Rongtai Health (603579): Domestic massage chair leader stable overseas customers

Rongtai Health (603579): Domestic massage chair leader stable overseas customers
Investment logic: As a mid- to high-end state-owned brand with high market recognition, the company is a leader in the long-term massage chair industry.High-end, the company’s overseas business has long-term stability due to the close cooperation of the major customer BODY FRIEND; continuous expansion, through the continuous rise in people’s demand for quality of life, the massage chair industry will usher in rapid development in China.The market level is solid and will fully enjoy the dividends brought by industry growth. Domestic sales and service twin engines helped the 18-year performance to steadily improve.The company’s 18-year domestic sales have increased by 37% in the long term, and the service (experience massage) has grown by 58% each year. Under the unfavorable situation of long-term reduction of 2% in the export sales, the company’s revenue has remained at 197% growth.With the gradual development of the domestic market, it is expected that domestic sales will become the main growth point of the company’s performance in the future. Major overseas customers have close relationships and stable export business.In 2017, the sales revenue of the company and its major customer BODY FRIEND accounted for 72% of the export sales revenue.2%.BODY FRIEND has been working closely with the company since cooperating with the company in 2012.In 2016, the company and BODY 杭州夜网 FRIEND exceeded the Long-Term Supply Agreement, and the agreement stipulated that by 2019, BODY FRIEND’s annual purchase volume in the company would not be less than 50% of the area of massage chairs it purchased in China in that year.The close relationship with BODY FRIEND guarantees the stability of the company’s export business. The domestic market is developing rapidly and the industry dividends can be expected.At present, the family penetration rate of massage chairs in the domestic mainland market is very low. The differences with Japan, some Hong Kong regions, Asian Taiwan regions, and South Korea break through, so the future of the mainland market is huge.With the upgrading of consumption, massage chairs have developed rapidly as home appliances that improve the quality of life. At the same time, the company occupies the brand advantage in the mid-to-high-end area of the domestic market. In the future, the company will fully enjoy the dividends brought by industry growth. “Mo Mo Da” small massage chair, incorporated into the low-end market.The company’s “Momoda” brand is mainly engaged in shared massage and small massage chairs.Along with the cold massage market in the second half of 2017, the company’s strategy for sharing massage shifted from active expansion to stable development with priority.In the future, the company will enhance the competitiveness of low-end massage chairs through “Momoda” small massage chairs.The “Mo Mo Da” massage chair increased from several millions in 2017 to more than 6 million yuan in 2018, and the market performed strongly. Earnings forecasts and investment advice.We expect an EPS of 2 in 19/20/21.07/2.47/2.91 yuan.As a leading company in massage chairs and a leader in experiential massage services, the company has for the first time covered and given an “overweight” rating. Risk reminder: risk of exchange rate fluctuations, new product promotion or less than expected.