Following the listing of Bubble Mart, another super Internet celebrity IP "tour" entered the Hong Kong Stock Exchange.
Remember that little yellow duck in your bathtub, in your cap, in your thermos, in your backpack?
Don't underestimate this little yellow duck, this duck named "B. Duck" has a history of 16 years, can be called a veteran player in the tide play market, and now it is "swimming" into the gate of the Hong Kong Stock Exchange.
On January 17, 2022, Deying Holdings was listed on the main board of the Hong Kong Stock Exchange, and on the first day of trading, it opened at HK$2.6 per share, up nearly 30% at one point, and as of press time, the total market value was HK$2.3 billion. After twice impacting the IPO on the main board of the Hong Kong Stock Exchange, Deying Holdings finally successfully listed on the main board of the Hong Kong Stock Exchange.
Yellow ducks "invade" the Hong Kong Stock Exchange
From the bathroom "swimming" into the Hong Kong Stock Exchange, the story also begins with a flock of ducks 30 years ago.
In 1992, a Chinese freighter carrying nearly 30,000 rubber yellow ducks sailed to Washington State in the United States, and encountered a strong storm in the Pacific Ocean, where containers were damaged and countless small yellow ducks were scattered. This "duck fleet" unexpectedly began to drift around the globe.
After 15 years of drifting in the Pacific Ocean, it reached the shores of the United Kingdom in 2007. For a time, "Duck" set off a round of craze around the world, and the BBC also specially filmed the documentary "Yellow Duck Invasion" for it.
In 2005, Hong Kong designer Hui Xialin traveled in Europe, he found in the "Little Duck Drifting Incident" 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 belonging to the Chinese.
In the same year, coinciding with the birth of Xu Xialin's son Thomas, Xu Xialin set up a bathtub toy for his son, creating the image of "Bathing Duck", and the B. Duck brand was also established.
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.
A gold sucker with an annual revenue of 200 million
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.
From 2018 to 2020, the IP licensing business revenue of Deying, the parent company of Little Yellow Duck, was HK$63.827 million, HK$81.63 million and HK$98.039 million respectively, accounting for an increase in revenue from 31.8% to 42%. In the same period, the revenue through e-commerce and offline channels was HK$137 million, 161 million and HK$135 million, accounting for 68.2%, 66.4% and 58% of the revenue respectively.
Little Yellow Duck's online sales accounted for 95.9%, and Tmall apparel products alone contributed HK$108 million, bringing in nearly half of the revenue.
It has more than 250 licensees and seven authorized agents to help it produce goods in markets such as China, Thailand, South Korea and Malaysia. Hundreds of licensees have designed various products, which in turn have accumulated a large number of fans for Little Yellow Duck. In terms of its authorized product categories, clothing and accessories are the most, with more than 12,000 SKUs, footwear ranked behind more than 3,700 SKUs, and home and daily necessities have more than 1,200 SKUs.
Although IP licensing and IP e-commerce go hand in hand, the little yellow duck is still considered to be "swimming" unhappily.
According to Frost & Sullivan's report, deying holdings ranked fifth in terms of 2020 role licensing revenue, with a market share of 2.4%, lagging behind domestic toy manufacturer Aofei Entertainment and nearly equal to another domestic amusement park player, Fantawild Culture.
Source: Frost & Sullivan
Looking at other players on the same track, the market value of the IP tide play brand Bubble Mart is nearly 27 times that of it, and the market value of the domestic toy giant Aofei Entertainment is 5 times that of it. Some insiders have analyzed that Little Yellow Duck is still a profitable company, but it is not fast enough and not enough.
"Catch the duck to the market", the road ahead of the little yellow duck is not clear
After impacting the IPO twice, the road to the bell ringing of the little yellow duck was not smooth.
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.
Deying was so eager to go public, or related to a VAM agreement that was about to expire.
According to the prospectus, in April 2021, Deying introduced investments from Wisdom Thinker and Wantong and signed a supplementary agreement. The agreement stipulates that if the listing is not successfully listed by 14 April 2022, which cannot achieve a valuation of not less than HK$1.8 billion, a share repurchase will be required at an annual total return of 8%.
Deying Holdings finally "drove the ducks to the market" at the last moment.
In recent years, Deying's revenue structure is changing. As the second growth curve, the proportion of IP licensing business revenue has grown from 31.8% in fiscal 2018 to 47.6% in the first half of fiscal 2021, which is almost the same as the self-sales of peripheral products, and the importance is gradually highlighted. On the contrary, the proportion of revenue from peripheral products has been in a state of decline in recent years, accounting for nearly 70% in fiscal 2018 and more than 50% in the first half of fiscal 2021.
Revenue Fundamentals of Deying Holdings / Image Source: Deying Holdings Prospectus
Relying on the low-cost IP licensing business in the later stage, Deying Holdings has achieved continuous profitability. But the brutal capital market is like Louis Carroll's Alice in Wonderland, "In this country, you have to run non-stop to keep you where you are." ”
According to the prospectus, the B. Duck family accounted for 99.2%, 98.9%, and 99.0% of the IP licensing business from fiscal 2018 to 2020, and further reached 99.5% by the first half of fiscal 2021. In the B. Duck family, B. Duck's little yellow duck is the core.
It is not difficult to see that the IP licensing income of Deying Holdings is too dependent on the Little Yellow Duck family.
Image source: Deying Holdings Prospectus
Such a share is even higher than the proportion of Molly in the bubble mart that is widely criticized as a single IP. As far as IP is concerned, Bubble Mart has successfully changed from relying only on Molly at the earliest to multi-point flowering later. In 2017, Molly accounted for 89.4% of the total revenue of the entire Bubble Mart. After that, Bubble Mart promoted an IP every year, and successively launched Dimo, Yuki, BOBO & COCO. In June 2020, Molly's share has dropped to 16.3%.
In the IP licensing and IP e-commerce track that Deying focuses on, on the one hand, Disney, the "top" of the IP industry that started with animation and other content, and on the other hand, bubble Mart, which has its own channel support and a strong supply chain. In the face of these two mountains, Deying has no content fullness, no own channels, and also faces problems such as difficulty in IP replication. The little yellow duck who "toured" through the Hong Kong Stock Exchange was not clear.
Is IPO monetization still a good business?
In fact, IP licensing monetization is no longer a trade secret. For domestic IP, Deying Holdings in the role of intellectual property rights can be 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 even very young. The "tidal play fever" ignited by Bubble Mart has attracted more new players to the Nuggets.
However, judging from the financial report data of Bubble Mart, the IP market has released a signal of cooling, and users and capital have begun to look at IP products calmly and rationally. In the capital market, bubble mart's market value once shrank by nearly half, and as of January 6, the market value reached HK$59.1 billion, and the stock price continued to decline.
Only by constantly evolving can we survive. Bubble Mart has been constantly changing over the past year, moving more frequently than ever before. From the IP cross-border co-branding, to the launch of the "Mega" series of large-scale handmade, from the launch of the sub-brand Offline store, to the news that the bubble Mart theme park is landing in the industry.
Abandoning the blind box story, Bubble Mart is constantly staging new stories to expand its business territory. These actions all carry the arduous mission of diversifying the IP ecosystem of Bubble Mart.
In 2020, during the road show, Wang Ning said that Bubble Mart will not do China's Disney, but will do the world's Bubble Mart. Twelve years after its establishment, Wang Ning, who "does not do Disney", still struggles to embark on the same path as Disney.
From Deying of "betting" to Wang Ning of "compromise", IP head players are trapped on the throne. From this point of view, the cup of IP monetization is not so good.
Source: Tech Planet, Open Pineapple Finance