The article | VCPE reference, author | Li Zixuan, Editor | Li Youran
Jay Chou may harvest a Hong Kong stock IPO.
Recently, Superstar Legend Group Limited (hereinafter referred to as "Giant Star Group") submitted a watch to the Hong Kong Stock Exchange.
This company is not owned by Jay Chou, but it is related to Jay Chou everywhere.
According to the prospectus, there are four controlling shareholders of the company:
Jay Chou's long-time business partner, Ma Xinting, is the founder and executive director of the company, holding 27.63% of the shares of Superstar Legend through its wholly owned company, Harmony Culture;
Jay Chou's mother, Yip Wai Mei, and founder and non-executive director Yang Junrong, jointly hold 27.63% of Superstar Legend through Legend Key, a wholly-owned company with equivalent shares. Zhou's fans know that Yang Junrong is Zhou's agent and co-founded Jewell Music Co., Ltd. with Zhou;
Another founder and non-executive director, Chen Zhong, also worked at Jewell Music. He holds 9.21% of the stake in Superstar Legend through his wholly owned company, Max One.
The above four founders are acting in concert, holding a total of 64.47% of the voting rights of Superstar Legend.
Source @ Screenshot of prospectus
In addition to the close relationship between the core shareholders and Zhou, the business of Superstar Legend also revolves around Jay Chou's related IP, but the company's main source of income is not star IP.
So, how exactly does the superstar legend monetize?
Jay Chou's IP "set up the big one", but rely on retail to support 300 million revenue
First of all, the big IP of "Jay Chou" is undoubtedly the most valuable intangible asset of the superstar legend.
As a result, the company has developed the reality show "Zhou Youji", Jay Chou's concert, and the two-dimensional image of "Zhou Classmate" based on Jay Chou, and has the corresponding copyright. In 2021, Superstar Legend also cooperated with Bubble Mart to launch the "Zhou Classmates Zhou Travelogue" blind box.
A similar series of "IP creation and operation" activities have generated a certain amount of revenue for the company.
According to the prospectus, from 2019 to 2021, the revenue of Superstar Legend was 0.87 billion yuan, 457 million yuan and 365 million yuan respectively, of which the "IP creation and operation" revenue was 0.06 billion yuan, 0.92 billion yuan and 0.64 billion yuan, accounting for 6.7%, 20.1% and 17.5% of the total revenue, respectively.
Source @ Screenshot of prospectus
From this point of view, the revenue directly generated by IP is not optimistic, and in the past three years, the highest accounted for only 20.1% of the total revenue.
However, the investment in building and operating IP is enormous. According to the prospectus, the largest proportion of the company's expenditure in 2020 was the copyright fee of the TV program, that is, the copyright fee of "Zhou Travel", totaling 106 million yuan, accounting for 23.2% of the company's total revenue for that year.
Source @ Screenshot of prospectus
In contrast, new retail generates more than three times more revenue than "IP creation and operation". The new retail business seems to be the pillar of the company's revenue, accounting for about 80% of the total revenue, and even more than 90% at one time. This can't help but make people feel a sense of dislocation of "planting melons and getting beans".
Source @ Screenshot of prospectus
The so-called new retail business includes health management products, da ren yue self skin care series and other three parts. The largest contributor to revenue is health management products, which have contributed more than 70% of revenue in the past three years. According to the prospectus, from 2019 to 2021, the revenue contributed by health management products was 0.72 billion yuan, 341 million yuan and 275 million yuan, accounting for 83.0%, 74.5% and 75.4% of the total revenue, respectively.
So, what do health management products mean?
According to the prospectus, the health management products by product type include magic carcass coffee, magic prebiotic fudge, magic carcass probiotic freeze-dried powder, magic carcass herbal drink and other five parts.
Among them, Magic Carcass Coffee is undoubtedly the bearer in health management products, achieving revenue of 72 million yuan, 333 million yuan and 228 million yuan from 2019 to 2021, accounting for 100.0%, 97.7% and 82.7% of the total revenue of health management products, accounting for 83.0%, 72.8% and 62.3% of the company's total revenue.
Source @ Screenshot of prospectus
It can be seen that Magic Carcass Coffee has become the most mature and successful product of superstar legends. And this is inseparable from Jay Chou's influence.
Jay Chou was reduced to a marketing tool
Behind the best-selling magic carcass coffee, it is inseparable from the deep binding with Jay Chou.
In addition to the basic operations of placing the "Zhou Classmate" image in the Magic Carcass Coffee Offline Store and printing the "Zhou Classmate" cartoon image on the limited edition packaging, the reality show "Zhou Travel" and Jay Chou concert became the accelerator of the magic carcass coffee impulse.
After "Zhou Youji" landed on Zhejiang Satellite TV, Mogang Coffee launched the "official designated bulletproof beverage" - "Zhou Youji" joint limited edition, and implanted hard wide in the program.
Source @ Screenshot of the "Zhou Travel" program
At the "Ningbo Superstar Action Super Night Concert" held in 2020, the company also promoted Mogang Coffee by posting advertisements, product displays and gift giving at the venue.
The move greatly boosted coffee sales.
In 2020, the annual sales of Mogang Coffee exploded from 632,000 boxes in 2019 to 3.315 million boxes, and the company's gross profit also increased significantly, from 0.57 billion yuan to 233 million yuan.
