Zhitong Financial APP learned that according to the disclosure of the Hong Kong Stock Exchange on August 12, Special Arts Entertainment and production (Holdings) Co., Ltd. submitted an application for listing on the main board to the Hong Kong Stock Exchange, with Zhongzhou International Capital as its exclusive sponsor. The company submitted its listing application to the Hong Kong Stock Exchange on January 31, which later lapsed.

Special Arts, Entertainment and production Company is the largest service provider of technical production and creative solutions for events and live performances in Hong Kong, specializing in concerts.

The company's business operations can be simplified into two main businesses, namely (I) providing technical production and creative solution services, and (ii) engaging in concert organizing business.

According to the prospectus, the company'sThe main source of income is the provision of technical production and creative solution services.. For the years ended March 31, 2017, 2018 and 2019, the company's revenue from providing technical production and creative solution services was approximately HK $145.5 million, HK $162.4 million and HK $168.3 million, respectively, accounting for about 66.0%, 61.8% and 55.1% of the total revenue for the same period.

The revenue from the concert organizing business accounts for an increasing share of the total revenue.For the years ended March 31, 2017, 2018 and 2019, the income of the concert organizing division was about HK $74.9 million, HK $100.4 million and HK $136.9 million respectively, accounting for about 34.0%, 38.2% and 44.9% of the total revenue for the same period.

Major customer

During the track record period, the company's revenue mainly came from (I) service fees for the provision of technical production and creative solutions, (ii) sales of concert tickets, and (iii) concert sponsorship income. The company builds a diversified customer base around the above services, including, but not limited to, concert organizers, concert audiences and concert sponsors. In each of the three years ended March 31, 2019, the five major customers accounted for about 30.4%, 28.1% and 25.4% of the total revenue, respectively, while the company's sales to the largest customers accounted for about 9.2%, 6.2% and 6.7%, respectively. On March 31, 2019, the top five customers had a business relationship with the company for more than 4 years to more than 12 years.

Status within the industry

According to the Frost Sullivan report, the three major service providers (including the company) in the Hong Kong market for technology production and creative solution services accounted for 52.4% of the market for the year ended March 31, 2019. The company participates in more than 500 concert projects, providing technical production and creative solution services, involving more than 400 Hong Kong and non-Hong Kong artists and bands. It is reported that for the year ended March 31, 2019, in terms of total revenue generated, the company is in the Hong Kong technology production and creative solution services market.Rank firstWith a market share of about 33.0%

As stated in the Frost Sullivan report, the top 10 concert organizers (including the company) also account for 26.8% of the total number of concert programs in the Hong Kong concert market. According to the report, in terms of the concert programs in the Hong Kong concert market, the company will be in the calendar year 2018.Ranked tenthAt present, it is the only concert organizer in Hong Kong capable of providing technical production and creative solutions for large-scale and super-large concert projects.

Key financial data

Earnings for the years ended 31 March 2017, 2018 and 2019 were approximately HK $220.5 million, HK $262.8 million and HK $305.2 million, respectively.The compound annual growth rate is about 17.7%.. The overall increase in revenue during the track record period was mainly due to (I) an increase in the average revenue from technical production and creative services for large and super-large concerts by project size, and (ii) an increase in the average ticket sales of each concert by the concert organizing division.

Gross profits for the years ended 31 March 2017, 2018 and 2019 were approximately HK $41.6 million, HK $54.3 million and HK $64.1 million respectively. Gross profit increased from about HK $54.3 million for the year ended March 31, 2018 to about HK $64.1 million for the year ended March 31, 2019, an increase of about 17.9% due to the combined impact of: (I) revenue growth of about 16.1%; (ii) increased stage setting costs; and (iii) other concert organization and production costs increased.

Gross profit margin remained stable for the years ended 31 March 2017, 2018 and 2019, at about 18.9%, 20.7% and 21.0%, respectively.

(note: gross profit is calculated on a revenue basis, excluding: (I) stage setting costs; (ii) artist expenses; (iii) staff costs (excluding staff costs arising from directors' remuneration, finance and accounting departments and administrative and operating departments); (iv) venue rental; (v) office and warehouse rental and related expenses; (vi) other concert preparation and production costs; and (vii) depreciation of performance equipment. And (viii) Advertising and Promotion fees. )

The return on total assets increased from about 13.2% for the year ended March 31, 2017 to about 18.6% for the year ended March 31, 2018, mainly due to an increase in net profit and a decrease in total assets due to the payment of dividends. The return on total assets decreased from about 18.6% for the year ended 31 March 2018 to about 9.2% for the year ended 31 March 2019, mainly due to a decrease in net profit and an increase in total assets.

The current ratio remained stable, at about 0.85 times on 31 March 2017, 0.95 times on 31 March 2018 and about 1.08 times on 31 March 2019.

advantage in competition

The relevant person in charge believes that the company has the following competitive advantages: the company is the pioneer and largest service provider of technical production and creative solutions for events and live performances in Hong Kong, specializing in concerts; has the ability to implement technical production and creative solutions for large and super-large concert projects; has excellent creative and innovative ability In 2018, the company is one of the top 10 concert organizers in Hong Kong, and on the last practicable date, it is the only integrated concert organizer in Hong Kong capable of providing technical production and creative solutions for large and largest concert projects. the senior management of the company is experienced, dedicated and supported by stable technical personnel. The performance equipment inventory is continuously updated, following the industry trend; it has established a sound and long-term business relationship with customers, which helps to support business operations; and has established a strong and long-term business relationship with suppliers and subcontractors to gain access to new business opportunities.

Business development strategy

The company's main business strategies include: enhancing the company's ability to provide technical production and creative solution services, and enhancing the ability to organize concerts.