China Fund News reporter Li Zhi
Zhou Hongyi, the "Master of The Reds", is expected to reap another listed company.
On October 25, Huafang Group, the operator of the live broadcasting platform, submitted a prospectus for listing in Hong Kong, with CCB International and Haitong International as the joint sponsors of the company. According to the prospectus, the chairman of the board of directors of Huafang Group is Zhou Hongyi, who is also the largest shareholder of the company.
The live broadcasting platform operator "Huafang Group" plans to go to Hong Kong for an IPO
The number of users exceeded 370 million
According to the prospectus, Huafang Group is a well-known Internet company in China, providing audio and video live entertainment and social networking services for users around the world. Huafang Group operates a leading online social entertainment live broadcasting platform in China, focusing on the field of online social entertainment, with a diversified portfolio of services ranging from live broadcasting to a series of multi-faceted audio and video social networking products and services.
According to the iResearch report, Huafang Group ranked first among all online entertainment live streaming platforms in China in terms of cumulative downloads on mobile devices during the track record period, while it ranked second in terms of monthly active users of all channels and monthly usage time on mobile and PC for the eight months ended August 31, 2021. As of August 31, 2021, the Company had 372 million registered users and a significant portion of active users were aged 35 and under.
In terms of the company's business, Huafang Group has three major platforms, namely the mobile flagship product Hua pepper, the PC flagship product Six Rooms (including mobile six-room live broadcast, pomegranate live broadcast and Huafang live broadcast) and the international products of HOLA Group operating overseas.
One is "peppercorns". It is reported that Hua Pepper is a mobile flagship product launched in May 2015, which is an interactive entertainment experience delivered through live broadcast time. Users can access the live streaming feature to watch, follow and explore content of interest to them, and chat with streamers and other users in real time. As of August 31, 2021, the cumulative number of registered users of Peppercorns reached 207 million. As of August 31, 2021, Hua pepper had about 101 million registered anchors, and for the eight months ended August 31, 2021, There were more than 200,000 average monthly active anchors.
The second largest platform, Six Rooms, is the flagship PC-side product of Huafang Group and has its own mobile applications, including Six Rooms Live, Pomegranate Live and Huafang Live. With more than 10 years of operating history, Six Rooms is one of the earliest live streaming products in China.
The third is the overseas business, the team has successfully operated a number of international products of the HOLLA Group in North America, Europe, the Far East, the Middle East and North Africa. HOLLA is a video mobile app for the European and North American markets that provides social exploration and video chat services to allow users to meet new people around the world.
Revenue in the first eight months of this year was nearly 3 billion yuan
Net profit performance is unstable
In terms of operating business, Huafang Group's monetization ability mainly relies on the scale and vitality of the user community, and almost all the revenue is generated from the purchase and reward of virtual items to the anchor and other services on the live broadcast product. For the income generated by the virtual items received by the anchor, huafang group shares with the anchor and its related anchor brokerage company. Each virtual item is equivalent to a certain amount of virtual tokens. The host who receives the virtual item can exchange the virtual item for virtual tokens, and then exchange the virtual tokens for cash in a pre-agreed proportion.
Specifically looking at the operating performance of Huafang Group in recent years, the prospectus shows that in 2018, 2019 and 2020, the company's revenue was RMB1.993 billion, RMB2.831 billion and RMB3.684 billion, respectively, and the revenue in the first eight months of this year was RMB2.96 billion. At the same time, the company's gross profit margin performance has also steadily increased, with a gross profit margin of 28.5% in 2020.
However, the performance in terms of net profit is not stable, in 2018, 2019 and 2020, Huafang Group achieved a net loss of 187 million yuan, a profit of 191 million yuan and a loss of 1.525 billion yuan, respectively, and a net profit of 232 million yuan in the first eight months of this year.
Zhou Hongyi, the "Leader of the Red Cloth", is the largest shareholder
Songcheng Performing Arts and Mango Cultural Creation have participated
It is worth noting that the largest shareholder of Huafang Group is Zhou Hongyi, chairman of Qihoo 360, who holds 38.21% of the shares through the three companies. Songcheng Performing Arts holds 37.06% of the shares through its wholly-owned subsidiary, Global Bacchus Limited, making it the second largest shareholder of Huafang Group. In addition, Mango Cultural Creation also appeared in the list of shareholders, with a shareholding ratio of 1.54%.
Currently, Chow is a non-executive Director and Chairman of the Board of Directors of the Company (appointed in June 2021) and is primarily responsible for the Overall Strategic Planning, Corporate Governance and Business Direction of the Group. Zhou Hongyi joined the Group in April 2019 and has served as the Chairman of the Board of Directors of Huafang Technology and Mijing Hefeng since April 2019 and September 2020 respectively.
