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4. Competitor analysis

4.1 Beauty Optoelectronic Device Market Competitive Landscape

The global market has seen increasing market concentration among the top equipment. By 2016, the market share of the top 3 optoelectronic medical aesthetic device manufacturers was 40.7%, with notable acquisitions including the merger of Syneron with Hologic, the acquisition of Zeltiq by Allergan, and the acquisition of Syneron-Candela by Apax. Sisram’s Alma took up 5.9% of the global market share

In China, 80% of optoelectronic devices are imported, primarily from United States, Israel, and Germany. In 2016, the market share of the top three optoelectronic medical aesthetic device manufacturers in China (CR3) was 40.5%, with Alma from Israel, Qizhi Laser, and Sciton from the United States. However, most domestic brands are small-scale optoelectronic medical aesthetic equipment manufacturers, and their technological capabilities are relatively weak and lagging in terms of product safety, efficacy, and the establishment of distribution networks. Alma has the highest market share of 16.2%

4.2 Segmented Markets Competitive Landscape (Laser-based and IPL Devices)

The degree of market concentration is high in the segmented market with overseas brands still occupying the majority share. In the laser-based medical aesthetic device sub-market in China, the industry's CR3 reached 65% in 2020. Among them, Alma, a subsidiary of Sisram Medical, held the largest market share at 32%, making it the market leader. Qizhi Laser and Sciton accounted for 18% and 15% respectively.

As for intense pulsed light (IPL) medical aesthetic devices, the industry's CR3 in China reached 82% in 2021. Among them, the overseas brand Sciton, with its core OPT/AOPT intense pulsed light technology and flagship product M22, captured a market share of 54%, securing the top position. Sisram Medical's subsidiary, Alma, with its flagship products such as the Black Gold DPL Super Photon, ranked second with a market share of 22%.

4.3 Sisram’s Economic Moats: Product Advantages

Sisram’s patented technology utilizes the performance differences of different energy sources to enhance device accuracy control and employs high-frequency pulse technology to improve precision, and thus enabling precise control of depth of treatment.

For energy output technology, products such as Pixel CO2 utilize dual-mode beam laser platform with multi-point focusing and scanning modes. It integrates different treatment functions into a single platform and allows for a selection of various treatment modes and combined treatments, and thus achieving targeted therapeutic effects.

While focusing on precise efficacy, Alma also prioritizes the treatment experience of users. The company is committed to reducing discomfort by implementing its In-motion technology, which involves repeatedly moving the energy release device over the treatment area. This ensures that the patient's skin can absorb an equivalent amount of energy, resulting in a relatively painless experience.

For instance, Alma’s DPL Super photon device is currently the only device that can deliver precise and targeted painless treatment. Moreover, the treatment time is the shortest and duration of treatment effect is the longest compared to competing products. Due to product advantages, Sisram DPL’s treatment price is 2980RMB per treatment, 2 to 3 times the price of other comparable treatment offered. As for hair removal devices, Sisram’s Soprano series offers shorter treatment courses and lower levels of discomfort, targeting the mid-to-high-end hair removal market in China. In terms of treatment courses, Sisram’s treatment device requires 3-5 sessions, which is fewer than the 3-6 sessions required by other brands such as SciMedic. The total duration of the treatment course is 3-5 months, significantly shorter than the 12-18 months required by devices like the Cynosure GentleLase Pro-U.

During the treatment process, it can maintain a continuous temperature of 45-50℃ in the hair follicle area while keeping the skin surface temperature at 25℃, providing a virtually painless experience for patients. Additionally, it has minimal occurrences of redness, swelling, or blistering. The price of Sisram’s device treatment is 3 to 5 times of the market average price.

5.Investment thesis

5.1 Growth of aesthetic cosmetic market (Global, US and Asia)

According to Medical Insight, the market size of energy-based medical aesthetic devices and consumables was $2.67 billion in 2016, with a compound annual growth rate (CAGR) of 14.6% from 2014 to 2016. It is projected to reach $4.48 billion in 2021, with a CAGR of 10.4% from 2016 to 2021, indicating steady double-digit growth in the global energy-based medical aesthetics market. North America and Asia have significant market potential. According to Medical Insight, in 2016, North America, Asia, and Europe were the top three energy-based medical aesthetics markets globally, with market sizes of $1.39 billion, $570 million, and $540 million, respectively. It is projected that by 2021, these markets will grow at compound annual growth rates of 11.1%, 11.5%, and 7.6%.

