Dot blue letter attention, do not get lost~
Sitting on Top Stars such as Wang Yibo, Wu Xuanyi and Huang Minghao, Lehua Entertainment successfully passed the listing hearing of the Hong Kong Stock Exchange on August 7 and will officially land on the Hong Kong market.
In March this year, Lehua Entertainment submitted a listing application to the Hong Kong Stock Exchange. Before the IPO, Du Huawei, founder and chairman of Lehua Entertainment, was the largest shareholder, holding 50.18% of the shares, Chinese Culture held 14.25%, Ali Pictures held 14.25%, and ByteDance's wholly-owned subsidiary Quantum Leap held 4.74%.
There are 66 signed artists
According to the prospectus, Lehua Entertainment was established in 2009, focusing on artist management business, and after more than ten years of development, it has become a cultural entertainment platform covering artist management, music IP production and operation, and pan-entertainment business. According to Frost & Sullivan, Loch Wah Entertainment ranks first among Artist Management companies in China in terms of artist management revenue in 2021, with a market share of 1.9%.
In terms of finances, Lehua Entertainment's performance has achieved rapid growth in the past three years. Lehua Entertainment's revenue grew rapidly from RMB631 million in 2019 to RMB1.290 billion in 2021, with a compound annual growth rate of about 43%; Profit increased from 119 million yuan in 2019 to 335 million yuan in 2021, with an annual compound growth rate of about 67%. In the first four months of 2022, Leroy continued to achieve year-on-year growth, demonstrating the resilience of the company's business model.
Specifically, artist management is the core business of Lehua Entertainment, accounting for 84.0%, 87.7% and 91.0% of total revenue from 2019 to 2021, respectively. Music IP production and operation accounted for 11.8%, 10.0%, and 6.1%, respectively, and pan-entertainment business accounted for 4.2%, 2.3%, and 2.9%, respectively.
From the perspective of gross profit margin, from 2019 to 2021, the gross profit margin of Lehua Entertainment is 44.3%, 53.5% and 46.6%, respectively. Overall, talent agency is still a lucrative business.
In the artist management part, as of April 30, 2022, Lehua Entertainment has a total of 66 signed artists including Han Geng, Wang Yibo, Meng Meiqi, Fan Chengcheng, Huang Minghao, Wu Xuanyi, and 71 trainees participating in the trainee program. The signed artists have played important roles in a number of productions, such as the drama series "The Choice of Ideal Illuminating China", "The Wind Rises in Luoyang" and "Ice Hockey Boy", the movie "Revolutionary", "The Great Cause of Building the Army" and "The Great Cause of Party Building", and the variety show "This! It's hip-hop" and "Extreme Youth".
The prospectus reveals that Lehua Entertainment usually signs exclusive artist management contracts with artists, with contract periods ranging from 5 to 15 years, usually including automatic renewal clauses. Exclusive trainee contracts with trainees are generally for a period of three years. As of April 30, 2022, Leroy has a total of 23 business brokers and 17 executive brokers, each of whom typically works with 1 to 3 artists at the same time.
In terms of talent reserve, as of April 30, 2022, Lehua Entertainment has cooperated with more than 30 art schools, institutions and colleges across the country, and has selected trainees through singing and dancing competitions, global selection networks, social media platforms and other means. In the first four months from 2019 to 2022, Lehua Entertainment received more than 65,000 applications for the trainee program from China, South Korea and the United States, and signed trainee contracts with 19, 28, 50 and 7 trainee candidates in each period, with the overall acceptance rate not exceeding 0.3% per year.
Star shareholders gathered
The Chinese artist management market is highly competitive and highly fragmented.
According to Frost & Sullivan, the market had more than 1,200 players as of December 31, 2021, including several large entertainment content production companies engaged in artist management business. In 2021, the size of China's artist management market will be about 61.2 billion yuan. The top five artist management companies generated a total revenue of 3.4 billion yuan in 2021, accounting for about 5.5% of the total market share in the same year.
Lehua Entertainment is more focused on the virtual artist field, hoping that it can grow into the company's second growth curve. The pan-entertainment business to which virtual artists belong.
According to the data, from 2020 to 2021, Lehua Entertainment's pan-entertainment business achieved revenue of about 37.869 million yuan, a year-on-year surge of 80.95%. Revenue surged, and the virtual artist group A-SOUL, launched at the end of 2020, began to generate commercial revenue through live broadcasts, concerts and endorsements. The virtual artist group is jointly planned by ByteDance and Lehua Entertainment, with ByteDance providing underlying technical support and Lehua providing content planning and operation.
In terms of capital operation, Beijing Lehua Entertainment Culture Communication Co., Ltd., an affiliate of Lehua Entertainment, was listed on the New Third Board, but it has been delisted in 2018. Lehua Entertainment accepted investments from CMC Capital, Alibaba Pictures, ByteDance and others in July 2021, but the amount of financing was not disclosed.
