Behind Wang Yibo's rumors, Lehua Entertainment's bumpy road to listing

(hereinafter referred to as "Lehua Entertainment"), the company's head artist Wang Yibo was caught in an indecent incident rumor yesterday, today, Lehua Entertainment issued a statement to clarify, and said that in response to this malicious rumor, the company has reported to the public security authorities today, and will also be entrusted with lawyers today to the court The company has reported the case to the public security authorities today, and will also entrust its lawyers to submit the case of Wang Yibo's reputation defense (defamation) to the court today. It is understood that Lehua Entertainment was established in June 2009, and its main business is divided into four major sectors, namely Lehua Music, Lehua Brokerage, Lehua Film & TV and Lehua Variety, under which there are many famous artists such as Wang Yibo, Han Geng and Cheng Xiao. As one of the head companies in the entertainment industry, Lehua Entertainment has always had a dream to go public. Public information shows that in September 2015, Lehua Entertainment was listed on the New Third Board. in March 2018, Lehua Entertainment was delisted from the New Third Board. on March 3, 2018, Lehua Entertainment filed a pre-listing counseling with the Beijing Supervision Bureau of the China Securities Regulatory Commission, but the company voluntarily terminated the listing counseling again on May 26, 2021. After a series of twists and turns, on August 7 this year, Lehua Entertainment passed its listing hearing on the Hong Kong Stock Exchange. according to its prospectus and the company's public information, artist management contributed 84% of the company's revenue in 2019, 87.7% in 2020, and in 2021, the figure was raised to 91.0%. from 2019 to 2021, Lehua Entertainment's total gross margin was 44.3%, 53.5%, and 46.6%. The prospectus shows that from 2019 to 2021, Leroy Entertainment's revenue will be $631 million, $922 million and $1.290 billion, respectively, with a compound annual growth rate of 43.0%; net profit will be $119 million, $292 million and $335 million, respectively, with a compound annual growth rate of 67.6%. From the data in the prospectus, Lehua Entertainment highly relies on the artist business, especially several top stream artists, and Wang Yibo is one of the main forces of the company. And as seen from the financial figures of these years, Lehua Entertainment's net profit has been rising since the last three years of the epidemic, and the compound annual growth rate is non also high. Therefore, after Leroy Entertainment passed the listing hearing of the Hong Kong Stock Exchange, it was thought that "the first stock of talent agency" might be born. However, shortly after this, in the face of global inflation and epidemics, the capital market continued to be depressed, coupled with the continued decline of the Hang Seng Index and a large number of new shares broke, Lohas Entertainment decided to suspend the IPO of Hong Kong shares after careful consideration. Lehua Entertainment, which has previously experienced delisting, should understand the reality of the capital market and the impact of the external market environment on the share price, and the company does not want the market value and share price to be undervalued." A close source revealed. Some public information shows that in April this year, Luhan and Black Panther Band belonged to Fenghua Qiushi once again submitted a listing application to the main board of the Hong Kong Stock Exchange. Previously, on January 22, 2021, September 27, 2021 and November 15, 2021, Fenghua Qiushi had submitted three listing applications to the Hong Kong Stock Exchange, but none of them went any further. In addition, Star Huawen, the father of The Voice of China, hit the HKSE again in May this year following the lapse of its prospectus in November 2021. "Lehua Entertainment has wanted to capitalize for many years, and its financing needs are understandable. The company currently has so many more out-of-the-loop artists under its belt is also a great resource. However, the company's reliance on flow artists is too high, and once the artists have problems or relevant policies are tightened, then Lehua Entertainment will face a lot of challenges in the future." The close source further said. The first financial reporter learned from multiple interviews that Wang Yibo is currently the top flow in the circle and one of the "faces" of Lehua Entertainment, if his image is damaged, then there will be a series of subsequent problems, including compensation for endorsements, the treatment of unaired works, the closure of the program, etc.. This is not just a matter of the artist alone, these top stream artists, the works performed by most of the major production companies and Akiyip, Youku, Tencent and other platforms to the S + level project, these projects are often invested in hundreds of millions of dollars, if the artist has problems is a total loss. When the time comes, the artist and the economic company where the compensation and follow-up treatment will be very troublesome. In particular, some unaired works or already recorded programs will also involve other artists involved in the performance of the work, making the entire film and television drama may have to be re-shot, AI face or simply abandoned, and these will involve a lot of financial losses. At this delicate stage of the proposed IPO, Lehua Entertainment is bound to have crisis management when negative rumors emerge about the top stream artists under its banner. However, the entertainment industry should pay attention to the fact that it shall return to the essence of acting and make better works, rather than purely brush data and engage in traffic, and practitioners and investors should make the industry develop more healthily.