Source @ Screenshot of prospectus
However, relying on concert promotion is not a long-term solution after all, especially under the influence of the epidemic, the holding of concerts is facing great challenges. This also led to a downward trend in the sales and proportion of magic carcass coffee year by year.
As of December 31, 2021, sales of Magic Carcass Coffee fell to 2.133 million boxes from 3.315 million boxes in the same period of 2020. Although in 2021, the price of mopod coffee per box increased by 7 yuan compared with 2020, sales revenue still fell sharply from 333 million yuan in 2020 to 228 million yuan, and the proportion of total revenue fell from 72.8% to 62.3%.
The sales model hides the hidden dangers of MLM?
The distribution network has always been the main sales channel for the legendary new retail business of Superstar. According to the prospectus, the revenue contributed by the distribution network from 2019 to 2021 was 81 million yuan, 362 million yuan and 292 million yuan, accounting for 100%, 99.2% and 96.8% of the new retail business, respectively.
Source @ Screenshot of prospectus
In 2020, the sales of Mogang Coffee soared, inseparable from the contribution of distributors - 575 distributors and 16,519 dealers, a total of 3.315 million boxes of coffee were sold.
Why is the distribution network so powerful?
According to the "Daily Economic News" report, some Magic Carcass coffee dealers revealed that to join strategic dealers, the goods are from 160 boxes. According to the dealer data in 2020, this year, the goods sold by Superstar Legends to new dealers alone reached 2.643 million boxes, accounting for 79.7% of the total sales in 2020.
However, from the above data, it can also be seen that about 80% of dealers only take the goods once. At the same time, the prospectus discloses changes in the number of distributors and dealers. 2020 is the fastest year for the expansion of the distribution team, and in 2021, not only the expansion rate declines, the number of distributors and dealers terminated during the year was 118 and 3900 respectively, almost half of the new number. It can be seen that the business of distributors and dealers is getting worse and worse.
Source @ Screenshot of prospectus
In addition, it is worth noting that according to the Beiqing Network, the relevant agents revealed that there are four different agent levels of Magic Carcass Coffee, Platinum VIP, Diamond VIP, General Agent Group Purchase Chief and Strategic Distributor.
Platinum VIP needs a one-time investment of 990 yuan to buy the product, Diamond VIP needs to invest 4200 yuan... And so on, the more you invest, the higher the level, the lower the purchase price you can enjoy, and you can earn a high price difference.
Image source @ Beiqing Network
At the same time, there are also very considerable recommendation awards and management awards at the strategic dealer level. For example, if strategic dealer A directly recommends B to become a strategic dealer partner, A can permanently enjoy B's 8% sales incentive, and if B recommends C to become a strategic dealer partner, A can also permanently enjoy C's 4% sales incentive.
This seemingly perfect sales model has attracted many questions.
The prospectus discloses that in June 2020, the company's Kunshan Superstar Action, Jumu Cultural Creation (Kunshan), Kunshan Ting Luxury and other companies were frozen by the local market supervision bureau in a fourth-tier city on the grounds of suspected pyramid schemes. In May last year, several of The Legends' companies were again frozen in a number of bank accounts.
Source @ Screenshot of prospectus
In response, Superstar Legend said that the company operates with "a new sales model" and solicits end consumers through social media, while many distributors and dealers are themselves consumers of products. Superstar Legend also acknowledges that misconceptions by authorities or end consumers about the company's business model can lead to negative publicity and potential regulatory sanctions, with adverse effects on the business.
Source @ Screenshot of prospectus
How to go to Jay Chou
It is not difficult to see from the prospectus that the superstar legend is trying to get rid of its dependence on Jay Chou.
On the one hand, the company strongly emphasizes the contribution and ability of its IP operation team independent of Jay Chou's influence.
In the prospectus, The Legend of superstar said that Jay Chou himself "did not play a key role" in the "Zhou Travels" program and the IP creation of "Zhou Students", and the company's achievements in "IP creation and operation" "are attributed to the experience and efforts of our management and operation team". Superstar Legends has a team of 32 people focused on IP content creation and IP licensing.
On the other hand, Superstar Legends plans to cooperate with other stars to expand the combination of stars and IP series. For example, in 2021, it produced a pop music talk show starring singer Yu Chengqing, "Both Come and Be Happy", and a variety show centered on singer Liu Qihong. At the same time, the company is also exploring the feasibility of creating a binary personality for stars such as Liu Qihong and Fang Wenshan.
According to the intellectual property rights disclosed in the prospectus, the company has registered more than 50 trademarks and copyrights related to Jay Chou and other stars, and is applying for and handling the registration of other IP.
The purpose behind all this is to continuously provide a driving force for the new retail business. "After cooperating with other celebrities, it is expected that the Group will be able to replicate the business model used by Mogang Coffee to new products and different celebrities, creating synergies, thereby further reducing the use of Jay Chou's relevant IP empowerment."
However, there are also risks in seeking a way out of IP and product diversification. First of all, the celebrity collapse incident has made many brands suffer dumb losses.
Second, the premise of a business model being copied is that it has already run through. Judging from the sales model of Magic Carcass Coffee and its hidden risks, this premise is obviously not valid.