In terms of equity, before the IPO, Du Hua, founder and chairman of Lehua Entertainment, held 50.18% of the shares, and Chinese Culture, Alibaba and ByteDance held 14.25%, 14.25% and 4.74% of the shares of Lehua Entertainment, respectively.
The net proceeds from the IPO will be mainly used for continued investment in artist operations; Expanded music IP library; Invest in or acquire businesses or assets that are consistent with or create synergies with their growth strategies; Expansion of pan-entertainment business; Overseas expansion and use as working capital and general corporate purposes.
Entertainment regulatory policies are constant
In the past year, bad artists have been frequently exposed, and the entertainment industry has been in the limelight. It takes courage to choose Lehua Entertainment, which is listed at this time.
On February 10 this year, the website of the State Administration of Radio, Film and Television published a notice on the printing and distribution of the "14th Five-Year Plan" for the Development of Chinese Television Dramas. It is mentioned that the order of income distribution, including actors' remuneration, should be regulated, and labor contracts such as standardized, institutionalized, and unified remuneration should be promoted.
In fact, Lehua Entertainment is greatly influenced by artists. In the prospectus, Lehua Entertainment pointed out that most of the company's revenue comes from the artist management business. Failure to maintain relationships with artists and trainees or to expand the number of artists and trainees signed, the Company's business, financial condition and results of operations may be materially and adversely affected.
In addition, the State Administration of Radio, Film and Television issued the Notice on Further Strengthening the Management of Literary and Art Programs and Their Personnel (effective September 2, 2021), which prohibits the broadcast of idol cultivation variety shows. In order to comply with this notice, Chinese media platforms should suspend the broadcasting of such variety shows, and Lehua Entertainment will not enter into any similar arrangements. After the notice came into effect, the signed artists did not participate in any idol cultivation programs. Although the notice prohibits the broadcast of idol cultivation programs, it does not prohibit artists who have participated in such programs from engaging in business activities.
Strong policy supervision superimposed on the impact of the epidemic, and the growth of the artist management industry has fluctuated greatly in recent years. According to the data, the market size of China's artist management industry increased from about 63 billion yuan in 2017 to about 68.5 billion yuan in 2018, with a compound annual growth rate of 8.8%. However, the market size decreased to about 58.3 billion yuan in 2019, mainly due to the implementation of specific requirements for the proportion of artists' salaries to the total investment in films and dramas at the end of 2018. Since then, the impact of the epidemic has temporarily affected the work arrangements of artists, and the market size has dropped to about 52.3 billion yuan in 2020.
Entering 2021, the artist management industry has gradually recovered from the epidemic. At the same time, driven by the continuous development of the professional artist management system, the demand for talented artists and diversified monetization channels by content production companies is increasing, and the market size of China's artist management industry has expanded to about 61.2 billion yuan in 2021.
However, the agency is still optimistic about the future development of the artist management industry. According to Frost & Sullivan, the size of China's artist management market is expected to reach about 111.7 billion yuan in 2026, with a compound annual growth rate of 12.8% from 2021 to 2026, thanks to the development of professional artist management systems, the proliferation of digital channels competing for audiences, and diversified monetization channels.
(The pictures and tables in the text are from the Lehua Entertainment Prospectus)
Source: Company e (ID: lianhuacaijing)
Editor: Wang Zhaocheng
Copyright Notice
All original content of securities times platforms shall not be reproduced by any unit or individual without written authorization. Our company reserves the right to pursue the legal responsibility of relevant actors.
Reprint and cooperation can contact the Securities Times Assistant, WeChat ID: SecuritiesTimes
END
Click Keywords to view it
Periscope series in-depth report丨 Stock Affairs Conference Column 丨 Investment Little Red Book 丨e Company Investigation丨 Times Living Room 丨 Shady Investigation丨 Top Ten Celebrity Private Equity Interview 丨 Sanya: Closed Management of the City's Community! Hainan province's full nucleic acid 丨 Peng Zhaohui: good at small and medium-cap growth stock value mining, win in heavy positions, expensive in insisting on 丨 A number of well-known fund managers "invisible heavy stocks" exposed, Glen, Xie Zhiyu, Zhao Feng, Lu Bin... The latest to buy these stocks 丨 The latest video of the Eastern Theater soldiers in the Taiwan Strait! Completely break the so-called "middle line of the strait"! The latest interpretation of expert military exercises丨 early morning briefing! Sanya added 160+125! Hainan: Be prepared to fight the big battle of epidemic prevention and control, speed up the speed of "chasing the sun" 丨 "stock god" Buffett lost 43.7 billion US dollars in the second quarter, apple fell into the culprit, why is it so calm?