Earned only 830,000 yuan in the first half of the year, Lu Han and Wang ...

The capital market only believes in strength, not in "top flow". On October 12, Fenghua Qiushi Group Holdings Limited submitted its fifth listing application to the Main Board of the Hong Kong Stock Exchange. The company has submitted prospectuses to the HKEx four times, on January 22, 2021, September 27, 2021, November 15, 2021 and April 1, 2022, but all of them ended up in a "prospectus failure" situation. Fenghua Qiushi is a music entertainment service provider operating in China for more than 10 years, focusing mainly on granting music rights and music recording business, supplemented by concert hosting and production, and artist management. The company's founder, Li Hui, was the keyboardist for rock singer Cui Jian's band. Formerly known as Beijing Fenghua, the company was founded in 2010 and signed a full 4-year contract with Wang Feng in 2011, including recordings and performances. Based on revenue generated from music rights and recordings granted in China in 2021, Fenghua Qiushi ranks 15th out of more than 400 music record labels, with a market share of just 0.6 percent. In 2015, Fenghua Qiushi signed an exclusive music contract with Luhan, the hottest "top streamer" at the time. According to the prospectus, from fiscal year 2018 to 2021, Fenghua Qiushi's revenue will be 100.366 million yuan, 55.605 million yuan, 70.561 million yuan and 81.858 million yuan respectively, and 42.239 million yuan for the first six months of 2022. Despite the rebound in revenue, the net profit margin is not clear. For the fiscal years 2018~2021, the net profit margin was 18.5%, 33.8%, 60.5%, 40.6%, but in the first half of 2022, the net profit margin plummeted to 2.0%, recording a profit of only $833,000. Source: Screenshot of the prospectus repeatedly hit the IPO, repeatedly failed, the capital market does not look at Fenghua Qiushi, the biggest reason is Fenghua Qiushi extremely dependent on its artist Luhan. In the prospectus, Luhan's name appeared up to 200 times, involving almost all of Fenghua Qiushi's important businesses. in fiscal year 2019, fiscal year 2020, fiscal year 2021 and the first six months of fiscal year 2022, the amount of revenue directly attributable to Luhan accounted for about 25.5%, 21.2%, 9.3% and 25.2% of the company's total revenue, respectively. It can be said that Luhan is the most important source of revenue for Fenghua Qiushi, and the company was once called "Luhan concept stock". If a single "top stream" artist is overly tied to the company, on one hand, it can be a revenue support, but on the other hand, it has to bear the risk of great uncertainty, and if the artist being relied on "collapses" or terminates his contract, the whole company may collapse. In the prospectus, Feng Hua Qiu Shi also admits that there is no guarantee that the two sides will continue to work together after the contract with Luhan expires. If we cannot continue to cooperate with Luhan and the next Luhan cannot appear within the company, this will have a huge impact on Fenghua Qiushi's performance. Because of this, the capital market has been cautious about Fenghua Qiushi. There are few companies like Fenghua Qiushi that are deeply bound to artists. The dilemma that Fenghua Qiushi faces is also a shackle that is difficult to break for companies of the same type: Lehua Entertainment, which relies on Wang Yibo, has hit the IPO three times in eight years, but all of them ended in failure; Superstar Legend, which is strongly bound to Jay Chou, has hit the IPO three times, but there is no result yet either. What is the way out for "Luhan concept stock" and "Wang Yibo concept stock"? Source: Vision China "Top Stream" Dependence The "Top Stream" dependence of Fenghua Qiushi is the epitome of a number of cultural and entertainment companies in the industry, and has become an important reason why a number of cultural and entertainment companies have faltered in their IPOs. The road to IPO of the famous mainland artist management company Lehua Entertainment is also bumpy, hitting IPO three times in eight years, but all ended in failure. The most recent one was on August 7, when Lehua Entertainment passed the hearing of the Hong Kong Stock Exchange and was scheduled to land on the Hong Kong Stock Exchange on September 7. Du Hua, the founder of Lehua Entertainment, has even been thrilled to give thanks in his circle of friends. However, just a foot away from the listing, Lehua Entertainment suddenly announced on September 2 to temporarily shelve the listing plan.