Recently, Bruco Group, known as "China's version of Lego", officially submitted a listing application to the Hong Kong Stock Exchange, with Goldman Sachs (Asia) Securities and Huatai Financial Holding as joint sponsors.
With more than 30 world-renowned IP licenses, Bruco is the world's fastest-growing toy company in recent years. Fundamentally, the company has been losing money in recent years. In the first quarter of this year, the company successfully turned losses into profits.
Image source: Company prospectus
The "Chinese version of Lego" was launched in Hong Kong
According to the prospectus, Bruco was founded in 2014 by Zhu Weisong, co-founder of Youzu Network. The company's toy products are mainly divided into two categories: "building character toys" and "building block toys", which are known as "China's version of Lego".
IP toys are an important part of the global toy market. Up to now, Bruco has been licensed by more than 30 well-known IPs, including Ultraman, Transformers, Naruto, Marvel Infinity Legends, Marvel Spider, Detective Conan, Hatsune Miku, Saint Seiya, etc.
In addition to licensing cooperation, Bruco is also actively creating original IPs, and has launched two of its own IPs, namely the children's puzzle category of Bruco and the theme of Chinese traditional culture Heroes Unlimited.
In recent years, with the authorization of well-known IPs such as Ultraman, Blue has continued to develop rapidly. According to Frost & Sullivan data, Brooke is China's largest and the world's leading building character toy company, with a gross merchandise value (GMV) of about 1.8 billion yuan in 2023, a year-on-year increase of more than 170%, making it the world's fastest-growing large-scale toy company.
According to the plan, the funds raised by Bruco in this IPO will be used to enhance R&D capabilities related to product design and development, further enrich the IP matrix, and invest in core production resources and its own large-scale factory focusing on building character toys.
Image source: Company prospectus
Turnaround in the first quarter of 2024
According to the prospectus data, in 2021, 2022 and 2023, Bruke will achieve operating income of 330 million yuan, 326 million yuan and 877 million yuan respectively, gross profit margins of 37.4%, 37.9% and 47.3% respectively, and losses of 507 million yuan, 423 million yuan and 207 million yuan respectively.
In the first quarter of 2024, Bruke achieved operating income of 466 million yuan, a year-on-year increase of more than 200%; The profit was 46.711 million yuan, and the adjusted profit was 120 million yuan, a year-on-year increase of 26.1%.
During the reporting period, the company's toy products sold 24 million pieces. As of March 31, 2024, the Company had 391 stock-keeping units (SKUs) for sale, including 130 SKUs for children under 6 years of age, 243 SKUs for people aged 6 to 16 and 18 SKUs for ages 16 and older. In terms of price, the price of the company's mainstream products ranges from 19.9 yuan to 399 yuan, and the price of the hot-selling mass price band products is 39 yuan.
The data also shows that as of March 31, 2024, Bruco has a total of 433 dealers. From 2021 to 2023, the sales revenue of Brooke's offline dealers will be 113 million yuan, 157 million yuan, and 733 million yuan respectively, accounting for 34.2%, 48.2%, and 83.6% of the total revenue, respectively; In the first quarter of 2024, the sales revenue of Bruco's offline dealers has reached 424 million yuan, an increase from 72.4% in the same period last year to 91.0%.
Ultraman's IP products account for a relatively high proportion of revenue
According to the prospectus, in the first quarter of 2024, the product revenue of Ultraman IP accounted for the majority of Bruke's total revenue, which is also an important reason for the company's turnaround. According to public information, in 2021, Blue can obtain the authorization of Ultraman IP. The following year, the company began designing, developing, and selling Ultraman building toys. Since then, building character toys has gradually become the main source of the company's revenue. As of the end of the first quarter of 2024, the company has a total of 133 Ultraman IP toy SKUs.
The data also shows that the revenue from licensing IP accounts for the majority of Bruco's revenue. From 2022 to the first quarter of 2024, the revenue from licensed IP will be 116 million yuan, 705 million yuan, and 382 million yuan respectively, accounting for 98.4%, 91.7%, and 84.2% of the revenue from building character toys, respectively.
According to Bruco, IP licensing agreements are typically one to three years long and generally do not automatically renew. As a result, there can be no assurance that the Company will always be able to successfully renew or maintain the Company's License Agreement on similar terms, or that it will not be possible to renew or maintain the Agreement at all. According to some of the authorized IP information disclosed, the company's existing Naruto, Marvel Wireless Legends, Marvel Spider and other IPs will expire in 2025, and the authorization of Ultraman IP in China will also expire within 3 years.
Reviewer: Peng Yong
Editor: Wang Yin
Proofreading: Jiao Yuanyuan
Producer: Zhang Nan
Issued by: Sun Hong