April 20, 2023, music entertainment service provider from BeijingFenghua Qiushi Group Holdings Limited Fenghua Qiushi Group Holdings Limited (hereinafter referred to as”colorful autumn fruits”) Submitted another prospectus to the Hong Kong Stock Exchange to be listed on the Hong Kong Main Board as an IPO. This is another application after it was submitted five times: January 22, 2021, September 27, 2021, November 15, 2022 April 1, 2022, and October 12, 2022.
$FengHua Qiushi (810160.HK)$Prospectus link:
https://www1.hkexnews.hk/app/sehk/2023/105322/documents/sehk23042000009_c.pdf
Main business
colorful autumn fruits, founded in 2010, as a music and entertainment service provider that has been operating in China for more than 10 years, mainly focusing on self-operated onesGrant music copyright and music recording services, as well as concert hosting and production, artist management, etc..
According to the Insight Consulting Report, based on revenue generated from the licensing and recording of music copyright in 2022,colorful autumn fruitsIt ranked 14th among music record companies, with a market share of about 0.6%; among music record companies headquartered in China,colorful autumn fruitsRanked 3rd, with a market share of around 1.5%.
Grant music copyright and music recording
The company has a diverse and growing music library, including homemade and purchased music in the form of singles, digital and physical albums and videos, which the company licenses to (i) digital streaming platforms, (ii) album production companies, (iii) marketing and advertising companies, and (iv) other entertainment companies such as film production companies. The company receives revenue by collecting royalties and license fees from customers based on (i) a fixed minimum guarantee amount; (ii) revenue sharing arrangements; and/or (iii) key performance indicator revenue. The company also provides customers with custom music and video production services.
As of the last available date, the company's music library has 907 musical works, including rock, pop, pop rock, folk, etc.
Concert hosting and production
The company is responsible for hosting and producing the entire concert, including recruiting artists, creating entertainment content, obtaining concert venues and related permits, ticket sales arrangements and stage management. In addition, the company also provides production services for concerts and events hosted by third parties and collects production fees from them.
Artist management
Artist management revenue comes mainly from a certain percentage of the performance fees the company collects and earns from commercial activities and television programs. At the last practical date, the company managed 16 musical artists and 10 trainee entertainers, including the Black Panther Band, Mr. Luhan, Mr. Hao Yun, the Hulu Group, Mr. Liu Wei, Ms. Xu Mingming, Ms. Wang Ruolei, Ms. Li Siyu, Uncle Super, Mr. Dong Youlin, Ms. Wei Chen, Ms. Zhang Keyou, Ms. Wang Jingjing, Ms. Ahdipal Alikam, etc. In the case of managed music artists, three major contracts are signed with them, namely (1) an exclusive all-inclusive contract (including music and entertainment services); (2) an exclusive music contract (which only includes music business services); and (3) an exclusive joint management arrangement where the artist's music and performing arts business in a certain region is managed jointly by the company and an entertainment agency. For trainee artists, the company provides professional training and exclusive management services.
According to the prospectus,colorful autumn fruitsThe business is largely dependent on the core artist Mr. Luhan. In fiscal year 2020, fiscal year 2021, and fiscal year 2022, the amount of revenue directly attributable to Mr. Luhan accounted for about 21.2%, 9.3%, and 16.2% of the company's total revenue, respectively.
Shareholder structure
According to the prospectus,colorful autumn fruitsIn the shareholder structure before listing,
ZSFH Limited holds 28.00% of the shares,
(ZSFH Limited is held by Mr. Li Hui, Mr. Tang Yuxiao, Mr. Bian Zhenmin, Ms. Tang Haizhen, Mr. Huang Zhenfeng, 9.23%, 9.23%, 7.38%, and 4.62% respectively);
Mr. Li Hui holds 20.80% of the shares through HL Limited;
Mr. Tang Yuxiao holds 15.36% of the shares through YXT Limited;
Mr. Bian Zhenmin holds 4.80% of the shares through ZMB Limited;
Ms. Tang Haizhen holds 4.80% of the shares through HZT Limited;
Mr. Huang Zhenfeng holds 3.84% of the shares through ZFH Limited;
Mr. Wu Jun holds 2.40% of the shares through JW Limited.
The shareholders mentioned above are concerted actors (Mr. Li Hui can make final decisions at his sole discretion) and are a group of controlling shareholders.
37 Mutual EntertainmentAnhui Shangquwan, a subsidiary of (002555.SZ), held shares through Genesis Breaking Dawn20.00%;
Company performance
According to the prospectus, in the past 2020, 2021, and 2022,colorful autumn fruitsThe operating income was 75.061 million, 81,858 million yuan, and 94.845 million yuan respectively, and the corresponding net profit was 4,271.7, 33.251 million yuan, and 29.93 million yuan respectively.
Intermediary team
colorful autumn fruitsThe intermediary team for this IPO mainly includes: Douren Finance is its sole sponsor and overall coordinator; Ernst and Young is its auditor; Commerce is the company's Chinese lawyers; Fan Ji Luojiang and Fang Shi are the company's Hong Kong lawyers; Jing Tian Gongcheng and Li Zhicong are their brokerage Chinese lawyers and Broker Hong Kong lawyers respectively; and Insight Consulting is their industry adviser.
