D capabilities are is of utmost importance in supporting its development.
Data from the future wearable IPO prospectus shows that during the reporting period, their investment in research and development expenses was2275.49Ten thousand yuan,4714.06Ten thousand yuan and7472.59Ten thousand yuan, accounting for2.87%,4.76%and7.05%At the same time, the prospectus also indicates that after deducting issuance expenses, the funds raised this time will be used for future construction projects of health digital factories, research on intelligent wearable artificial intelligence technology, and development of digital healthcare platforms.;The proportion of R&D expenses to revenue for Beil relaxation in the past three years is5.86%,4.46%and3.97%.
In terms of patent applications, as of2022year5month31Today, the total number of shares held by Future Wearable and its holding subsidiaries1376Patents, among which, the invention patent with the highest gold content is48Item. And BiLiang relaxation as of2021year12month31Date, with invention patents at home and abroad159item.
In comparison, in terms of R&D strength,SKGHarmonious Relaxation seems to be on par, and in the future, who can occupy the top spot as the massage device leader remains to be seen with its subsequent development.
Revenue has increased, while net profit has decreased.SKGWhere has all the money gone??
Currently,SKGHarbin Relax, Aojiahua, and Rongtai Health together form the first tier of the massage instrument industry. Among them, in the online channel for portable massage instruments:SKGWith a high market share, data from the Economic Research Institute of Guosen Securities shows that the market shares of their cervical massagers and eye massagers are31%and12%, and this also enables its parent company to sprint towards wearable devices in the futureIPO listingIt has a somewhat logical implication.
The prospectus for the future wearable device IPO shows,2019year-2021In [year], the company's main business revenue was78995.03Ten thousand yuan,98707.37Ten thousand yuan and105670.72Ten thousand yuan. The cervical massager, which has a high market share as mentioned above, constitutes the most important part of its revenue, accounting for a proportion of main business revenue that is74.19%,86.67%and70.33%This also means that the dependence on a single core product is too high, increasing the risk of product iteration and updates being replaced. It can affect the company's overall revenue stability. In the future, wearable devices have clearly recognized this point as well. In their prospectus, 'high concentration of product revenue' is one of the main operational risks they have identified.
In terms of net profit, during the reporting period, the net profit attributable to the shareholders of the parent company after deducting non-recurring gains and losses was22453.68Ten thousand yuan,21214.6Ten thousand yuan and14902.23Ten thousand yuan. Comparing its revenue data, it is not difficult to find that while the revenue from wearable devices has been increasing year by year, its net profit has been continuously declining.
The fluctuation in gross profit margin is one of the reasons for the decline in net profit. During the reporting period, the gross profit margins of the company's main business were as follows:55.81%,58.31%and52.38%Among them, the gross profit margin of wearable health products that contribute significantly to revenue has decreased significantly.2020year-2021In [year], they decreased respectively1.97%and5.75%.
The gross profit margin of future wearables has also made it onto the hot search list for a while. Compared to its three consecutive years of exceeding50%The gross profit margin. Apple's latest quarter's gross profit margin was only43.76%Therefore#SKGGross profit margin far exceeds that of Apple#The topic sparked a heated discussion among the public.
"SKGIt is currently the leader in the massage instrument market, soSKGHaving a relatively high say in the supply chain and upstream and downstream suppliers can bring about higher gross profit margins." Lou Lei said. In the Chinese market, there are far more well-known mobile phone manufacturers than well-known massage instrument companies, and since the development of mobile phones has a long history, the gross profit margin of products will remain at a relatively stable and low level. In contrast, massage instruments are still relatively new products in the Chinese consumer market, and there are also much fewer well-known manufacturing enterprises, so they have relatively high gross profit margins.
On the other hand, the increase in selling expenses has also squeezed the profit margin for future wearables. During the reporting period, their sales expenses were10238.76Ten thousand yuan,21020.39Ten thousand yuan and21461.79Ten thousand yuan, including market promotion and advertising expenses of5583.35Ten thousand yuan,16,581.50Ten thousand yuan and16100.46Ten thousand yuan. Regarding the surge in costs, the wearable device's explanation for this is:2020In [year], the company significantly increased its investment in market promotion and advertising, including an increase in advertising placements for main TV dramas and variety shows, celebrity endorsements, and new media;2021In [year], the company made structural adjustments to its cost allocation while maintaining market promotion and advertising expenses, reducing investments in online film and television dramas, variety shows, and new media platforms, and increasing investment in offline elevator advertisements.
