Source: Brokerage China Author: Qu Hongyan Recently, China Yangtze Power hit a historical high and once again showed the slow bull stock trend of "tripling in ten years". The slow bull market has left behind many passers-by and brought good returns to the steadfast investors. It is "rare for those who triple in one year to be like carp jumping over the dragon gate, while those who double in three years are few and far between." On the other end of the investment world, however, violent collapses are also deafening, with many financial products suspected of "Ponzi schemes" ceasing payments, leaving investors with no hope of recovering their investments. Both positive and negative cases illustrate the importance of forming a suitable mentality towards money in one's lifetime; otherwise, sooner or later, you will divorce yourself from your money. "I call this the money mind, a person's IQ can reach 120, 140, or even higher levels, and perhaps some people's minds are good at doing one thing, while others are good at doing another. They can do things that most ordinary people can't do. But I know some very smart people who make very foolish decisions because they lack the money mind." Buffett once said so. The so-called money mind refers to believing in common sense, believing in compound interest, being cautious and rational, thinking independently, prioritizing security over return, not dealing with people with questionable character, not easily guaranteeing for others, not believing in windfall profits, and not trying to cross legal norms for extra benefits. In today's world of ubiquitous information, everyone's wealth may become the "prey" of those with ulterior motives. Only with the money mind, can one form good behavior habits and shield oneself from separating from one's wealth. Do not entrust your wealth easily. Wealth is easy to lose but hard to accumulate, and trust is a vital reason leading to the rapid loss of wealth. "Do not allow anyone else to manage your business unless you can watch their every move closely and understand their behavior; or you have strong reasons to believe in their character and ability. For investors, this criterion determines when you can let someone else make investment decisions for you." Graham's criterion written eighty years ago is so clear. Almost all the investors who lost their wealth in the financial products have violated the above two criteria. They did not have the ability to closely supervise the whereabouts of their funds, nor did they have sufficient reasons to believe in the character of the product issuers. They easily invested their own wealth solely based on others' glib tongue and a piece of commitment paper. They did not act as gatekeepers of their own wealth and ended up with nothing left even if the government punished the wrongdoers. "An ounce of prevention is worth a pound of cure." This is a phrase Munger often says. Destiny must be in one's own hands, and investors with a suitable money mind will try their best to find suspicious points in their investments to protect the safety of their principal. For example, whether the manager is trustworthy, whether the underlying assets are profitable, whether oneself can timely monitor the risks in the investment process, and whether the sales staff is obtaining large commissions. As long as any unreliable signs are found, these investors firmly will not invest their money. Do not desire to get rich quick. As in the capital market and anywhere else, making money is not easy, and desiring to get rich quick will lead to quick loss of wealth. In the capital market, the desire to get rich quickly often leads to investors over-allocating specific stocks, industries, or assets at the worst time. For example, buying high-risk stocks that can gain huge returns once an adventure succeeds, but the chance of success is very small, also known as "whispering stocks" by legendary fund manager Peter Lynch. "They often tell investors a story with explosive effects. These 'whispering stocks' have a hypnotic effect on people, and it is easy for you to believe that the story the company tells has an emotional appeal that can easily confuse you." This is like hearing a very tempting "sizzling" sound, making you salivate, but you did not notice that there is no steak on the grill. In the eyes of investors who lack the money mind, stable yield provided by blue chips such as China Yangtze Power cannot meet their demands. However, historical experience clearly shows that buying stocks lacking in safety solely based on imagined high yields is unwise. The long-term average investment return of general stocks is 9%-10%, which is also the average investment return of stock indexes in history, a benchmark to measure one's investment performance and the benchmark to measure fund investment performance.
Author: Zhou Le.

On September 11th, the Hong Kong stock market once again experienced a sharp drop in individual stocks. The "Jay Chou concept stocks" $STARPLUS LEGEND (06683.HK)$ At one point in the trading session, it plunged more than 78% and triggered multiple market volatility adjustment mechanisms. On the news front, as of the time of writing, no bearish news related to Superstar Legend has emerged. Moreover, according to its latest financial report, the company's performance in the first half of the year recorded rapid growth.

Analysts believe that the reason for the flash crash may be the short-term sell-off of market funds. In recent days, there have been frequent violent selling-off tactics in the Hong Kong stock market, and Huazhong In-V even experienced a nearly 90% plunge yesterday.

It is reported that Jay Chou's mother, Ye Hui Mei, indirectly owns shares of Jay Chou legend and is therefore regarded as "Jay Chou concept stocks". According to the 2024 semi-annual report, the proportion of shares held by the company controlled by Jay Chou's mother, Ye Hui Mei, and Jay Chou's agent, Yang Junrong, in Jay Chou legend is 23.92%.

It is worth mentioning that, thanks to the support of "Jay Chou concept stocks", Jay Chou legend was highly favored by capital when it went public. In June of this year, the company's stock price once soared to HKD 13.16 per share, with a cumulative increase of more than 209% compared to the IPO price, and its highest market capitalization reached HKD 11 billion.

Suddenly plummeted.

On September 11th, the Hong Kong stock market once again witnessed a stock crash and a sharp drop. The stock of the "Jay Chou concept stock" Giant Star Legend plummeted by more than 78% at one point, with the lowest stock price of HKD 2.04 per share, setting a new record low since its listing, and its market cap shrinking to 2 billion Hong Kong dollars. The market volatility regulation mechanism was triggered multiple times during trading.

Giant Star Legend is a constituent stock of the Hang Seng Composite Smallcap Index. When the stock price changes by more than 20% within 5 minutes, it will trigger the market regulation mechanism, and the stock will be required to trade within a specified price range for the next 5 minutes. After the cooling-off period, trading will resume as normal.

