The "IPO journey" of superstar legend can be described as full of twists and turns.
On June 30, Superstar Legend announced that it will issue an IPO from June 30 to July 5. It plans to issue 127 million shares globally at an issue price of HK$4.25. It is expected to start trading on July 13, 2023.
And this isn't the closest Superstar Legend has come to an IPO. On June 13, Superstar Legend planned to land on the Hong Kong Stock Exchange, but on June 9, 4 days before the listing, it suddenly announced the withdrawal of the IPO and decided to postpone the listing. For this "release dove" behavior, industry insiders believe that "there is a high probability that it is undersubscribed."
Therefore, the issue price of Superstar Legend has been lowered by up to 32.5% from the initial issue range to facilitate a smooth IPO. However, from the perspective of the business model, even if it successfully lands on the Hong Kong Stock Exchange, investors in the secondary market may be less interested in it, and the risk of breaking the company always exists.
Performance stalled, superstar legendary Jay Chou's halo failed?
At the beginning of its establishment, Superstar Legend was only an entertainment company mainly engaged in artist brokerage business. It once led the variety show "Travel Notes 1" with Jay Chou as its IP and subcontracted services for Jay Chou's 2017 and 2018 concerts.
Realizing that the pure artist brokerage business has limited imagination, around 2018, Superstar Legend shifted its attention to the new retail market, trying to combine IP with new retail to form a commercial closed loop that leverages the influence of IP to leverage the sales of new retail products.
In fact, with the gradual maturity of Internet technology and the strong rise of the "Generation Z" who pursue individuality in the consumer market, around 2018, the new retail industry is indeed booming. According to data from the China Business Industry Research Institute, in 2018, the market size of China's new retail industry was about 109.6 billion yuan, and it has reached a trillion-dollar scale by 2022, with a compound growth rate of over 100%.
In this context, in order to seize the market to the maximum extent, most new retail companies will also sign contracts with celebrities to announce their products. However, the business focus of these new retail companies is "new retail", that is, at the product level. They only regard personal IP as a means of publicity and distribution, and do not pay much attention to it.
The legend of superstars chose to pay equal attention to IP and new retail, and told the story of "IP + new retail", which also achieved outstanding results in the early stage.
In April 2019, Juxing Legend launched Moku Coffee, all of which are purchased from Hengmei Group and shipped directly to downstream distributors. With the IP resources of Jay Chou in hand, Superstar Legend not only placed the advertisement of Motong Coffee in "Zhou You Ji 1", but also printed the cartoon image of Jay Chou on the packaging of Motong Coffee.
Thanks to Jay Chou's huge influence, Motu Coffee's performance has grown by leaps and bounds. According to data from China Insights Consulting, in terms of total merchandise transaction volume, Juxing Legend will become the largest company in China's bulletproof beverage market in 2021, with a market share of 25.6%.
It is worth noting that because Juxing Legend chooses light assets to operate the new retail business, it does not need to bear high fixed assets and depreciation costs, and it also has a higher gross profit rate than the first-tier companies in the new retail industry. According to the prospectus, from 2020 to 2022, the gross profit margins of Superstar Legend’s health management products will be 71.1%, 71.6%, and 64.9%, respectively. As a comparison, the gross profit margins of the three squirrels during the same period were only 23.90%, 29.38%, and 26.74%, less than half of that of the superstar legend.
However, it is a pity that the performance of Superstar Legend has not continued to rise. In the past two years, with the decline in the popularity of Moku Coffee and the sluggishness of other new retail products, Superstar Legend is facing the challenge of stalling. According to the prospectus, from 2020 to 2022, the revenue of Superstar Legend’s health management products will be 340 million yuan, 275 million yuan, and 216 million yuan, respectively, and the sales revenue of the mainstay of revenue will be 333 million yuan, 228 million yuan, and 151 million yuan respectively. billion, showing a continuous downward trend.
This is mainly because the competition in the entire new retail track is becoming more and more fierce, and traditional new retail players are also promoting products with the help of star effects. The business model of IP + new retail is easy to be copied. A strong supply chain and channel foundation can easily be overtaken by other companies.
Take Juxing Legend’s Magic Tong prebiotic jelly candy as an example. On the one hand, this product is purchased from upstream suppliers, which does not have a cost advantage. On the other hand, the downstream shipping channels are limited to dealers and do not cover supermarkets and other channels. , it is naturally difficult to win the market. From 2020 to 2022, the revenue of Magic Tong Prebiotic Gummy Candies will be 7.919 million yuan, 2.475 million yuan, and 67,000 yuan respectively, and the scale will continue to drop.
