November 8, 2023, Music and Entertainment Service Provider from BeijingFenghua Qiushi Group Holdings Limited Fenghua Qiushi Group Holdings Limited (hereinafter referred to as”colorful autumn fruits”) Once again, a prospectus was submitted to the Hong Kong Stock Exchange to be listed in an IPO on the Hong Kong Main Board. This is another application after it failed six times: January 22, 2021, September 27, 2021, November 15, 2021, April 1, 2022, October 12, 2022, and April 20, 2023.
Link to Fenghua Qiushi's prospectus:
Main business
colorful autumn fruits, founded in 2010, as a music and entertainment service provider, mainly focuses on independent businessMusic copyright licensing and music recording services, 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%.
Music copyright licensing 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, (iv) e-commerce platforms, and (v) other entertainment companies, such as film production companies. The company earns revenue by charging licensing fees from customers based on (i) a fixed minimum guarantee fee; (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 November 1, 2023, the company's music library has 2,964 musical works, covering rock, pop, pop rock, folk songs, etc.
Concert hosting and production
The company is responsible for the entire concert hosting and production, including recruiting artists, creating entertainment content, obtaining concert venues and related permits, ticket sales arrangements and stage management. In addition, the company also produces concerts and commercial acquisitions for third party organizers and commercial enterprises, and collects fixed production fees from them.
Artist management
Artist management revenue mainly comes from a percentage of performance fees collected and earned by the company from commercial activities and television programs. As of the last practical date, the company managed 15 musical artists and 10 trainee entertainers, including but not limited to Black Panther, Mr. Lu Han, Mr. Hao Yun, Ms. Xu Mingming, Ms. Wang Ruolei (also known as Ms. Lin Yule), Ms. Li Siyu, Uncle Super, Mr. Dong Youlin, Ms. Wei Chen, Ms. Zhang Keyou, Ms. Wang Jingjing, Ms. Ahdipal Elikam, and Mr. Xiao Ying. As far as managing music artists are concerned, there are three main types of contracts signed with them, namely (1) an exclusive all-inclusive contract (including music and performing arts services); (2) an exclusive music contract (including music business services only); and (3) an exclusive co-management arrangement, where the artist's music and performing arts business in a certain region is managed by the company and an entertainment agency. As far as trainee artists are concerned, the company provides professional training and exclusive management services.
According to the prospectus,colorful autumn fruitsThe business depends largely on the core artist Mr. Lu Han. In FY2020, FY2021, FY2022, and the first five months of FY2023, the amount of revenue directly attributable to Mr. Luhan accounted for about 21.2%, 9.3%, 16.2%, and 15.4% 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%;
Directors and Executives
colorful autumn fruitsThe board of directors consists of 8 directors, including 2 executive directors, 3 non-executive directors, and 3 independent non-executive directors.
directorates(8 people)
executives(7 people)
Executives include Chairman of the Board and Executive DirectorLi HuiMr. Chief Executive Officer and Executive DirectorTang Zheng YiMr., Chief Content Officer and Deputy General ManagerZhao MingyiMr. Finance DirectorChen YijunMr. Director of Legal AffairsWang MinMadam, Director of Copyright LicensingWang LinMadam, Director of Concert Organizing and ProductionWang Jirongteacher
Company performance
According to the prospectus, in the past five months of 2020, 2021, 2022, and 2023,colorful autumn fruitsThe operating income was 75.061 million, 8,1858 million, 94.85 million, and 7.983 million yuan, respectively, and the corresponding net profit was 4,271.7 million, 33.251 million, 29.930 million, and -16.549 million yuan, respectively.
Intermediary team
colorful autumn fruitsThe main intermediary team for this IPO was: Fanjin Finance as its exclusive sponsor and overall coordinator; Hong Kong Li Capital as its overall coordinator; Ernst & Young as its auditor; Commerce as China lawyers for the company; Fan Ji Luojiang and Fang as the company's Hong Kong lawyers; Jingtian Gongcheng and Li Zhicong were their Hong Kong lawyers; Jingtian Gongcheng and Li Zhicong were their industry advisors respectively; and Insight Consulting was their industry adviser.
