Recently, Taifeng Culture Holdings Limited (hereinafter referred to as "Taifeng Culture") submitted its prospectus to the Hong Kong Stock Exchange again, with Future Finance as the exclusive sponsor. Previously, the company had submitted a statement to the Hong Kong Stock Exchange in 2020.
Taifeng Culture, founded in 2013 and headquartered in Suzhou, Jiangsu Province, is a well-known trading platform for contemporary Chinese painting, known as "Taobao" in the field of traditional Chinese painting.
The company acts as an agent to match the needs of contemporary Chinese painting sellers (including artists and painting owners) with buyers by organizing exhibitions of contemporary Chinese painting commissioned for sale and utilizing the Taifeng Art Mall platform, with revenue derived from commissions charged to contemporary Chinese painting sellers. During the Track Record Period, all revenue of the Company was derived from the provision of painting agency services and the profit model was relatively simple.
Company painting agency services related business model, prospectus
Contemporary Chinese paintings usually refer to paintings created after 1949. According to Frost Sullivan Report, in 2021, Taifeng Culture ranked first in the turnover of contemporary Chinese painting on all art platforms in China with a market share of 16%, and ranked second in the turnover of traditional Chinese painting on all art platforms in China with a market share of 7.6%.
According to the Prospectus, as at the Latest Practicable Date, Tyfon Internationa and the Employee Special Purpose Vehicle held 70.01% and 8.56% of the total issued share capital of Taifeng Culture respectively, Tyfon Internationa was wholly owned by Hu Ting, the Employee Special Purpose Vehicle was owned as to 72.71% by Tyfon International and 27.29% by the Employee Shareholders.
In this application for listing, the Company intends to raise funds for further expanding sales channels and networks, enhancing research and development capabilities of art-related technologies, expanding business through strategic investment or company acquisition, continuously building brand image and popularity, working capital and general corporate purposes.
Expected implementation schedule of company plan, prospectus
From January to September in 2020,2021 and 2022, the revenue of Taifeng Culture is about CNY 134 million, CNY 194 million and CNY 201 million respectively, and the corresponding profits for the period are CNY 31.858 million, CNY 67.595 million and CNY 66.666 million respectively, showing an upward trend as a whole.
Consolidated statement of profit or loss and other comprehensive income of financial statements, prospectus
Affected by the increase in labor costs, the gross profit margin of Taifeng Culture declined from 69.7% in 2020 to 67.4% in 2021. From January to September 2022, the gross profit margin of the Company increased to 69.2%.
Major financial ratio, prospectus
It is worth noting that as revenues rise, the company's cost of sales also rises rapidly. During the reporting period, the sales cost of Taifeng Culture was about CNY 40.55 million, CNY 63.261 million and CNY 61.836 million respectively, among which the sales cost increased by more than 50% year-on-year in 2021, higher than the revenue growth rate of the same period.
During the track record period, in order to attract contemporary Chinese paintings and retain customers, the Company paid interest-free commission deposits to most customers in advance before receiving the full payment of the painting price from the buyer. From January to September of 2020,2021 and 2022, the total amount of entrusted deposits paid by Taifeng Culture to customers is about RMB 120 million yuan, RMB 105 million yuan and RMB 117 million yuan respectively, accounting for a large proportion of the company's revenue in the same period.
If the Company fails to sell the entrusted contemporary Chinese paintings to the buyer in accordance with the terms of the agency service agreement, it will return the paintings to the customer and recover the full amount of the trust deposit from the customer. However, in the event that the commissioned painting is not successfully sold to the buyer, the Company cannot guarantee that the entrusted deposit paid to the customer will be fully recovered, which may affect the Company's operating results.
In addition, the preferences and needs of painting buyers are affected by various factors such as economic and political conditions, changing trends in the art market, collection preferences of painting buyers and financial resources. Once the demand for contemporary Chinese painting market decreases, or the Company is unable to identify, respond to and correctly judge the future trends and changes in the contemporary Chinese painting market, it may increase the difficulty of selling paintings to buyers within the period stipulated in the agency service agreement, thus affecting the commission income of the Company.