According to Tianyancha data, Beijing Huafang Technology Co., Ltd., the main company of the six rooms, has experienced multiple rounds of financing before, and in the tens of millions of dollars of C round financing in 2012, Songcheng Group took over with one click. Subsequently, in June 2018, Hua pepper merged with six rooms, and in the strategic financing in December of that year, Qihoo 360, Sanqian Capital, and Haoyue Capital have already participated.
China's entertainment live broadcast market has great potential
According to the prospectus of Huafang Group, China's online audio social entertainment market mainly includes real-time interactive audio entertainment services, focusing on music, audio services (including chat rooms), karaoke, social exploration and game accompaniment. Since 2017, the revenue generated by content subscriptions and virtual gift tips on the top online audio social entertainment platforms has increased significantly, resulting in a significant increase in the overall market development.
Globally, with the popularization of global mobile Internet infrastructure, the user base of the online social entertainment market continues to grow, and the audio and video social entertainment platform is experiencing a stage of rapid development. The global audio and video social entertainment market has experienced strong growth over the past five years and is expected to maintain steady growth over the next five years.
According to iResearch, after the steady development of the global online social entertainment market, the global audio and video social entertainment market has increased from RMB273 billion in 2016 to RMB1,174.8 billion in 2020, with a compound annual growth rate of 44.0% and is expected to reach RMB2,954.8 billion in 2026.
Soochow Securities Research Report also said that entertainment live broadcasting is one of the important vertical content and monetization means of short video platforms, and the current global entertainment live broadcast market still maintains rapid growth, but the characteristics of each region are different: North America, Japan, the Middle East and Southeast Asia are the main overseas entertainment live broadcast markets, North America is dominated by game live broadcasting, in August 2021, the game live broadcasting platform MAU represented by Twitch still maintains a year-on-year increase of nearly 20%; Latin America live broadcast revenue is low, live broadcasting enterprises are fewer, but the penetration rate of live broadcasting in Latin America is not low, Brazil accounts for 4.1% of Twitch's global MAU, ranking 6th among all countries; the entertainment live broadcast market in Asia and the Middle East has obvious dividends, and Chinese companies have geographical, cultural, policy and other advantages.
Zhou Hongyi has been making big moves recently
360 invested in Nezha Automobile and also established a private equity fund
Recalling Zhou Hongyi's entrepreneurial career can be described as very exciting. Since 1995, Zhou Hongyi has worked for Founder, then became the president of Yahoo China in 2004, and two years later, Zhou Hongyi invested in Qihoo 360 Technology Co., Ltd. and became the chairman of Qihoo 360. On March 30, 2011, Zhou Hongyi led Qihoo 360 to be listed on the New York Stock Exchange, and the stock price doubled on the first day of listing. On February 28, 2018, Zhou Hongyi led 360 to return to A-shares from the privatization of US stocks.
However, the stock price of 360 has been in a state of shock and decline since 2018, and the stock has fallen by 82% at a higher point so far. As of press time, the stock was quoted at 11.95 yuan, with a total market value of 85.387 billion yuan.
On May 6, 2015, Qihoo 360 and Coolpad joint venture of the new mobile phone brand "Qiku", but because of various problems from software to hardware, users from the beginning of the expectation to the final disappointment, and finally made both sides end in failure. On August 2 this year, Qiku Internet Network Technology (Shenzhen) Co., Ltd. underwent a change of industry and commerce, and the legal representative was changed from "Zhou Hongyi" to "Peng Shuai".
Although the mobile phone business failed, Zhou Hongyi did not give up the cross-border, this time aimed at the new energy vehicle industry, with the intention of laying out intelligent networked vehicle safety.
On May 11, 2021, Zhou Hongyi responded to car-making rumors for the first time, saying that 360 will not build cars independently, but will cooperate with Nezha Automobile to participate in car building. On October 25, 360 announced that the investment in Nezha Automobile has fulfilled the procedures required by the relevant government authorities, and the relevant agreements for this investment have been signed. This also means that the cooperation between the two sides has taken another step.
It is worth mentioning that Zhou Hongyi, who has been floating in the capital market for a long time, intends to break into the private equity circle. On August 23, the data released by the China Foundation Association showed that 360 (Beijing) Private Equity Fund Management Co., Ltd. had officially completed its registration on August 20, and the types of institutions were: private equity, venture capital fund manager, and the legal person was Zhao Dan. This is the first private equity fund management company under 360 Group to complete the registration. This means that in the near future, 360 may participate in the form of private equity.
EDIT: Captain
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