New Stock Preview | Lemo IoT: Smart Massage Chair Leader Successfully Listed Again, How to Break Through Growth Anxiety?

Riding on the trend of sharing economy and wellness, shared massage chairs have become an indispensable "fixture" in public places and consumption scenarios such as shopping malls, cinemas, and high-speed rail stations. After early crazy expansion, grabbing market share, and market reshuffling, the market share in the industry has gradually stabilized, and the remaining companies appear more resilient. Recently, the intelligent massage service provider Fujian LeMo IoT Technology Co., Ltd. (referred to as "LeMo IoT") submitted a listing application to the Hong Kong Stock Exchange, with China Securities Co., Ltd. International and Shenwan Hongyuan Group Hong Kong as its joint sponsors. It is worth noting that this is LeMo IoT's second submission, with the previous one on January 21, 2025. As a leading company in the shared intelligent massage chair industry, behind LeMo IoT's consecutive submissions to the Hong Kong market, there seems to be hidden anxiety about future growth. Business rapid expansion, profitability under pressure LeMo IoT was founded in 2014 and launched the "LeMo Bar" brand in 2016, dedicated to providing machine massage services for consumers in commercial complexes, cinemas, transportation hubs (including airports, high-speed rail stations, etc.), where consumers can scan and pay to enjoy several minutes of massage services. As of now, the company has set up more than 48,000 service outlets for machine massage services, deploying over 535,000 machine massage devices, covering 31 provincial-level administrative regions and 339 cities in mainland China. The company's service outlets expanded from 21,727 in 2022 to 45,993 by the end of 2024, with a compound annual growth rate of approximately 45.49%. In terms of consumer coverage, the company has a solid market position, with a cumulative identifiable service population of over 165 million and over 32 million registered members as of the last practical date. From a financial perspective, LeMo's main revenue comes from machine massage services and other sources. In 2022-2024, the company recorded revenues of 330 million yuan, 587 million yuan, and 798 million yuan respectively, doubling its revenue over three years. In 2023, the company's revenue increased by 77.7% year-on-year, but in 2024, the revenue growth rate was about 36%, showing some slowdown. In terms of revenue sources, at the end of 2024, 98.11% of the company's business came from machine massage services, while other services included online sales of home massage equipment and massage accessories, as well as digital advertising services. In the most profitable machine massage service business, LeMo operates in a direct management model and a partnership model. The direct management model is the company's main operating model for machine massage services, with approximately 71.0% of service outlets operating under this model, while the remaining 29% of service outlets operate under the partnership model. The direct management model brings in over 80% of the company's revenue, while the partnership model contributes only 14.31% of the revenue to LeMo. In terms of profit, the company's net profit attributable to shareholders in 2022 was only 6.481 million yuan, increasing by over 1,200% to 87.34 million yuan in 2023 and then experiencing a slight decline of 1.8% in 2024, still achieving a profit of 85.807 million yuan. Thus, 2023 became a "highlight" for LeMo IoT, with significant increases in gross profit margin, operating profit margin, and net profit margin, with the gross profit margin increasing from 25.8% to 41.8% and the net profit margin increasing from 2.0% to 14.9%. However, in 2024, rapid growth showed a slight sign of "fatigue." Based on the data from the first quarter of 2025, the company achieved quarterly revenue of 221 million yuan, an 18.4% year-on-year increase, indicating continued business expansion. However, net profit decreased by over 10% from the same period of the previous year to 233.38 million yuan, showing continued pressure on profitability. Looking closely at its prospectus, this seems to be the "hidden cost" that came with the rapid expansion before IPO: in 2024, the company's sales costs increased by 49.4%, significantly higher than the revenue growth rate, leading to a decrease in gross profit margin by 5.7 percentage points. At the same time, the company also faced rapid growth in operating expenses, with marketing expenses increasing by 47.6% and administrative expenses increasing by 57.6%. In addition, the company's operating cash flow has been increasing year by year from 2022 to 2024, but the speed of earning money seems to lag behind the speed of spending. Over the same period, the net cash used in financing activities by the company has been expanding year by year, leading to a decrease in cash and cash equivalents year by year. By the end of 2024, LeMo IoT's cash and cash equivalents amounted to 19.684 million yuan, urgently needing "blood replenishment." "After grabbing market share," what is the next step? According to Frost & Sullivan data, the market size of intelligent massage services in China increased from 17.21 billion yuan in 2020 to 27.07 billion yuan in 2024, with a compound annual growth rate of 12.0%. It is expected to grow from 31.02 billion yuan in 2025 to 56.06 billion yuan in 2029, with a CAGR of 15.9%. The report shows that in the three consecutive years of 2022-2024, by transaction volume, LeMo IoT ranked first among all intelligent massage service providers in mainland China, with market shares of 33.9%, 37.3%, and 42.9% in the respective years. In terms of revenue, the company also ranked first in the Chinese machine massage market in 2024, with a market share of over 50%. It is clear that in terms of layout of intelligent massage chairs, LeMo IoT is undoubtedly a leading company. For LeMo IoT, after experiencing the disorderly growth of the industry and market reshuffling, it still firmly occupies a high market share, indicating recognition of its operations and services. However, if the company wants to maintain high-speed growth, it needs to deepen its understanding of future consumption scenarios. Currently, LeMo's service outlets are distributed in various commercial complexes, cinemas, transportation hubs, and other scenarios. By channel division, as of the end of 2024, machine massage service revenues from commercial complexes, cinemas, airports, high-speed rail stations, and other consumption scenarios were 476 million yuan, 204 million yuan, 76.015 million yuan, 11.915 million yuan, and 14.139 million yuan respectively, accounting for 60.82%, 26.14%, 9.71%, 1.52%, and 1.81% of the total transaction volume. However, looking at the number of devices, at the end of 2024, "LeMo Bar" had 71,000 massage devices in commercial complexes, 406,800 in cinemas, 2,733 in airports, 1,239 in high-speed rail stations, and 8,588 in other locations. This means that 14.5% of the devices deployed in commercial complexes contributed to over 60% of the revenue, while the majority of cinema devices contributed less than 30% of the revenue, indicating ineffective conversion rates. In addition, the shared massage chair industry continues to face cost pressures, with high rental costs and fierce competition for prime locations, as well as significant pressure on procurement costs and payback periods for massage chairs. Additionally, consumer habits still need to be cultivated, as over 70% of users are occasional consumers (using the chairs temporarily in waiting scenarios), lacking stickiness and showing sensitivity to prices, with limited effect on repeat purchases from promotional activities. Currently, the industry is shifting towards refined scene operations. In the short term, hygiene, operation and maintenance, and profitability of intelligent massage chairs remain key challenges; long-term development relies on technological innovation, scene deep cultivation, and cost control. If the company can overcome the bottleneck of user experience, there is still potential for it to become a complementary business format in offline traffic economy under the trend of "health consumption." In the prospectus, LeMo IoT also mentioned that the net proceeds from the IPO will mainly be used to expand the coverage and penetration of service outlets, continuously improve and iterate technology, enhance brand, and support operating capital and other general company purposes. In this context, listing for additional financing, further consolidating its leading position, and contemplating the transformation path may be the best choice LeMo IoT can make.