Quality issues remain a major weakness in the massage instrument category
As a product that comes into direct or indirect contact with human skin, the quality of massage devices has always been a focal point of public concern.
SKGIt has also been complained about by consumers multiple times due to issues such as product quality and after-sales service. As of2022year8month3On the Black Cat Complaint Platform, regardingSKGComplaints272In addition, some consumers have experienced neck burns after using their neck massagers.
Image source: State Grid of China
A leading enterprise in the domestic massage instrument field,SKGThe recurring product issues not only expose the company's shortcomings in quality control but also reflect the uneven quality of products in the industry. Quality issues are a 'dilemma' for massage instrument companies facing development.
2022year4Month, the State Administration for Market Regulation10provinces(city)89produced by enterprises98Random inspections were conducted on batch massage instrument products, and the unqualified rate was37.6%, up from the previous spot check5.9%; 2022year1In the month, the Shanghai Market Supervision Administration inspected JD.com Mall,iBailian, OrientalcjTmall, Suning5Supervisory spot checks were conducted on massagers sold on an online platform, and there were3The batch of products is unqualified, with the main non-conforming items being markings and instructions, power supply connection, and external flexible cords.2National mandatory safety indicators;2021In [year], the Guangzhou Market Supervision and Administration Bureau conducted supervision and spot checks on the quality of massage instrument products, with a total of19Batch samples, upon inspection, there are4Batch products do not meet standard requirements......
Back to this Future Wearable SprintIPO listingCurrently, the massage instrument market is a rapidly growing blue ocean industry. As the market continues to expand, more and more manufacturers will pour into this sector, and products are bound to be rapidly iterated under competitive market pressure and technological upgrades. In the fierce market competition,SKGWhether it can maintain its share of the leading brand, and whether its parent company's wearable business can make a sprint in the futureIPO listingsuccess?
Lou Lei fromSKGAn analysis of the advantages and disadvantages shows whether future wearables can make a dash for successIPO listingThe possibility of success, he believes, lies in the current future wearable sprintIPO listingStages, indeed come with many problems, such as high marketing and promotion costs, and product quality being questioned by some. However, he has taken a relatively leading position in the massage device market within a very short period of time, and there are indeed many commendable points to his credit, which have also played a certain role in promoting the healthy development of the industry. In the future, wearable devices also hope to achieveIPO listingFurther expand its advantages in niche categories, and also hope that in the future wearable ifIPO listingSuccess can lead to greater product refinement and R&D, driving the industry into a more Developing in a virtuous cycle.
*This article is reprinted from State Grid of China. , author Wang Xiaoman , Original title: Revenue rises, net profit falls. Wang Yibo is the spokesperson.SKGsprintIPO listingHow to break through? ">
Frost & Sullivan Insight & Extended Readings
Q: SKGThe financial report data for the past three years show that product sales have been increasing, but profits have not. What is your view on this phenomenon? FutureSKGAnd how can this phenomenon be changed?
A: SKGThe massage instrument industry is still developing rapidly, with products in the market being updated quickly and new players constantly entering the market.SKGIn order to increase their market share and visibility, companies will adopt strategies such as intensifying product promotion, accelerating product innovation and iteration, and reducing the profit margin of sold products. These measures aim to enhance the company's market presence and further develop into a stable industry leader. In the future, whenSKGAfter stabilizing its market positioning, it can consider leveraging its good reputation and awareness for promotional efforts. By offering high-quality products, it can attract consumers, thereby reducing marketing expenses. With the growth in product sales, profits are also expected to recover accordingly.
Q: On the Black Cat Complaint Platform and product reviews, there are many negative comments from users who have experienced skin redness, swelling, and a burning sensation after using these products. Is this a unique drawback of 'internet celebrity' massage instrument products? And how can this issue be improved?
A: Pulse current massage devices are still a relatively new product experience for consumers. When consumers are not very proficient in using new products, they may occasionally experience some side effects during use. To improve this phenomenon, companies can increase education and guidance on how consumers should correctly use their products, ensuring that consumers can use them properly and enjoy the benefits they bring.
