Annual revenue exceeds 3.5 billion, and another big seller is about to go public!

With the improvement of economic level and the rise of national fitness awareness, the sports fitness equipment industry has also ushered in rapid development. In recent years, a series of fitness equipment big sellers have actively sought capitalization. Recently, another fitness big seller , Zhejiang Lixuan Sports Technology Co., Ltd., disclosed its prospectus and plans to be listed on the main board of the Shanghai Stock Exchange.

Annual revenue exceeds 3.5 billion, Lixuan Sports is sprinting to go public

Lixuan Sports is a company that mainly engages in the design, research and development, production and sales of fitness equipment and related accessories. Its products cover two major categories: aerobic exercise and strength training, including treadmills, exercise bikes, elliptical machines, rowing machines and dumbbells. Its products are mainly sold to Europe, North America and other places, with overseas sales accounting for more than 90% .

Lixuan Sports plans to raise 2.002 billion yuan this time. According to the prospectus, this money will be used in order of priority to invest in six projects, including a production base with an annual output of 1.5 million fitness equipment and 600,000 dumbbells, and technological transformation of an annual output of 450,000 fitness equipment.

With the rapid development of the fitness industry, Lixuan Sports' performance has shown a steady upward trend. From 2019 to 2021, Lixuan Sports' operating income was RMB 1.54 billion, RMB 2.45 billion, and RMB 3.52 billion , respectively, and its net profit attributable to the parent company was RMB 207 million, RMB 310 million, and RMB 442 million, respectively.

The revenue scale of various products of Lixuan Sports is also growing accordingly. According to data, Lixuan Sports' business revenue mainly comes from exercise bikes, elliptical machines, and treadmills. In 2021, the sales revenue of the above three types of products were 133,293.87 million yuan, 89,001.91 million yuan, and 67,613.53 million yuan, respectively, an increase of 27.42%, 41.79%, and 22.43% compared with 2020, accounting for 83.46% of the main business income in 2021.

It is worth noting that the dumbbell products newly developed by Lixuan Sports in 2020 had sales revenue of 241.2049 million yuan in 2021, an increase of 1603% compared with 2020. In addition, the sales revenue of rowing machines of Lixuan Technology in 2021 was 189.1785 million yuan, an increase of 94.06% compared with 2020.

The growth in Lixuan Sports Product revenue is also inseparable from the company's continuous research and development of new products to meet consumer demand. Data shows that from 2019 to 2021, its R&D expenses were 52.9579 million yuan, 85.1427 million yuan, and 112.8910 million yuan, respectively, showing an increasing trend year by year.

In terms of production mode, Lixuan Sports mainly adopts the "production based on sales" model, formulating production plans and organizing production in combination with sales orders, production capacity and inventory. With a mature supply chain system, long-term accumulated production technology and rich industry experience, Lixuan Sports has established long-term and stable cooperative relationships with internationally renowned fitness equipment brands such as Nautilus and Decathlon.

With the deepening of cooperation with these internationally renowned brands, the proportion of Lixuan Sports' overseas sales is also increasing year by year. From 2019 to 2021, its overseas sales accounted for 80.64%, 91.54% and 93.50% respectively.

According to statistics from the General Administration of Customs of China, the total export value of treadmills and other fitness and rehabilitation equipment in China in 2021 was US$8.945 billion. Calculated at the exchange rate at the end of 2021, Lixuan Sports accounted for 5.69% of the total exports of China's fitness equipment industry in 2021 , and has strong market competitiveness.

However, as Lixuan Sports' performance continued to rise, the gross profit margin of its main business showed a downward trend year by year. From 2019 to 2021, excluding the relevant freight and customs clearance fees incurred due to the implementation of the new revenue standard, the gross profit margin of Lixuan Sports' main business was 27.42%, 24.74% and 22.71% respectively.

Lixuan Sports said that the decline in the gross profit margin of the company's related products was mainly affected by the cost of raw materials. In 2021, the prices of commodities in the global and domestic markets rose rapidly compared with 2020, and the procurement costs of raw materials for Lixuan Sports' main products rose sharply. Although Lixuan Sports raised the sales price of its products after consultation with major customers, the gross profit margin of its main products still declined due to a certain time lag.

In addition, Lixuan Sports is also facing a series of risk factors in its current operation, including international trade protection policies, high customer concentration, intensified market competition, exchange rate fluctuations, rising raw material prices, etc. However, thanks to the rapid development of the fitness market industry, Lixuan Sports' prospects are still very bright.

The global fitness equipment market is growing rapidly with an average annual compound growth rate of over 5%.

With the popularization of health awareness among the whole people, consumers' demand for fitness participation is increasing, which has also driven the continuous expansion of the scale of the fitness equipment industry worldwide.

According to data from Research and Markets, the global fitness equipment market size was approximately US$13.5 billion in 2020, and is expected to maintain a compound growth rate of 5.3% from 2020 to 2027. The global fitness equipment market size will reach US$19.4 billion in 2027.

At the same time, affected by the epidemic, home fitness is gaining favor among more and more fitness enthusiasts due to its advantages of no time and location restrictions. According to data from Fortune Business Insights, the global home fitness equipment market size was US$10.18 billion in 2020, with an average annual compound growth rate of 4.74%. It is expected that the market size will reach US$14.74 billion in 2028.

From the demand side, developed countries such as Europe and the United States are currently the world's most important fitness equipment consumer markets due to their high level of economic development and strong awareness of sports and fitness.

North America (mainly the United States) is the world's largest consumer market for fitness equipment, with a market size of more than US$6 billion in 2020, accounting for nearly half of the global consumer market. Europe, represented by Western Europe, is currently the world's second largest consumer market for fitness equipment.

Fitness equipment sold in Europe and the United States is mostly imported. According to statistics from the United Nations trade database, from 2012 to 2020, the total import value of fitness equipment in the United States and Canada increased from US$2.12 billion to US$4.77 billion, with a compound annual growth rate of 10.67%; among them, the trade value of fitness equipment imported from China increased from US$1.5 billion in 2012 to US$3.3 billion in 2020, accounting for 70% of the total import value of fitness equipment in the United States and Canada.

From 2012 to 2020, the total import value of fitness equipment in Europe increased from US$1.4 billion to US$1.94 billion, with a compound annual growth rate of 4.16%; among them, the trade volume of fitness equipment imported from China increased from US$970 million in 2012 to US$1.45 billion in 2020, and its share in the total import value of fitness equipment in Europe increased from 69.59% to 74.98%.

With the transfer of the global industrial chain, China is becoming the world's largest manufacturer of fitness equipment . According to statistics from the General Administration of Customs of China, from 2017 to 2021, the total value of China's fitness equipment exports had an annual compound growth rate of 32.88%, showing a trend of sustained growth. China's fitness equipment industry still has a lot of room for development.

At present, with the popularization of Internet and Internet of Things technologies, the fitness equipment industry is also developing in the direction of intelligence. Lixuan Sports also stated that in the future it will continue to increase investment in research and development of production processes and new technologies, design and launch products that meet market demand, continuously expand product categories, and continue to explore new customers and new markets.

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