Caixin News, August 28th (Reporter Wu Chao) due to weak consumer demand and intensified industry competition, Rongtai Health (603579.SH), the domestic massage chair leader, saw its revenue decline again in the first half of the year after experiencing two consecutive years of revenue decline. The company revealed in its financial report that at the current stage, product prices in the offline market continue to decline, and the gross margins across various channels in the online market have also declined.

Rongtai Health announced on the evening of the 27th that the company achieved operating revenue of 0.825 billion yuan in the first half of the year, a decrease of 7.30% year-on-year; the net profit attributable to the shareholders of the listed company was 0.111 billion yuan, an increase of 6.12% year-on-year.

In addition, Rongtai Health also faces the issue of cash outflow. The net cash flow from operating activities in the first half of the year was -43.1845 million yuan, compared to 0.164 billion yuan in the same period last year. This was mainly due to the decrease in revenue resulting in reduced refunds, as well as an increase in the cycle of purchasing raw materials and paying for goods compared to the same period last year.

Rongtai Health's main products are massage chairs and small massagers, and the company adopts different operating models for the domestic and international markets. The domestic market is mainly operated with proprietary brands and also provides ODM production for individual companies; the overseas market mainly operates on ODM basis, providing OEM production for brands from all over the world, and gradually promoting proprietary brands to the international market through e-commerce channels.

In terms of domestic business, Rongtai Health stated that the spending power and willingness of Chinese residents to consume are gradually recovering in the first half of the year, but consumption motivation is still insufficient. In particular, the mid-range product market share has significantly increased, while the market share of high-end products has contracted. Against the backdrop of soft market demand and intensified competition, product prices have continued to decline. As a result, the company is stepping up efforts in channel reform, resource investment in terminal channel expansion, new product promotion, and store image upgrade.

In the online market, Rongtai Health frankly faces pressure, with the industry growth rate slowing down and the declining influence of top influencers. Platform price wars and frequent subsidy policies, as well as intensified algorithmic price comparisons, have led to lower gross margins across various channels, increased return rates, and intense competition on online platforms. However, in the background of the convergence of traditional e-commerce and interest, the trend of diversified channels is gradually stabilizing, and the company's market share is increasing.

In a recent investor research activity, Rongtai Health stated that during the 618 period this year, the overall sales of Rongtai brand on all platforms basically remained the same as last year, and the growth on Douyin was lower than expected. As the current large-scale promotion effects have become normalized, the timeline has become quite long, and the halo effect of top anchors is not obvious, so the overall sales on e-commerce platforms did not meet expectations.

In terms of overseas business, shanghai rongtai health technology corporation stated that, affected by the global economic downturn and weak demand, the number of orders from major customers has decreased, and the performance of various regional markets varies.

Among them, the south korea market saw a significant decline in the first quarter, with some recovery in the second quarter; the usa market performed well in the first quarter, but weakened in the second quarter due to factors such as the rise in marine transportation fees; europe and the middle east markets remained stable with growth, the russian market grew significantly, but the shipment progress is constrained by payment efficiency issues due to international financial sanctions; the southeast asia market remained generally stable.

Regarding the order situation, shanghai rongtai health technology corporation introduced in the survey that generally, July and August are relatively slow seasons, and this year is no exception. The data for July is generally average, and from the current perspective, August also appears to be relatively flat.