Wen 丨 Lü Pin
Edited by 丨 Cao Weiyu
Source 丨Tou China Network
The little yellow duck finally knocked on the door of the Hong Kong Stock Exchange.
On January 17, B.Duck's parent company, Deying Holdings, was listed on the main board of the Hong Kong Stock Exchange. On the day of the listing, Deying Holdings opened at HK$2.6 per share, up more than 30% at one point, and as of press time, the total market value of Deying Holdings exceeded HK$2.7 billion.
It is worth noting that this road to IPO, Deying Holdings has taken an extremely difficult road.
As early as March 2019, Deying Holdings applied for GEM listing on the Hong Kong Stock Exchange, and then withdrew the application; in May 2021, Deying Holdings transferred to the main board of the Hong Kong Stock Exchange for IPO, and after 6 months of application invalidation, only one day later, Deying Holdings launched another attack on the Hong Kong Stock Exchange.
Such a rush to go public, or related to an expiring VAM agreement.
According to the prospectus, after deying holdings introduced Wisdom Thinker and Wantong in April 2021, it signed a supplementary agreement similar to the VAM agreement in July of the same year. The agreement sets a listing deadline, according to which Wisdom Thinker and Wantong require Deying Holdings to be listed by April 14, 2022, otherwise it must repurchase shares at an annual total return of 8%.
Deying Holdings finally managed to get on the bus at the last minute.
A duck opens the Chinese brand dream
B. Duck Little Yellow Duck was originally created in 2005 by Hong Kong designer Hui Xialin, founder of Deying Holdings. But the story begins with a flock of ducks from 30 years ago.
In 1992, a cargo ship carrying nearly 30,000 rubber yellow ducks sailed to Washington State in the United States, encountered a strong storm in the Pacific Ocean, the container was damaged, and countless small yellow ducks were scattered. This "duck fleet" unexpectedly began to drift around the globe.
After 15 years, the Duck Fleet drifted 35,000 kilometers and left its mark on the coast of many countries, finally ending the journey with its arrival on the shores of the United Kingdom in 2007. For a time, as a synonym for bravery, the little yellow duck circled a wave of fans around the world and became a household name "net red".
In 2005, Hong Kong designer Hui Xialin traveled in Europe, he found in the "Duck Fleet" incident: in the entire production process of the little yellow duck, China can only earn a few cents of processing fees, while Europe can earn dozens of times the high price difference, so he came up with an idea: to create a small duck image that belongs to the Chinese.
In the same year, coinciding with the birth of Xu Xialin's son Thomas, Xu Xialin wanted to design a bathtub toy for his son, inspired by the "Duck Fleet", Xu Xialin combined his pointed upward hairstyle to design an anthropomorphic cartoon little yellow duck, laying the foundation for the brand prototype of B. Duck.
Xu Xialin created a series of bathroom-themed products, the first bathroom waterproof little yellow duck radio was widely popular around the world as soon as it was launched, officially named "Bathing Duck", and the B. Duck brand has been established ever since.
B. Duck's journey as an independent brand has since begun, and Xu Xialin has also started his own Dream of a Chinese brand. Xu Xialin first opened the first self-owned toy factory, using B. Duck to carry out specialty commodity retail business. In 2010, Deying Holdings officially launched the licensing business, and since 2011, it has authorized third parties to use the role of B. Duck as a consumer product and for promotional purposes.
B. Duck began to become the "top pillar" business of Deying Holdings.
From 2012 to 2014, B.Duck's role licensing business gradually expanded to South Korea, Malaysia, Thailand and other places, and the internationalization began to appear, while Deying Holdings also launched a clothing series during this period, opening clothing stores in Hong Kong, Beijing, Shanghai and Shenzhen.
In 2015, Deying Holdings opened its first online flagship store on Tmall, launched an e-commerce business, and has since expanded to other e-commerce platforms such as JD.com, Vipshop and HKTVmall.
Since 2017, Deying Holdings has continuously launched new IP for rich roles, from the initial Buffy and B. Duck Baby to the 2018 actress Zhou Dongyu cooperated to launch the joint IP "DONG Duck". Up to now, Deying Holdings has 26 original characters and is expected to launch new characters in 2023, such as Buffy Friends: Cream, Mocha, etc.
Source: Deying Holdings Prospectus
Deying Holdings' target audience is concentrated in 15 to 34 years old, in order to cater to the young group, Little Yellow Duck has also created a lot of "out of the circle" content, expanding its brand influence.
First of all, it co-branded with Xicha to launch the "B.Duck× Xicha" limited co-brand cup, mobile phone case, co-brand card and other products on Christmas Day; and then jointly launched the "There is a small 'emperor' duck in the palace" IP with the Forbidden City; it also co-branded with young people's favorite game Peace Elite; the most recent out of the circle was due to the fact that Yang Qian, the first Post-00 Olympic double gold winner in the Chinese sports world, wore a small yellow duck hair card and caused the same product to be out of stock.
Little Yellow Duck sits in town, the second role intellectual property company in China
B. Duck's pleasing design has captured a large number of fans and also made the performance of Deying Holdings considerable.