From the market perspective, since August, the stock price of Giant Star Legend has been in a horizontal range with very low volatility. The sudden flash crash caught many investors off guard.

In terms of news, as of the time of writing, there have been no bearish news related to Giant Star Legend. Analysts believe that the flash crash may be due to short-term selling pressure in the market. This kind of violent dumping strategy has occurred frequently in the recent Hong Kong stock market. Yesterday, Huazhong In-v also experienced a sharp drop of nearly 90%.

Giant Star Legend is indirectly held by Jay Chou's mother, Ye Huimei, and is therefore considered a "Jay Chou concept stock." According to the semi-annual report of 2024, the shareholding proportion of Ye Huimei and Jay Chou's agent Yang Junrong-controlled entities in Giant Star Legend is 23.92%, corresponding to a market cap of approximately 0.51 billion Hong Kong dollars.

According to the official website of Giant Star Legend, the company was established in 2017 and is a Hong Kong-listed company focused on IP creation, operation, and new retail. In February 2024, the company was included in the Hang Seng Composite Index as a constituent stock. In March, it officially entered the Hong Kong stock connect program, and in May, it was included in the MSCI Global Small Cap Index.

It is reported that Giant Star Legend's revenue mainly comes from two parts:

One is the new retail business. According to the company's official website, this business mainly focuses on the development and sales of health management products and skincare products. Its products include health management brand Modong, I Like Fresh More for food enthusiasts, and skincare brand Moji Bo Shi, among others.

Second is IP creation and operation business, known as the "first stock of star IP" in the market. This business is divided into IP content creation and management business, including providing media content creation, event planning and star IP management services, as well as IP licensing and related product sales. Mega Star Legend has deeply integrated core stars Jay Chou and Liu Genghong, and has created two phenomenal IPs, "Zhou Xiaoxue" and "Coach Liu", and has built a star IP portfolio including Fang Wenshan, Vivi, Nan Quan Mama, and Kun Ling. As of now, the company's star IP matrix has a total fan base of over 0.24 billion on the internet.

According to the company's latest disclosed 2024 half-yearly report, Mega Star Legend achieved an operating revenue of 0.267 billion yuan in the first half of the year, a year-on-year growth of about 76%; gross profit of 0.134 billion yuan, a year-on-year growth of about 44.6%; net profit of 25.45 million yuan, a year-on-year growth of about 55.5%.

In the first half of this year, Mega Star Legend's IP creation and operation business has grown significantly, surpassing the new retail business for the first time, becoming its largest business sector, accounting for approximately 58.8% of total revenue in the first half of the year. The revenue generated by this business sector was 0.157 billion yuan, an increase of approximately 149.8%.

The influence of Jay Chou

Although Jay Chou is not involved in the operation or ownership of Mega Star Legend, the establishment and development of the company are closely related to him. In 2017, Ma Xinting, Jay Chou's agent Yang Junrong, director Chen Zhong of his management company, and Jay Chou's mother Ye Huimei jointly invested in the establishment of Mega Star Legend.

In the year of its establishment, Mega Star Legend started to produce an outdoor lifestyle reality show called "Jay's Journey" with Jay Chou as the theme.

Since its establishment in 2017, Mega Star Legend has been involved in planning Jay Chou's world tour concerts. Subsequently, Mega Star Legend has served as the planning service provider, investment party, and supplier for Jay Chou's concerts and the planning service provider for the "Mega Star Action Super Night" in Ningbo. At the same time, Mega Star Legend owns the trademark for "Zhou Xiaoxue" and the IP of "Jay's Journey".

In April 2023, Mega Star Legend submitted its prospectus to the Hong Kong Stock Exchange for listing. In the end, Mega Star Legend issued 1.266 billion shares at a price of HK$4.25 per share, raising HK$0.538 billion, and its market capitalization at the time of issuance was HK$4.4 billion.

According to the prospectus, Super Star Legend signed a 10-year IP licensing agreement with Jay Chou's artist management company, JVR Music, in 2021, which can be extended for another 10 years.

Thanks to the boost of the "Jay Chou concept stock", Super Star Legend quickly gained favor in the capital market after listing. After listing, the stock price continued to rise. In June this year, the company's stock price reached a high of HKD 13.16, with a cumulative increase of over 209% compared to the issue price, and the highest market capitalization reached HKD 11 billion.

In 2023, Super Star Legend collaborated with Jay Chou to release "Journey 2", which earned the company over 80 million yuan in revenue. In addition, the company's revenue from managing celebrity IPs also increased. With this, Super Star Legend achieved revenue growth.

From the perspective of the main business composition, Super Star Legend is a listed company with clear and advantageous main business. However, its development prospects have been affected by an excessive reliance on Jay Chou's personal IP.

Super Star Legend has a relatively single monetization model. Although its main selling product, Modong Coffee, has gained some popularity through the promotion of Jay Chou's reality show, the scale of its niche industry (instant coffee drinks that meet the requirements of low-carbon diet and healthy management) is small, and its future potential is also average.

It is reported that Modong Coffee is essentially a dietary drink centered around high-fat, high-protein, low-carb consumption. It aims to force the body to burn fat and produce ketones when the body lacks carbohydrates. Although this industry fits the emerging lifestyle of young people, the market size is currently not large due to its limited target audience.

Due to the highly specialized and segmented nature of the product, it may affect the future growth potential of this product. According to research reports from Pu Yin International, the size of the bulletproof beverage market in China increased from 500 million yuan in 2017 to 3.2 billion yuan in 2021, with a compound annual growth rate of 34.6%. It is estimated that the market size will reach 5 billion yuan by 2027.

Editor/rice