On March 28, "Tide Play First Share" Bubble Mart (09992. HK) has released its 2021 annual report. According to the annual report, in 2021, The total revenue of Bubble Mart was 4.49 billion yuan, an increase of 78.7% year-on-year, and the adjusted net profit of non-IFRS was 1.002 billion yuan, an increase of 69.6% year-on-year.
(SKULLPANDA image from Bubble Mart's official Weibo)
Bubble Mart's 2021 revenue and net profit rose, but Red Star Capital Bureau noted that bubble Mart's stock price still fell after the noon of the day. On March 28, Bubble Mart closed at 31.00 yuan per share, down 6.06%. At 16:00 on March 30, the market value of Bubble Mart was HK$50.909 billion, which was close to the waist compared with the market value of HK$100 billion when it was just listed.
Bubble Mart reported that the overall data is not bad, but it is not bought by the capital market. Bubble Mart's revenue growth rate has slowed down, gross profit margin has declined, and the three head IP revenues of Molly, SKULLPANDA and Dimo account for 72.22% of their own IP revenue, or the capital market has begun to doubt Bubble Mart's new IP building capabilities.
It is worth noting that Bubble Mart emphasized in its 2021 annual report that IP is the core of their business, which means that Bubble Mart is moving from the strong channel weak IP at the beginning to the strong channel strong IP. Although doing IP has strong staying power, it is a long-term and risky path, the market may be able to give Bubble Mart more time to grow, but in the context of intensified industry competition, there is not much time left for Bubble Mart.
Revenue and net profit double increased: continuous store expansion, head IP revenue tended to be balanced
In 2021, Bubble Mart's total revenue was $4.49 billion, an increase of 78.7% year-on-year, and non-IFRS adjusted net profit was $1,002 million, an increase of 69.6% year-on-year.
Red Star Capital Bureau noted that Bubble Mart, which has been criticized for its uneven IP income, will be more balanced in 2021.
Among the head IP revenue of Bubble Mart, the revenue of its own IP increased from 39.0% in 2020 to 57.6% in 2021, of which Molly's revenue was RMB705 million, an increase of 97.6% year-on-year, and SKULLPANDA became bubble Mart's second largest revenue IP, with revenue of 595 million yuan, an increase of 1423.8% year-on-year. Dimoo's revenue was RMB567 million, up 79.8% year-on-year. The revenue of small sweet beans in 2021 was 161 million yuan, an increase of 458.1% year-on-year. In 2020, bubble mart head IP Molly revenue of 357 million yuan, Dimoo revenue of 315 million yuan, other own IP revenue did not break 100 million, of which SKULLPANDA revenue was 39.065 million yuan.
At the same time, Bubble Mart, which has always taken the advantage of channels, is still expanding offline stores and overseas stores, and developing online channels.
In terms of offline, in 2021, Bubble Mart will open 106 new offline stores in China, from 187 at the end of 2020 to 288 at the end of 2021. In 2022, Bubble Mart plans to open 40-50 stores in different overseas regions, and has already confirmed projects in South Korea, Australia, New Zealand, the United States, and Japan.
Online, the mini program Bubble Mart box drawer independently developed and designed on the WeChat platform generated revenue of 898 million yuan in 2021, an increase of 92.6% year-on-year, and the revenue of Jingdong flagship store in 2021 was 143 million yuan, an increase of 296.0% year-on-year. Tmall's flagship store revenue in 2021 was RMB599 million, up 47.5% year-on-year.
Wang Ning, founder and chairman of the board of directors of Bubble Mart, attributed the increase in online revenue to the growth of brand influence and the increase in the number of members. Wang Ning also revealed that online channel optimization will still focus on WeChat Mini Programs, Tmall and JD.com, but will also accelerate the development of live e-commerce platforms such as Douyin. "Our recent live e-commerce growth on Douyin is gratifying."
In its financial report, Bubble Mart said in its business review: "We still focus on artist discovery, IP operation, consumer reach and the promotion of trendy toy culture. For the future, Bubble Mart will use IP, channels, overseas markets, and promotion of trend culture as keywords.
Capital dissatisfaction: the growth rate is slowing down, and the ability to build IP is questioned
Although Bubble Mart's earnings report showed that it increased revenue and profit in 2021, Red Star Capital Bureau found that after Bubble Mart's financial report was issued, the stock price fell on the same day. On March 28, Bubble Mart closed at 31.00 yuan, down 6.06%.
Why? Or from bubble mart 2021 annual report can see some clues.
First of all, the revenue growth rate of Bubble Mart has slowed down significantly. The data shows that from 2017 to 2020, the total revenue of Bubble Mart was 158 million yuan, 515 million yuan, 1.683 billion yuan and 2.513 billion yuan, respectively, an increase of 225.49%, 227.19% and 49.31% year-on-year. In 2021, the total revenue was 4.49 billion yuan, an increase of 78.7% year-on-year.
Secondly, the gross profit margin of Bubble Mart declined. According to the 2021 annual report data, the gross profit margin of Bubble Mart decreased from 63.4% in 2020 to 61.4% in 2021. Bubble Mart said it was mainly due to a decline in gross margins for branded products. Bubble Mart products are mainly divided into brand products and external products. As for the reason for the decline in the gross profit margin of brand products, Bubble Mart explained that it was due to the improvement of product process quality and the increase in raw material costs in 2021.