In addition, it is worth mentioning that although Superstar Legend has a halo of "Jay Chou concept stocks" on his head, and the IP+ new retail business operation is closely related to Jay Chou, but in terms of equity structure, Jay Chou himself does not hold any shares in Superstar Legend. This kind of cooperative relationship is actually not stable.
Therefore, although at first glance, the business model of leveraging the influence of superstar IP to leverage new asset-light retail products is relatively perfect, but in fact it cannot withstand scrutiny and it is easy to touch the ceiling.
In this context, the superstar legend urgently needs to be broken.
It is difficult for the capital market to like the IP that the superstar legend cannot let go of
Due to the natural shortcomings of the IP + new retail business model, if Superstar Legend wants to continue to generate stable income and win the attention of investors, it may be necessary to deepen the new retail business on the basis of weakening IP.
But Superstar Legend is working in the opposite direction, that is, to strengthen IP. According to the prospectus, Superstar Legend planned a fitness-related performance event to be held in Qingdao on May 20, 2023, attended by Liu Genghong and other stars. In the second half of 2023, Superstar Legend will operate a music talk show centered on Yu Chengqing, and broadcast "Zhou You Ji 2" centered on Jay Chou.
This is mainly because the IP business is very profitable. According to the prospectus, in 2022, the revenue of Superstar Legend IP creation and management business will be 104 million yuan, a year-on-year increase of 62.71%, accounting for 30.2% of revenue, a year-on-year increase of 12.7pct, and the gross profit margin is 69.3%.
Source: Superstar Legend Prospectus
In this regard, Juxing Legend explained that the reason for the substantial increase in IP creation and management business revenue is mainly because "in 2022, its program development revenue around Liu Genghong and related IPs increased by 41.708 million yuan." Once its artists "get out of the circle", the superstar legend will reap rich financial returns.
On the other hand, it is very difficult to deepen the new retail business. Take Yonghui Supermarket, which runs through the "catering + supermarket + Internet" business format, as an example. Due to its heavy asset operation, it needs a lot of capital and manpower investment. In 2022, its net loss will be 2.763 billion yuan, compared with 3.944 billion yuan in the same period last year. Yuan.
The superstar legend who only operates with light assets and hopes to maximize the value of IP obviously does not want to fall into a similar predicament. Capturing more and more stars will undoubtedly expand the IP influence of superstar legends.
However, based on industry precedents, even if the shortcomings of the new retail product supply chain and channels are not considered, it may be difficult for Superstar Legend to win the favor of investors.
For example, Fenghua Qiushi holds the trump card of "Luhan", and has sprinted for IPOs six times since 2021, but has never been able to knock on the door of the Hong Kong Stock Exchange, and his performance has also fluctuated. From 2018 to 2022, the company's revenues were 100 million yuan, 55.6 million yuan, 70.56 million yuan, 81.89 million yuan, and 94.85 million yuan. 10,000 yuan, 29.93 million yuan.
Lehua Entertainment, which was once known as "Wang Yibo's concept stock", has been successfully listed, but it has also sprinted for three IPOs, and its valuation was cut in half immediately after listing, and some cornerstone investors got out of the battle.
Why are entertainment companies so bumpy in the capital market?
In fact, it is easy to understand that capital often values the long-term growth of a company, especially when examining a company that is sprinting to go public, the vision will be more "sinister", and the entertainment industry is changing rapidly, star assets have a bubble effect to a certain extent, companies that rely too much on star IP , has not really formed a healthy and sustainable business model, so it is naturally difficult to be recognized.
Although Superstar Legend seems to have a more innovative and imaginative business layout compared with Fenghua Qiushi and Lehua Entertainment, it still puts the "top stream" that is not trusted by capital at the center of development, and its attempt at new retail is still Being at the "superficial" level also determines that its products do not have core competitiveness and it is difficult to stand out in the fiercely competitive market.
In order to give investors more confidence, Superstar Legend may still need to re-examine itself. If it puts IP in an auxiliary position and improves the infrastructure such as the supply chain in the new retail business, it may be able to create a more promising business under the blessing of the star effect. Advantageous path. However, referring to the practices of other companies in the new retail industry, the development process will undoubtedly require a lot of time and money costs. Now the superstar legend who is eager to go public can still calm down?
Author: Tianyu