"Red Sect Leader" Zhou Hongyi may harvest his fourth IPO!
On October 25, Huafang Group, which has online live broadcasting platforms such as Peppercorn Live and Six Rooms, has officially submitted a prospectus to the Hong Kong Stock Exchange for listing on the main board, with CCB International and Haitong International acting as joint sponsors.
According to the prospectus, the chairman of the board of directors of Huafang Group is Zhou Hongyi, and at the same time, Zhou Hongyi holds 38.21% of the shares through several companies such as 360 and Hua pepper No. 1, which is the largest shareholder, which also means that after 360, 360 Digital, and Master Lu, another IPO of Zhou Hongyi is coming.
A belated IPO
According to the prospectus, Huafang Group is mainly composed of three business lines: sichuan pepper, a mobile live broadcasting platform, six rooms on the PC live broadcasting platform, and international products under HOLLA Group operating overseas.
If it were not for the fact that Huafang Group sought to go public, people may not remember the fire of six rooms and pepper live broadcast, which originated from the era of "Thousand Broadcast Wars".
"Six rooms" can be traced back to Peking University entrepreneur Liu Yan, in 2006, when the video website YouTube began to explode in the United States, Liu Yan set up a benchmark YouTube six rooms, in the six rooms in the initial period, with "Bird Cage Mountain Bandits", "A "Steamed Bun" caused by the rapid rise of self-made content, once became China's largest video sharing website.
But the good times are not long, soon, the video site into the era of hegemony, coupled with the ensuing global financial crisis, six rooms "failed", helpless to transform into live broadcasting, but six rooms got up early, caught up with a late set, the company also failed to enter the core head camp in the live broadcast era, in 2015, Liu Yan in the "cash + share exchange" way to make a price of 2.6 billion yuan, sold the company to Songcheng Performing Arts, he continued to serve as the CEO of six rooms.
It is worth mentioning that 2015 is the outlet of the live broadcast platform, at that time, the peppercorn live broadcast launched by the 360 Group killed a blood road by inviting popular stars to settle in, etc., Zhou Hongyi frequently created momentum for the pepper live broadcast platform, held pepper night, and even used peppercorns to broadcast live after the spontaneous combustion of his BMW.
It is worth noting that although Zhou Hongyi personally stood on the platform and frequently created momentum, in the period when the live broadcast trend was prevalent, the live broadcast of peppercorns was still lower than the head platforms such as YY live broadcasting, Douyu, Huya, etc. According to the data of Ai Media Consulting at that time, the market share of peppercorn live broadcasting was about 1%, which was in the second echelon.
What is unexpected is that in 2019, when the tide of live broadcasting has faded, six rooms and pepper live broadcasting suddenly merged, one rooted in the PC side, one mainly focused on mobile Internet, thus forming a new online live broadcast entertainment platform Huafang Group.
Today, under the leadership of Zhou Hongyi, Huafang Group has sounded the trumpet of IPO, but the live broadcasting industry at this time has long been different - the merger of Huya and Douyu has been stopped, and the market value of the two has continued to decline; the latest market value of Hong Kong-listed Yingke is only 2.9 billion Hong Kong dollars, which has shrunk by nearly 70% compared with the market value of 10 billion at its peak.
Huafang Group, in the industry under the xiaoser, belatedly arrived, which also makes the industry curious, the reorganization of the pepper live broadcast and six rooms, how strong is it?
Revenue depends on live broadcasting, and peppercorns take up the burden
According to the prospectus, in 2018, 2019, 2020 and the first eight months of 2021, the revenue of Huafang Group was 1.993 billion yuan, 2.831 billion yuan, 3.684 billion yuan and 2.96 billion yuan, respectively, and its revenue continued to grow.
However, compared with the 2020 performance of several peers, the revenue of Huafang Group has become not very good, and the revenue of the game live broadcasting platform Douyu and Huya in 2020 is about 10 billion yuan, which is more than 3 times that of Huafang, and the total revenue of Yingke Live in 2020 is 4.95 billion yuan, which is nearly 1.4 times that of Huafang.
In terms of net profit, Huafang Group is not stable, from 2018 to 2020, Huafang Group is only profitable in 2019, and the net profit of 191 million yuan is also slightly thin, in 2018 and 2020, the net profit is -187 million yuan and -1.525 billion yuan, respectively, but fortunately, in the first 8 months of 2021, Huafang Group made a profit of 232 million yuan.
In addition, Huafang Group is highly dependent on the audio and video live broadcast business, in 2018, 2019, 2020 and the first eight months of this year, the company's revenue generated from live broadcast services accounted for 99.2%, 99.6%, 99.6% and 97.5% of the total revenue in the same period, and it was very dependent on a single business.
Among them, Huafang Group is highly dependent on peppercorn live broadcasting, in 2019, 2020, the first 8 months of this year, the live broadcast service revenue of peppercorn live broadcasting was 2.166 billion yuan, 2.826 billion yuan and 2.23 billion yuan, accounting for more than 75% of the total revenue.
Monthly active users and streamers are rapidly churning
It is worth mentioning that huafang group's audio and video live broadcasting business generates revenue by selling virtual tokens to users, users use virtual tokens to exchange virtual items and other services, and send virtual items to the anchor, and the prospectus shows that almost all of the group's income comes from virtual tokens.
As of August 31, 2021, Huafang Group has a total of 372 million registered users, the cumulative registered users of Huafang and six rooms are 207 million and 77.3 million, huafang has 10.1 million anchors, and six rooms have 500,000 anchors.
In addition, the user activity data of Huafang Group is not as good as before, in 2018, 2019, 2020 and the first 8 months of this year, the monthly active users of Huazhu Live were 41 million, 23.6 million, 27.2 million, 29.5 million, and the monthly active users of Huafang Group fell by 11.5 million in three years, and the prospectus did not publish the monthly active data of the six rooms, which may be even worse.
The same is true for the active data of the anchor, Pepper Live has disclosed that there were 15 million active anchors in 2017, but according to the prospectus of Huafang Group, the average monthly active anchor in the first 8 months of 2021 was only 200,000, and it is worth mentioning that in order to continue to attract anchors to retain, Pepper Live also introduced a 30% industry-wide minimum commission rule.
On the one hand, live broadcast revenue still shows a high growth state, and the proportion of anchor costs in revenue, one of the main costs of live broadcasting platforms, has also shrunk from 74.6% in 2018 to 66.1% in the first 8 months of this year, with positive growth momentum.
On the other hand, according to iResearch's report, for the six months ended June 30, 2021, Huafang Group ranked third among all online social entertainment live broadcasting platforms in China, and ranked first in the cumulative download volume on mobile devices.