Core Summary
SKG (Future Wearable Health Technology) is attempting its third IPO attempt (having previously failed on the GEM board and the Beijing Stock Exchange), this time targeting the Hong Kong Stock Exchange. Although it holds the largest market share in China for smart wellness wearable devices (21.6% as of 2025), its core business growth has stagnated. Its revenue from fitness recovery and shaping devices has increased, but the low gross profit margin means these segments are not highly profitable. The company has also fallen into a pattern of over-reliance on marketing and under-investment in research and development. SKG outsources all manufacturing and sales, and its brand maintenance relies heavily on advertising spending. However, the industry has moved to a new phase where technology is the key competitive factor. Without a transformation, even a successful IPO may not result in a high valuation.
Detailed Analysis
1. Largest Market Share but No Profit Growth: Profitable Business Stagnating, Growth Business Unprofitable
SKG’s core products are smart wellness wearables, such as shoulder and neck massagers. Revenue from these products has remained stable at around 850-880 million yuan from 2023 to 2025, with a slight decline. To maintain growth, the company shifted to fitness recovery and shaping devices, such as fascia guns and shaping belts. Revenue from these segments increased from 97 million yuan in 2023 to 292 million yuan in 2025, accounting for 9.4% to 24.2% of total revenue, respectively.
The problem is that the profit margin from fitness devices is much lower than that from its core products. In 2025, the gross profit margin for smart wellness wearables was 53.2% (53 yuan profit on every 100 yuan sales), while for fitness devices, it was only 42.1% (11 yuan less profit per 100 yuan sales). As a result, despite increasing revenue, net profit has remained unchanged over the past three years (127-135 million yuan annually), and in the first five months of 2026, the net profit margin even decreased by 1.7 percentage points. In short, the growing segments are not profitable, while the profitable segments are not growing.
2. Overemphasis on Marketing, Underinvestment in R&D: Increasing Advertising Expenses, Declining R&D Spending
SKG’s success was initially driven by heavy marketing investments, including partnerships with celebrities like Wang Yibo and Yang Yang, and appearances in variety shows like “Riding the Waves” and “This! Is Street Dance.” Annual advertising expenses ranged from 150-190 million yuan, and sales expenses increased from 216 million yuan in 2023 to 288 million yuan in 2025, with 23.7% of revenue being spent on marketing.
However, R&D spending has been decreasing: from 95.51 million yuan in 2023 to 73.28 million yuan in 2025, with the R&D expense ratio dropping from 9.1% to 6%. The industry has evolved, with a focus on advanced technologies such as AI algorithms for precise massage, sensors for monitoring muscle status, and IoT connectivity to mobile apps. SKG’s insufficient R&D investment means its products are becoming increasingly homogeneous, and its advertising effectiveness is declining, leading to a vicious cycle of higher and higher marketing costs.
3. Complete Outsourcing of Manufacturing: Brand as the Only Asset, but Declining Marketing Efficiency
SKG outsources all manufacturing, with the outsourcing ratio rising from 27.8% in 2023 to 66.1% as of May 2026. Sales are also heavily dependent on distributors, accounting for over 78% of total sales. This means the company has no control over production quality or costs and lacks direct contact with customers (customer data and relationships are with distributors). Its only asset is its brand, which it must maintain through advertising. However, the effectiveness of this strategy is diminishing. For example, a competitor like Beisongxing spent 53% of its revenue on marketing in 2025 but still experienced a 28% decline in revenue and a near 100 million yuan loss. SKG’s current performance is better than Beisongxing’s, but if it continues to rely on heavy advertising, it will eventually face the same issue of diminishing returns.
4. The Critical IPO Decision: Can SKG Transition from Selling Hardware to Providing Services?
In the early days of the smart wearable industry, SKG’s combination of design, celebrity partnerships, and distribution channels helped it quickly gain market share. However, now that the industry has matured, investors are looking for long-term value: does SKG have core technologies? Can it retain customers? Can it generate revenue through services?
SKG still primarily sells hardware, providing a one-time purchase experience for customers. The future trend is towards a combination of hardware and services, such as using sensors to collect user health data and offering personalized massage plans or subscription-based services. Without a transformation, even a successful IPO may not result in a high valuation, as “largest market share” is just a past achievement; the key is whether SKG can adapt to the new industry trends.
Conclusion
SKG’s IPO journey is challenging because it relies on outdated models while failing to adopt new ones. It needs to shift from a marketing-driven to a technology-driven approach and from selling hardware to providing value through services. Otherwise, even if it succeeds in going public, it may face the same fate as many other internet-fueled brands that are quickly phased out by the market. Have you used SKG’s products? Do you feel that the marketing is extensive, but the functionality is similar to other brands? These are the issues SKG is currently facing.