Write in front: Recently, keep submitted a prospectus at the Hong Kong stock exchange. If the IPO is successful, keep will become China’s “first share of online fitness”. Since 2019, we have continuously followed the development and changes of the intelligent fitness industry chain and published many industry reports, such as l catterton accelerating the global layout of the fitness industry, where is the future of the fitness industry Fitness war “epidemic” – Fitness Industry under the epidemic situation, new needs and new opportunities “Industrial logic of intelligent fitness from the development of peloton interactive”, etc. In this article, we focus on the development of keep, business model, core data and other fields for in-depth discussion, and conduct horizontal and vertical in-depth comparative research on relevant companies in the industry.
Industry Overview: online channels drive the growth of fitness market, and China’s online fitness market has broad prospects. According to the keep prospectus, the scale of China’s fitness market is expected to increase from 786.6 billion yuan in 2021 to 1479.3 billion yuan in 2026, with a CAGR of 13.5%, higher than the global growth rate (4.8%). From the perspective of fitness crowd penetration, China has 21.5%, the United States has 48.2% and Europe has 41.2%. There is a large room for penetration improvement. From the overall perspective, the main driving force of China’s online fitness market is the growth of China’s online fitness market. In terms of China’s online fitness market, the scale of China’s online fitness market is expected to rise from 370.1 billion yuan in 2021 to 895.8 billion yuan in 2026, with a CAGR of 19.3%. At present, the online health food sector accounts for more than 50%, and the online fitness members and content sector will grow the fastest in the future. In addition, in terms of penetration rate, the penetration rate of online fitness crowd in China in 2021 was 45.5%, far less than 67.9% in the United States. The market prospect in the future is relatively broad. From the perspective of the overall development trend, the online fitness content with higher market concentration, stronger professionalism and more interaction is expected to be further integrated with fitness hardware in the future.
Company characteristics: self owned brand products account for 55%, and the sales volume of smart bike + yoga mat ranks first in China. Keep provides users with comprehensive fitness services, covering the whole fitness cycle of users, and provides one-stop sports solutions around the “eating, dressing and practicing” needs of fitness users. By the time of IPO, the company had carried out nine rounds of financing, with a total scale of US $650 million. Well known venture capitalists gathered, such as Goldman Sachs, Tencent, GGV Jiyuan capital, Bai, etc. In terms of main business, the company’s main products include online fitness content, intelligent fitness equipment and supporting sports products. The three business lines complement each other to form a collaborative business closed loop. In 2021, the penetration rate of the company’s platform members has reached 9.5%; By the end of 2021, the sales volume of keep smart bike has ranked first in China; In addition, the company is also the largest yoga mat brand in China in 2021, with a market share of 14.9%. In terms of revenue model, the company’s revenue mainly comes from three sources: 1) private brand products; 2) Membership and paid courses; 3) Advertising and other services. Among them, private brand products achieved revenue of 637 million yuan and 639 million yuan in 2020 and the first three quarters of 2021 respectively, accounting for more than 55% of the revenue; Member subscription and online paid content sales closed at 380 million yuan in the first three quarters of 2021, a year-on-year increase of 52.5%; Advertising and other revenue reached 140 million yuan in the first three quarters of 2021, with a year-on-year increase of 51.0%. In terms of user size, in 2021, keep had an average of 34.4 million monthly active users (MAU), and the number of users actively participating in exercise recorded by the platform was about 1.7 billion. Calculated according to these two indicators, keep is the largest online fitness platform in China and the world. In terms of performance, in terms of revenue, the company’s revenue in the first three quarters of 2021 was 1.159 billion yuan, a year-on-year increase of 41.30%; In terms of gross profit, the company’s gross profit margin remained above 40%, but the company strategically increased the expenditure on traffic acquisition and brand promotion. The sales expense in the first three quarters of 2021 was 818 million, accounting for 70% of the revenue in the same period, resulting in an adjusted loss of 696 million. (data source: keep prospectus)
Vertical and horizontal comparison: the online fitness industry is leading in China, which is similar to the business model of peloton, an overseas company. At present, 70.1% of the fitness people in China know about keep mobile app, and keep brand has the highest net recommendation value in fitness app, according to the survey of burning knowledge consulting. Comparable companies at home and abroad include peloton, Shuhua Sports Co.Ltd(605299) etc. From the comparison of products: 1) in terms of intelligent hardware, keep and peloton products occupy the low and high market price ranges respectively, Shuhua Sports Co.Ltd(605299) products have many types and large price ranges; 2) In terms of online subscription, peloton has high price level, small user scale, low keep price level and large user scale; From the perspective of business model, peloton builds a fitness ecosystem through the model of “software + hardware + media”, which is similar to the keep model; From the perspective of operation: 1) revenue scale: peloton’s revenue scale is the largest and increases significantly, and keep’s revenue increases year by year; 2) Profitability: Shuhua Sports Co.Ltd(605299) gross profit decreased, and peloton and keep’s gross profit margin remained stable at more than 40%; 3) Expense management: keep the sales expense rate in the first three quarters of 2021 exceeds 70%, and the R & D expense rate is at a high level in the industry.
Risk warning: market competition intensifies, the realization strategy is lower than expected, the risk of core technology leakage, the risk of unauthorized access, improper use or disclosure of such data, the risk of continued loss and net cash outflow, etc.
