Key points of investment

Company introduction: leading domestic fitness equipment company

Impasse is the first mainboard listed company in the domestic fitness equipment industry. It landed on the Shenzhen Stock Exchange in September 2017. With the recovery of the offline scene, demand for commercial fitness equipment continues to improve. In 2023 and the first half of 2024, Impas' revenue increased 9% and 45% year-on-year, respectively. By business, Impes has made efforts to export independent products, and overseas orders have increased dramatically. In the first half of 2024, independent product exports/overseas foundry/domestic market revenue increased 62%/43%/26% year-on-year respectively, and exports of independent products became an important driving force for growth.

Industry analysis: The global fitness equipment market exceeds 10 billion US dollars, and domestic brands are actively breaking through the global fitness equipment market of more than 10 billion US dollars, mainly in the European and American markets. According to Allied Market Research, the global fitness equipment industry market size was 11.496 billion US dollars in 2019 and is expected to reach 14.8 billion US dollars in 2028 (CAGR = 2.8% in 2019-2028). The European and American markets are more mature, and there is plenty of room for growth in the Chinese market.

The CAGR for the US, Europe and China in 2016 to 2019 was 2.31%/2.52%/9.38%, respectively.

Judging from the competitive landscape, internationally renowned sports and fitness brands such as Elken, Lijian, BIC, and Technogym occupy the main market share, and domestic brands such as Impace and Shuhua Sports are actively developing their own brands to break through.

Actively developing overseas and domestic markets, independent brands can be expected to grow OEM/ODM business: As customer needs become more and more diversified, Impes strengthens customer stickiness through a customized production model based on sales. The company attaches importance to R&D investment and uses supply chain advantages to seize market share.

The OEM/ODM export business achieved revenue of 249.8573 million yuan in the first half of 2024, an increase of 43% over the previous year.

Independent product export business: The product side actively innovates and actively expands the overseas sales network through new media and exhibitions. In the first half of 2024, the independent product export business achieved revenue of 197.9515 million yuan, an increase of 62% over the previous year. In addition to the European and American markets, the number of orders in emerging markets has achieved a breakthrough increase.

Domestic market business: As health awareness increases, the number of fitness enthusiasts continues to grow. On the one hand, Impis is continuously improving the household product system; on the other hand, it is actively establishing online and offline sales channels. The domestic market business achieved revenue of 124.0205 million yuan in the first half of 2024, an increase of 26% over the previous year.

Profit forecasting and valuation

Two-wheel drive in foreign and domestic markets, and independent brands have become an important driving force. Imps' 2024-2026 revenue is expected to reach 1.3/1.68/2.09 billion yuan, respectively, +45.5%/+29.3%/+23.9%, respectively; net profit to mother is expected to reach 0.1/0.14/0.21 billion yuan in 2024-2026, respectively, +16.5%/+35.9%/+46.9%. Optimistic about the export growth and potential of Impas' own brands, covered for the first time, and gave them a “buy” rating.

Risk warning

Industry competition intensifies; channel expansion and new product promotion fall short of expectations; fluctuations in raw material prices have a certain impact on performance; exchange rate fluctuations have a certain impact on performance.