According to the prospectus, the revenue of Deying Holdings between 2018 and 2021 H1 was HK$201 million, HK$243 million, HK$234 million and HK$124 million, respectively, while the net profit for the same period was HK$13.974 million, HK$32.856 million, HK$59.836 million and HK$25.606 million, respectively.
Previously, Deying had promised in a supplementary additional agreement with investors that the minimum profit in 2021 and 2022 would be HK$75 million and HK$8,500, which is still some distance away.
Specifically, the revenue of Deying Holdings is mainly composed of two sectors: role licensing business and e-commerce and other businesses. Among them, e-commerce has been supporting the majority of revenue. During the reporting period, the business achieved operating income of HK$137 million, HK$161 million, HK$135 million and HK$64.801 million, accounting for about 60% of the total.
According to the data, China's intellectual property product e-commerce market is expected to reach HK$65 billion in 2025, of which deying holdings' highly relevant role in the e-commerce market for intellectual property licensed goods is expected to reach HK$31.8 billion in 2025.
Compared with the current situation of Deying, the ceiling is still very high, and the development space is huge.
However, as the second growth curve, the role licensing business is not to be outdone, and in recent years, the proportion of the role licensing business of Deying Holdings is increasing year by year.
In Xu Xialin's view, role licensing is B. Duck's valuable asset, and the market ceiling is also high.
According to the prospectus, in the role licensing market, the retail sales of Chinese mainland and Hong Kong character ip licensing goods are expected to grow rapidly at a compound annual growth rate of about 7.6% from 2021 to 2025, and the retail sales of Chinese mainland are expected to reach about HK$59.8 billion in 2025.
In the face of this tens of billions of market, Deying Holdings is also continuing to exert efforts. From 2018 to 2020, the role licensing business of Deying Holdings contributed revenue of HK$63.827 million, HK$81.630 million and HK$98.039 million respectively, accounting for 31.8%, 33.6% and 42% of the total revenue respectively. In the first half of 2021, the revenue of the role licensing business accounted for nearly 50%, which was almost equal to the e-commerce business.
It is worth mentioning that Deying Holdings only relies on one IP of the B. Duck family, ranking second among the role intellectual property companies. Aofei Entertainment, the largest intellectual property company in China, has a number of IPs such as "Pleasant Goat and Gray Wolf", "Super Flying Man", "Ba la La Little Magic Fairy" and so on.
But similarly, Deying Holdings has not yet created a second out-of-the-loop IP, and the veteran IP "B.Duck" is still the main revenue pillar. From 2018 to 2020, "B. Duck" achieved revenue of HK$53.892 million, HK$61.555 million and HK$75.035 million respectively, accounting for 84.4%, 75.4% and 76.5% of the revenue of role licensing business in the same period.
In addition, although Deying Holdings has carried out overseas IP licensing layout since 2012, to this day, China is still the main battlefield of Deying Holdings. In the first half of 2021, the Chinese market contributed 99.3% of revenue, and the proportion of revenue in overseas markets decreased year by year.
Striving to be the "Chinese version of Disney"?
The IP business is attracting more and more players. For example, Bubble Mart, which is also listed in Hong Kong, now has a market value of more than HK$60 billion.
The two business models are different, and Deying Holdings is more like the upstream of Bubble Mart. Bubble Mart monetizes IP through the form of blind box, not only owns its own IP, but also buys IP to supplement the variety. Deying Holdings mainly provides its own IP authorization for third parties.
However, the two overlap in a number of businesses, such as e-commerce business, IP licensing and so on. In addition, both seem to want to create a "Chinese version of Disney".
As early as 2020, Deying Holdings cooperated with OCT, the operator of Asia's first-tier theme parks, to create a theme park, and also planned to open a flagship store in Shanghai. Bubble Mart registered and established Bubble Mart Park Management Co., Ltd. in August last year to make full preparations for the development of theme parks, and previously reached a cooperation agreement with Beijing Chaoyang Park to build a trendy cultural park.
But for Deying Holdings, the "Chinese version of Disney" still has a long way to go. For domestic IP, Deying Holdings in the role of intellectual property rights called the "originator", 17-year-old little yellow duck is already an "old" brand, but compared with 94-year-old Mickey Mouse, 48-year-old Hello Kitty, 37-year-old Mario and other internationally renowned IP, little yellow duck is still very young.
In addition, unlike the star capital of Bubble Mart, there is little venture capital behind Deying Holdings.
According to the prospectus, before the IPO, founder Xu Xialin held 84.46%; Wang's International held 9.37%; Henderson Land Chairman Li Jiajie held 2.66% through WikiMeber; and Wantong held 1.34%.
Before the listing, Deying Holdings had a number of shareholders withdrew. According to public information, Wang's International and Regal Hotel participated in the investment in Deying Holdings in 2017, of which Regal Hotel withdrew its investment in 2020. The same exit includes OJ VC Group, which invested in Deying Holdings in 2013, and the exit time is January 2021.
It is worth noting that Deying Holdings also plans to use about 9.2% of the net proceeds raised to repay the company's existing debt to improve the group's asset-liability ratio.