500,000 Massage Chairs, ¥800 Million Annual Revenue – Fueling a Hong Kong IPO
After 10 years of entrepreneurship, this company is sprinting toward an IPO.
On July 25, Fujian Lemo IoT Technology Co., Ltd. ("Lemo IoT"), an intelligent massage service provider, updated its prospectus on the Hong Kong Stock Exchange. China Securities Co., Ltd. and Shenwan Hongyuan Hong Kong are the joint sponsors.
Lemo IoT had previously filed its prospectus in January this year; this updated submission comes after the previous filing lapsed, with fresh data to advance the listing process.
In May 2014, the predecessor of Lemo IoT — Fuzhou Zhangchuang Information Technology Co., Ltd. (Zhangchuang Info) — was incorporated, but initially had no business operations. In December 2016, Xie Zhonghui, now vice chairman and executive director of Lemo IoT, acquired 60% of Zhangchuang Info and became the controlling shareholder.
Information shows that Xie Zhonghui once served as general manager of "Oriental God Massage Equipment", one of China's earliest massage device enterprises, and vice president of the massage appliance industry. The Hanshang brand he founded in 2011 became one of the top 10 brands in the massage equipment industry.
Under Xie's leadership, in the fourth quarter of 2016, Lemo IoT launched the "Lemo Bar" brand, officially starting its machine-based massage service business.
Just one year later, Lemo IoT had deployed and operated tens of thousands of shared massage chairs, covering more than 300 cities across China, including all first- and second-tier and medium-sized cities. Among commercial venues covered by the entire massage chair market, its penetration rate exceeded 60%.
Based on this success, in December 2017, Lemo IoT announced its first and only external financing round of RMB 50 million from Cowin Capital, reaching a post-investment valuation of RMB 400 million. This made it another representative enterprise that "goes public after just one funding round."
It should be noted that due to failure to complete the listing "bet" as agreed, Lemo IoT repurchased part of Cowin Capital's shares in April 2023 for RMB 62.1 million.
In October 2024, Shanghai Qimai, Dai Chusheng, Fang Xin, and Chen Guohai participated in a share transfer of Lemo IoT; at that time, the company's valuation reached RMB 750 million.
Before the IPO, Xie Zhonghui directly held 21.0% of Lemo IoT and controlled 7.3%, 3.8%, and 2.3% through incentive platforms Zhangchuang Win-win, Lemo Co-creation, and Lemo Win-win respectively, ultimately holding 34.4% of voting rights. In addition, Cowin Capital held 2.6%.
Based on the RMB 750 million valuation, Cowin Capital's book value remains approximately RMB 19.5 million.
According to the prospectus, through the "Lemo Bar" brand, Lemo IoT focuses on providing machine massage services to consumers in commercial complexes, cinemas, and transportation hubs (including airports, high-speed rail stations, etc.).
According to Frost & Sullivan's data, for three consecutive years from 2022 to 2024, the company ranked first among all machine massage service providers in China by transaction value, with market shares of 33.9%, 37.3%, and 42.9% respectively. By 2024 revenue, it ranked first in China's machine massage market with a share exceeding 50%.
As of the latest practicable date, Lemo IoT has established more than 48,000 service points for machine massage, deploying over 535,000 massage devices (averaging about 11.15 units per point). Service points expanded from 21,727 at the end of 2022 to 45,993 at the end of 2024. Cumulative identifiable service users exceeded 165 million, and registered members surpassed 32 million.
Behind the "aggressive expansion," Lemo IoT has recently faced allegations of inflating device numbers, exaggerating average order prices, and potential related-party transaction risks.
Take an example concerning alleged "device count inflation": According to a report from China Securities Journal, starting in April, its reporters visited core business districts, cinemas, airports, and high-speed rail stations in 11 cities including Beijing, Shanghai, and Shenzhen to conduct field investigations of shared massage chairs under the Lemo Bar brand. According to the actual coverage in these 11 cities, most massage service points had only 2 to 5 massage chairs, with very few points having 6 to 8 chairs.
This figure differs from the previously mentioned "average of about 11.15 units per point" (there may be differences in statistical methodology). As of now, Lemo IoT has not made a public response to the controversies.
Nevertheless, these doubts do not seem to affect Lemo IoT's impressive performance figures.
From 2022 to 2024 and the first quarter of this year, Lemo IoT's revenues were approximately RMB 330 million, 587 million, 798 million, and 221 million respectively. Gross profits were approximately RMB 85.34 million, 245 million, 288 million, and 77.06 million, with gross margins of 25.85%, 41.79%, 36.07%, and 34.86% respectively. Net profits for the periods were RMB 6.48 million, 87.34 million, 85.81 million, and 23.34 million.
As of the end of March 2025, Lemo IoT held cash and cash equivalents of only about RMB 26.21 million.
This content originates from TMTpost's Taidu Column. It is for reference, exchange, and learning purposes only and does not constitute investment advice.
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* Based on public prospectus and related reports. Logical paragraphs separated according to punctuation (periods, semicolons, exclamation marks, etc.) for optimized readability with 1.75 line height and responsive layout.
