Ask what the worldly situation is, and teach people to live and die. What can make people clinging in the world is not only love, but also IPO.
On March 8, Lehua Entertainment's prospectus for listing in Hong Kong was disclosed. China's largest artist management company has been on the road to IPO for at least 7 years.
As early as 2015, Lehua Entertainment, which was still listed on the New Third Board, sought an A-share listing. After more than a year of tossing and turning, it ended in failure. Subsequently, Lehua Entertainment planned to IPO separately, listed on the main board of the Shanghai Stock Exchange, and finally failed.
Now, Lehua Entertainment has turned to Hong Kong stocks, why is this? What happened in that? What is the performance and growth of the Hong Kong stock IPO of Lehua Entertainment? Through the prospectus, take a look at the end.
With an annual income of 1.3 billion, Han Geng, Wang Yibo and Meng Meiqi are cash cows
Founded in 2009, Lehua Entertainment is mainly engaged in artist management, music IP production and operation, and pan-entertainment business.
According to Frost & Sullivan, Loor Entertainment is The largest artist management company in China in terms of artist management revenue in 2020, with a market share of 1.5%.
In terms of performance, from 2019 to 2021, Lehua Entertainment's revenue was 631 million yuan, 922 million yuan and 1.29 billion yuan, respectively, and the profit during the year was about 119 million yuan, 292 million yuan and 335 million yuan, respectively.
Artist management is the company's largest source of income, in 2019, 2020 and 2021, the revenue of this sector was 530 million yuan, 810 million yuan and 1.17 billion yuan, accounting for 84%, 87.7% and 91% of the total revenue, respectively.
Currently, Lehua Entertainment has 58 contracted artists and 80 trainees participating in its trainee programme. Han Geng, Wang Yibo, Meng Meiqi, Fan Chengcheng, Huang Minghao, Wu Xuanyi, etc. are all artists signed by Lehua Entertainment.
Most of the revenue comes from artist management, which also means that once the popularity of artists declines or other changes, the performance of Lehua Entertainment will have a greater impact.
In the risk warning section, Lehua Entertainment said, "If we fail to maintain our relationship with artists and trainees or expand the number of artists and trainees we have signed, our business, financial condition and operating results may be materially and adversely affected." ”
In the prospectus, Lehua Entertainment said that the artist management contracts signed by the company, with contracts ranging from 5 to 15 years, usually contained automatic renewal clauses. According to the number of Weibo fans, Lehua Entertainment listed important signed artists, the top three are Han Geng, Wang Yibo and Meng Meiqi. Among them, the contract date of some artists is approaching.
Among its stars, the capital action of Lehua Entertainment has always attracted attention. Before the Hong Kong stock IPO, Lehua Entertainment planned for many years to list on the A-share market, but it all ended in failure.
A-share listing failed, what happened?
As early as September 2014, Lehua Entertainment was exposed to be preparing for the A-share listing, and the listing method would be "backdoor" listing.
In September 2015, Lehua Entertainment was listed on the New Third Board, which was then called "Lehua Culture". Two months later, in November, Lehua Culture issued an announcement on the suspension of transfer of "major restructuring matters".
In December, Gongda Electroacoustic, an A-share listed company, issued an acquisition announcement to acquire Huang Bo's Spring Fusion and Lehua Culture, where Han Geng and others are located, at a transaction price of 1.8 billion yuan and 2.32 billion yuan.
Such a restructuring plan has attracted inquiries from the CSRC, including the valuation of acquired targets such as Lehua Culture and the reasonableness of financial forecasts.
After that, Gongda Electroacoustic withdrew the original restructuring plan, abandoned the acquisition of Spring Fusion, and adjusted the valuation of Lehua Culture in the restructuring plan, from 2.32 billion to 1.89 billion yuan.
The valuation has been lowered, and the reddest restructuring plan has been folded. At the end of February 2017, the restructuring that had been tossing and turning for more than a year failed.
As for the reasons, Lehua Culture said that the M&A operation time is too long, the economic environment has changed, and shareholders have different ideas about the way the company connects with the A-share market.
Translated into one sentence: I want a separate IPO. Du Hua, chairman of Lehua Culture, also publicly stated that he was full of confidence in the company's future and wanted to IPO alone.
Turned to Hong Kong stocks, in recent years dividends of 600 million
In May 2019, the official website of the China Securities Regulatory Commission disclosed the report of China Merchants Securities on the counseling work of Lehua Culture's IPO (phase VI), which showed that Lehua Culture intends to apply for listing on the main board of the Shanghai Stock Exchange.
In the end, Lehua Entertainment did not knock on the door of the Shanghai Stock Exchange, but still came to the gate of hong Kong stocks. As early as 2018, there was a view in the market that the A-share IPO of Lehua Entertainment was full of twists and turns, and it would eventually go to Hong Kong stocks to continue the IPO.
First of all, the financial inspection of A shares "dissuaded" a large number of film and television media stocks related to stars, such as Happy Twist and Xinli Media. Some star-blessed companies' A-share listing plans have failed, and star capitalization has entered the cold winter.
Secondly, the problems of industry irregularities such as the "yin and yang contract" of the film and television entertainment industry have been exposed, the public's confidence and favorability in the film and television industry and traffic stars have dropped to the freezing point, the stock prices of film and television companies have been depressed, and the valuation has shrunk.
This may have affected the decision of Lehua Entertainment. Lehua Entertainment's own argument is that the Hong Kong stock listing can better reach international market investors who are more familiar with the company's industry and business model.
Before submitting the prospectus, Lehua Entertainment's move caused controversy. According to the prospectus, in October 2020, Lehua Entertainment subsidiary Lehua Co., Ltd. announced a dividend of 200 million yuan to shareholders, and in March 2022, it distributed a dividend of 400 million yuan.
In 2020 and 2021, Lehua Entertainment's profit was RMB292 million and RMB335 million, respectively, totaling RMB627 million. In other words, the dividend of 600 million yuan has been distributed almost for nearly two years.
Before the IPO, a large dividend was paid, and then it reached out to the market to raise funds. Such behavior often causes controversy and is questioned as a listing circle of money.
Nowadays, Lehua Entertainment, which has failed in A-share IPOs for many years, has switched to Hong Kong stock IPO listing, will the future listing process be smooth and the valuation geometry? We will also continue to pay attention.