Guotai Haitong: The intelligent acceleration of the fitness equipment industry recommends top brands that can benefit from their advantages.

Guotai Haitong released a research report stating that although the number of short-term fitness venues is shrinking, long-term growth in per capita income will support demand. At the same time, China's comparative advantage in manufacturing will continue to drive export growth, and AI technology empowerment will further strengthen the leading competitive advantage. It is recommended to focus on strong brands, channels, and production bases that are expected to benefit from the increasing concentration of the industry under the wave of intelligence, such as Impulse (Qingdao) Health Tech (002899.SZ), Shuhua Sports (605299.SH), Sportsoul Co., Ltd. (001300.SZ), and Jiangsu Kangliyuan Sports Tech. (301287.SZ), these companies are expected to benefit from the increasing industry concentration in the wave of intelligence. Guotai Haitong's main points are as follows: Changes in downstream formats, commercial fitness venues demand shrinking, long-term trends are positive Various types of fitness venues and studios are the main demand market for equipment. Since 2023, despite the effective control of the epidemic, the number of offline fitness venues in China has still been shrinking. According to the 2023 China Fitness Industry Data Report, the number of comprehensive fitness venues in China in 2023 was 117,000, a decrease of 13% compared to 2022. Among various types of fitness venues, fitness studios saw the smallest decrease of 7.36%, while the overall fitness venues saw the largest decrease of 22%. At the same time, the number of fitness members and the penetration rate of fitness enthusiasts related to fitness venues have continued to decline after reaching a peak in 2021, according to data from the Chinese Bodybuilding Association, falling to less than 70 million people by 2023, with a coverage rate of less than 5%. On the other hand, from a long-term perspective, considering the stable growth of per capita disposable income in China and the continuous improvement in the pursuit of a high-quality lifestyle by the people, downstream demand is expected to maintain long-term steady growth. China's manufacturing comparative advantage is prominent, and the export market for fitness training equipment is sufficient According to data from the General Administration of Customs, benefiting from the rapid recovery of production in the early stages of the epidemic, China's exports of treadmills and other fitness training equipment grew rapidly in 2020 and 2021, with treadmill exports reaching 11.12 billion yuan in 2021, general sports activities, gymnastics, or competitive supplies. The export amount reached 20.79 billion yuan, and the total export amount of other fitness and rehabilitation equipment was 45.85 billion yuan. In 2022, the corresponding export amount for the above items fell slightly, but the growth trend is expected to recover by 2023. In summary, the domestic fitness equipment industry chain achieves comprehensive production capacity and cost advantages through the cluster effect of the industry, fully opening up the export market. AI-empowered products, leading brand competitive advantage expected to expand Top companies like Shuhua Sports have made significant progress in the layout of AI products. AI technology applications are mainly concentrated in intelligent fitness equipment, software applications, and full-scene intelligent fitness systems. In 2022, Shuhua Sports' outdoor intelligent aerobic fitness station was selected as the ninth batch of innovative consumer goods in China's light industry; in May 2024, the company made its debut at the 41st China International Sporting Goods Expo, winning multiple awards, including the company's independently developed "i5 intelligent treadmill" and "Speed and Power Feedback System 2.0" receiving the "Innovative Promotion Award" at the 2024 Sports Expo. Risk warning: downstream consumer demand is below expectations, continuous increase in raw material prices, intensified industry price competition, etc.