Aojiahua (002614): Massive growth of massage chair brand business from niche to mass

Aojiahua (002614): Massive growth of massage chair brand business from niche to mass

This report reads: We believe that the massage chair industry is moving from a niche to the general public. The company’s product advantages, channel advantages, and scale advantages are in a positive cycle, which will bring continuous market share growth. It is currently at the starting point of continuous performance improvement and increased holdings.

Investment Highlights: Coverage for the first time, give overweight rating.

The market is suspicious of the company’s high-growth massage chair business, and it is estimated that the economic cycle has led to lower-than-expected results.

We believe that the massage chair industry is moving from a niche to the general public. The company’s product advantages, channel advantages and scale advantages are circulating in a positive direction, which will bring continuous market share improvement. It is currently at the starting point of continuous performance improvement.

The company expects EPS 0 for 2019-2021.

94/1.

15/1.

43 yuan, a reference industry comparable company, based on the higher growth of Aojiahua, given the company 25 times PE in 2019, corresponding to a target price of 23.

5 yuan.

Massage chairs are moving from niche to the general public. The market size is expected to grow at a compound rate of 25% in 2019-2023.

“Traditional Chinese medicine culture”, “aging trend” and “increasing fatigue population year by year” and massage chair potential consumer groups are huge.

The massage chair’s ability to imitate human hands is constantly increasing, and good products promote the release of potential demand.

At the same time, the purchasing power of massage chairs for Chinese urban residents reached the level when the Korean market broke out in 2010.

It is estimated that by 2023, the size of China’s massage chair market is expected to reach 22.2 billion, which is still twice as large as the market size of approximately 7.4 billion in 2018.

The company’s product 武汉夜生活 advantages, channel advantages, and scale advantages are circulating in a positive direction, which will continue to increase market share. The domestic massage chair business is expected to grow at a compound growth rate of 35% in 2019-2023.

The company has an intergenerational leading advantage over other brands in the high-end market, cuts the dimension in the low-end market, and shifts from the high-end market to high-medium-low full coverage.

Product advantages ensure higher profitability of channels, attract dealers to expand their footprint, and continue to increase brand revenue.

With the continuous expansion of the scale, in the long term, the cost of the company’s massage chair has about 20% to fall, further enhancing the product advantages.

Catalyst: Consumption upgrade restarted, and the low-end and mid-end 无锡桑拿网 markets successfully entered.

Risk Warning: Domestic economic and consumption growth is accelerating, and overseas demand is less than expected.