Finally, the ability to build IP is still questionable. Bubble Mart's 2021 annual report shows that the revenue of The three heads of Molly, SKULLPANDA and Dimoo accounted for 72.22% of its own IP revenue. Bunny, the fourth in revenue, accounted for 3.7% of free IP revenue, an increase of only 1.3% compared to 2020, and Small Sweet Bean accounted for 3.6% of free IP revenue, an increase of 2.4%.
(Screenshot from Bubble Mart's 2021 annual report)
Zhou Ximing, an investor in the tide play track, analyzed: "Only the small sweet beans in the financial report are new IP, accounting for only 3.6%, from this point of view, Bubble Mart has not fundamentally solved the anxiety about its IP problems in the market." ”
However, Wang Ning said at the performance briefing: "Our overall strategy is still the head IP strategy, not necessarily to emphasize the number of IP, but more is the quality of the head IP." But Red Star Capital found that in 2020, in the context of overall revenue growth, its most gold-absorbing IP Molly revenue declined, from 456 million yuan in 2019 to 357 million yuan in 2020.
Over the past year, Bubble Mart has put a lot of effort into molly's IP. 2021 is the fifteenth anniversary of Molly, Bubble Mart continued to launch the new IP products, promote cross-border joint cooperation, hold theme exhibitions, and launched a high-end tide play product line "MEGA Collection Series", which finally stopped the momentum of Molly's revenue decline. Molly's revenue in 2021 was 705 million yuan, an increase of 97.6% year-on-year.
(MEGA SPACE MOLLY picture from bubble Mart official Weibo)
The market environment is more worrying for capital.
On the one hand, the tide play industry where Bubble Mart is located has more and more players entering in recent years, 52Toys, TOPTOY are its fierce enemies, and international toy brands such as Funko and Bandai are also strengthening the layout of the Chinese market.
In the face of competition, Wang Ning said at the performance briefing: "2021 is the first year after the IPO of Bubble Mart, and there are many companies in the industry that have invested in the trend toy industry, but at present, there are fewer companies that can compete with us, and our growth is faster than the industry growth rate." ”
On the other hand, the supervision of the tide play industry is becoming stricter.
On January 12, 2022, the China Consumer Association pointed out that KFC's sale of instant edible goods in limited blind boxes is to stimulate consumption through "hunger marketing", resulting in consumers over-purchasing in order to obtain limited blind boxes, resulting in unnecessary food waste.
Subsequently, the Shanghai Municipal Bureau of Market Supervision issued the "Shanghai Blind Box Business Activities Compliance Guidelines" on January 14, giving 20 compliance suggestions and drawing a red line for blind box sales, including encouraging blind box operators to establish a guarantee mechanism, by setting the upper limit of the amount of withdrawal and the upper limit of the number of times, to guide rational consumption and avoid excessive speculation in the secondary market. During the two sessions, the blind box economy also received a lot of attention.
Turn to strong channels and strong IP
There is not much time left for Bubble Mart
"Our understanding of IP and the industry is also more profound. The industry is based on IP and content, and has a high threshold in design and aesthetics, which is also our value. Wang Ning explained in the financial report. How Bubble Mart does IP and what he wants to use it for can also be seen in his actions over the past year.
On the one hand, Bubble Mart is strengthening its voice in the field of trend art and culture and tapping into design talents. In 2021, they established inner flow, an art promotion agency, aiming to jointly create high-end art derivatives with galleries and artists around the world, and develop collectible art derivatives such as prints, sculptures, trendy toys, and living homes. In July 2021, Bubble Mart and the Guanghua School of Management of Peking University jointly established the Business and Art Research Center of Peking University, aiming to cultivate outstanding talents in cultural and creative industries and promote research in the fields of Chinese trend culture and new consumption.
On the other hand, Bubble Mart is constantly building its own IP industry ecology. Red Star Capital Bureau found that in 2021, Bubble Mart invested in the content company upstream of the IP industry chain - animation company at two o'clock. It is understood that two points of ten will develop IP animation or related content for bubble mart, and bubble mart also has the priority right to develop derivatives of two points of very original IP. It has also invested in consumer brands with cultural attributes located in the middle and lower reaches of the IP industry chain, such as the pan-two-dimensional retail brand "Cat Galaxy", the Hanfu Guofeng brand "Thirteen More", and the tide brand buyer store "Solestage" and other brands with cultural attributes.
In early January 2022, Bubble Mart also reached a cooperation with Beijing Chaoyang Park, announcing that it will build Bubble Mart's first offline park, and the feasibility study and concept design of the project have been completed. After the construction of the park is completed, there is no doubt that it can become the bearer and influence amplifier of all IP.
Since its establishment nearly 12 years ago, Bubble Mart has developed from a "trendy supplies collection store" built with retail logic at the beginning to a "leading enterprise in the tide play industry" with IP as the core. These 12 years are also the process of bubble mart from strong channel weak IP to strong channel strong IP. Molly was the starting point for their stride, and as their influence grew, this image gradually became a real IP. However, under Bubble Mart's vision of the future, they also need to create more and higher quality head IP - real IP, not image.
Creating a real IP takes time, determination, and more importantly, "opportunity." Opportunities are hard to find, bubble mart is still determined, but in the case of intensified industry competition, the capital market has little time left for bubble mart.
Red Star News reporter Yuan Ye intern reporter Zhang Luxi
Edited by Yang Cheng
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