Recently, Lehua Entertainment Group ("Lehua Entertainment") submitted a prospectus on the Hong Kong Stock Exchange, with CITIC Construction Investment International and China Merchants Securities International as joint sponsors.
Go to "Wang Yibo"? Why?
In 2009, Du Hua founded Lehua Entertainment, and the first artist signed was also Du Hua's good friend , Hunan Satellite TV host Xie Na, and then won the SJ group member Han Geng, who had just returned to China for development, making Du Hua famous in the brokerage business industry.
So far, the prospectus shows that according to Frost & Sullivan data, the total revenue of China's top five artist management companies in terms of revenue in 2020 is 3.2 billion yuan, accounting for about 6.1% of the total market share in the same year. The revenue of Lehua Entertainment's artist management business ranks first among all artist management companies in China, with a market share of about 1.5%. Han Geng, Wang Yibo, Meng Meiqi, Fan Chengcheng and other well-known artists are under the umbrella of Lehua Entertainment.
Artist brokerage itself is an asset-light industry, through the operation of artists' film and television dramas, songs, concerts, variety shows and endorsements and other contracts to earn shares, in the development of Lehua Entertainment in recent years, its net profit has grown rapidly, from 2019 to 2021, the company's revenue reached RMB631 million, RMB922 million and RMB1.290 billion, with a compound annual growth rate of 43.0%; net profit was about RMB119 million, RMB292 million and RMB335 million, respectively. The COMPOUND annual growth rate is 67.6%.
At present, the three major business segments of Lehua Entertainment are artist management, music IP production and operation, and pan-entertainment business, accounting for 91%, 6.1% and 2.9% of the company's total revenue in 2021. As of the latest practicable date, there were 58 signed artists and 80 trainees participating in the trainee programme. More than 90% of the business comes from artist agencies, and from the perspective of gross profit margin, in 2019, 2020 and 2021, the gross profit margin of Lehua Entertainment was 44.3%, 53.5% and 46.6% respectively.
Most of the media have mentioned that Lehua Entertainment relies too much on the artist management sector, so is artist management a good business?
Take Huayi Brothers as an example, Huayi Brothers' artist brokerage business began in 2000, when Huang Xiaoming, Li Bingbing, Zhou Xun and other first-line artists gathered at Huayi Brothers, which can be described as star-studded. From the digital point of view, at the beginning of the listing, from 2009 to 2013, the main business income brought by Huayi Brothers' artist agency and related service sector was 124 million yuan, 125 million yuan, 184 million yuan, 230 million yuan and 161 million yuan, and the gross profit margin was 62.71%, 67.48%, 66.78%, 68.39% and 75.51% respectively, and the gross profit margin of the artist brokerage business exceeded that of the film, TV series and derivative business, and even exceeded the cinema business.
Who wouldn't like a job with a high gross margin? However, since its development, the gross profit margin of the artist agency business has dropped significantly, which has also been recognized by the industry.
Artist brokerage has developed into the Red Sea, the development of the industry is gradually moving towards formalization and refinement, the previous artist brokerage companies generally get the full contract of the artist and then distribute, the artist brokerage company in the middle of the commission, do a matching transaction work, now, more and more brokerage companies, each company is good at the field is not the same, an artist's film and television contract, business contract and variety show contract, etc. may be distributed to different brokerage companies, at the same time, artists will also pay more attention to their own interests when choosing a brokerage company, It will also compress the profit margins of brokerage companies to a certain extent.
Lehua Entertainment cannot go to "Wang Yibo", or that the heavens and places are favorable and have cultivated a Wang Yibo, why should we go to "Wang Yibo", but the more "Wang Yibo", the better.
A listing obsession that is hard to let go
Lehua Entertainment has indeed put the listing into the growth plan very early, and Lehua Entertainment can be regarded as the artist agency that is most obsessed with listing.
In 2015, Lehua Co., Ltd., a non-wholly-owned subsidiary of Lehua Entertainment, was listed on the New Third Board. At the end of 2015, Gongda Electroacoustic announced that it reorganized Lehua culture and spring fusion with 4.12 billion yuan, and the restructuring plan was withdrawn at the end of September 2016, mainly because there was uncertainty about whether Spring Fusion could achieve performance commitments, and the two sides could not agree on key terms such as valuation.
Just a month later, Lehua culture became the "exclusive favorite".
On April 30, 2016, Gongda Electroacoustic commissioned Zhuoxin Dahua to evaluate Lehua Culture at the time of the first transaction, and according to the evaluation results at that time, the transaction price of Lehua Culture was set at 2.32 billion yuan.
On September 30, 2016, the above-mentioned appraisal agency once again evaluated Lehua Culture, and the final transaction price was set at 1.89 billion yuan. But in the end, Lehua Entertainment had no connection with the capital market.
In March 2018, Lehua Co., Ltd. was delisted from the New Third Board. In April 2018, it began to accept listing counseling from China Merchants Securities in an attempt to land on the capital market by way of IPO, but terminated the listing counseling after the progress report was updated to 16 issues, and the A-share listing plan fell short.
This time, Lehua chose the Hong Kong Stock Exchange.
Rabbit ye and the investment circle people chatted, everyone is not too optimistic about the stock price performance of Lehua Entertainment after the listing, even if the list of shareholders of Lehua Entertainment is not lacking in Ali Pictures, ByteDance and Chinese Culture such entertainment industry capital bigwigs, but everyone is also looking forward to the entertainment industry is increasingly depressed at the moment, Lehua Entertainment listing in the end how much money can be raised.