China's energy-based market demand continues to grow at a double-digit rate. According to Medical Insight, the market size of energy-based medical aesthetic devices in China was $160 million in 2016, and it is projected to reach $330 million by 2021, growing at a compound annual growth rate of 16% from 2016 to 2021. According to Frost & Sullivan, the non-surgical market size in China was 97.7 billion yuan in 2021, with a compound annual growth rate of 25% from 2017 to 2021. While skin rejuvenation and hair removal continued to growth steadily within China, anti-aging treatments have also gained popularity in recent years and are highly sought after by individuals seeking aesthetic enhancements. Skin tightening projects have been highly sought after in recent years. Sisram’s Accent thermal face-lifting treatment device has the potential to achieve exceptional growth as it offers much more comfortable treatment experience and much lower price compared to Thermage, Ultherapy, and Thermi.

5.2 Expanding the product matrix.

The company launched its home beauty device product, LMNT One. In March 2022, the company introduced the LMNT brand for home beauty devices, and in May, they launched their first product, LMNT One. The product is sold in China and Italy through distribution and e-commerce models. The company has already established a presence on various platforms such as Tmall, Douyin (TikTok), Xiaohongshu (RED), laying a solid foundation for future online channel expansion.

LMNT One, the home beauty device, utilizes a combination of three technologies to achieve multiple effects such as skin brightening and collagen regeneration. The device features a single setting design and one-button operation, making it easy to use for home spa treatments, business trips, and travel. In 2021 the market size of home beauty devices reached 9.8 billion RMB, with a year-on-year growth of 19.9%. The compound annual growth rate from 2017 to 2021 was approximately 26.4%, indicating a period of rapid growth in the industry. The emphasis on high-end products and increasing average spend per customer have become major drivers of home beauty industry growth in recent years, benefiting the sales of high-quality and high-end products like Alma.

Compared to markets like the United States and Japan, the penetration rate of home beauty devices in China is low, indicating significant growth potential. In 2020, the penetration rate of home beauty devices in China was 2.1%, while during the same period, the penetration rates in the United States and Japan were 20.0% and 11.0% respectively. When benchmarked against overseas markets, China's home beauty device market still has a relatively low penetration rate, indicating ample room for improvement in the future.

Sisram also ventures into various other beauty sub-industries including injectables and aesthetic dentistry. Sisram’s Hyaluronic Acid and Lipolytic Injection products were launched in Hongkong and India and are currently going through clinical research stage in China. A recently acquired subsidiary of Sisram is also carrying out bio-degradable silhouette protein face-lifting thread research and development. Sisram strategizes to further expand its product portfolio, and it has the potential to ultimately integrate all product lines into one-stop beauty treatment centers that directly reaches out to end-users. 

5.3 Stronger customer engagement through direct sales expansion

Since its listing in 2018, the company has been focusing on expanding its direct sales channels as an important factor for sustainable growth. It has established nine major direct sales centers worldwide and has transitioned from distribution to direct sales in markets such as Mainland China, Hong Kong, South Korea, the United Kingdom, Australia, and Israel. As of 2022, the proportion of revenue from direct sales channels has increased from 37.6% in 2017 to 66%. The compound annual growth rate (CAGR) of direct sales channel revenue from 2017 to 2021 was 28.8%, surpassing the average revenue CAGR of 21.09% during the same period.

Direct sales enable more refined operations in mature markets and result in higher gross profit margins. In the initial stage of foreign brands entering the domestic market, they can quickly cover the end market through distributors to establish a presence. However, as projects mature, major brands should rely more on internal operations to maintain relationships with institutional clients and communicate product features. The company's direct sales channels have higher gross profit margins compared to distribution channels, and the trend towards direct operation is expected to drive higher-quality growth in the future.

Fig: Sales share by distribution channels, 2022 (Red: Direct Sales | Yellow: Distributor Sales)