On December 3, LEMO SERVICES (2539.HK) debuted on the Hong Kong stock exchange at HK$40 per share. Defying the trend of "no cornerstone, no IPO survival" in Hong Kong's new stock market, the company—lacking both a greenshoe mechanism and cornerstone investors—saw its shares surge up to 78.65% intraday before closing at HK$54.5, a 36.25% increase from the IPO price. With a current market cap of around HK$3 billion, the performance exceeded expectations. Despite deploying 535,000 massage chairs across cinemas, malls, and transit hubs—securing its industry leadership—the firm plans to allocate 60% of its HK$182 million net proceeds to expand service outlets, prioritizing scale over profitability.
"Most Chinese companies hit a painful growth ceiling after reaching just over a billion yuan in revenue," confessed Xie Zhonghui, founder of LEMO SERVICES, during a 2024 entrepreneurship forum, revealing the company's bottleneck anxieties.
Behind LEMO SERVICES' rapid rise via shared massage chairs lies a tangled capital narrative and profitability challenges. Its HKEX listing hasn’t resolved the growth pains surfacing even before revenue hit the billion-yuan mark.
**A Capital Backstory** Few know that LEMO SERVICES’ origins trace not to frontman Xie Zhonghui but to Wu Jinghua, chairman of Fujian Glory Health Technology (873733), a New Third Board-listed firm. After graduating in 2003, Wu returned to Fujian’s "massage equipment hub" in 2007, later founding Glory Fitness. In 2014, Wu co-established Fuzhou Zhangchuang Information Technology (LEMO’s precursor) with 85% control, though it lay dormant until 2016.
That year, Xie—a seasoned executive across sales and massage equipment—acquired 60% of Fuzhou Zhangchuang for a nominal sum, launching the "LEMO Bar" brand while sourcing chairs from Wu’s Glory Health. Reports suggest Wu’s stake was held under Xie’s name to avoid conflicts with Glory Health’s independent listing plans. The arrangement unwound in 2021 ahead of Glory Health’s New Third Board debut.
Xie soon brought in Han Daohu as co-founder via a zero-cost 30% stake transfer. Han, founder of massage chair firm Shanghai Jiugong (acquired by Rongjie Health in 2015), later attracted investors Pan Jianzhong and Li Bin. In 2017, cornerstone investor Jishi Yixiang invested RMB50 million under a five-year IPO deadline, which LEMO missed, repurchasing most shares for RMB62.1 million in 2023.
By September 2024, Xie transferred 2% shares and the chairmanship to Han. Pre-IPO, Xie retained 34.4% control via direct holdings and employee platforms, while Han held 19.5%, Wu 15.2%, and Jishi Yixiang just 2.6%.
**Growth Bottleneck Hits Early** LEMO’s prospectus reveals a classic "revenue up, profits down" dilemma. Revenue grew from RMB330 million in 2022 to RMB798 million in 2024 (55.5% CAGR), but growth slowed sharply: 77.75% in 2023, 35.98% in 2024, and just 13.8% for Jan-Aug 2025. Cinema-scene revenue growth plummeted from 86.71% (2022) to 12.49% (2025).
Meanwhile, costs outpaced revenue: 2024 sales costs jumped 49.1% to RMB510 million, surpassing revenue growth. By Aug 2025, costs rose 22.6%—1.7x revenue growth—as chair counts exploded from 167,100 (2022) to 536,400 (2025). Cinema chairs now exceed 80% of total units, yet daily revenue per chair crashed from RMB0.30 (2023) to RMB0.11 (2025).
Profit fell 1.76% in 2024 and 5.68% Jan-Aug 2025. With Q4 seasonally weak, full-year 2025 profit growth seems unlikely. Gross margins peaked at 41.47% in 2023, sliding to 36.61% by 2025. Self-operated model margins dropped from 34.46% to 30.38%, while the high-margin (70%+) partner model shrank to 13.92% of revenue, with no new city partners added since 2024.
**Controversies Mount** Beyond financials, LEMO faces consumer backlash. A 2024 incident where a girl’s hair got trapped in a chair sparked safety concerns, while its app scores just 2.2/5 for opaque refunds, slow repairs, and ad overload—homepage ads precede every use for minimal ad revenue (2.59% of total).
Skepticism grew in July 2025 when a Caixin investigation found irregular chair ID numbering—sample checks revealed just 1.63% of claimed "Yuanqi Egg" chairs in 11 cities. Industry-wide, machine massage services account for only 0.5% of China’s RMB27 billion massage market (2024), with giants like Rongtai Health exiting the space.
**Survival Test Begins** "Listing is a milestone, but our global expansion from Hong Kong starts now," declared Chairman Han Daohu, hinting at domestic growth pressures. Xie Zhonghui admitted in 2024: "Our 200+ HQ staff must support RMB4-5 billion revenue—scale or die." For LEMO’s 609 employees, that goal looks distant.
As shared-chair market红利 fades, LEMO’s HKEX entry hasn’t cured its "billion-yuan bottleneck." The real survival test is just beginning.
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