A piece of paper gave birth to a big business of 10 billion yuan, and also sent a company to the Hong Kong stock IPO. The "hard currency" between primary school students - the production company of Ultraman Card, Card Game, submitted a prospectus and plans to be listed on the main board of the Hong Kong Stock Exchange. A reporter from Beijing Youth Daily learned that in 2022 alone, the company's revenue will reach 413.1 billion yuan, operating profit of 180.3 billion yuan, and the card business accounted for 95% of the total revenue1%。
With an annual revenue of more than 4 billion yuan, the card tour went to Hong Kong for IPO
Zhejiang Enterprise Card Game recently submitted a prospectus on the Hong Kong Stock Exchange to be listed on the main board, with Morgan Stanley, CICC and JPMorgan Chase as joint sponsors.
According to the prospectus, Kayou received investment from Sequoia and Tencent in June 2021, of which Sequoia subscribed 1US$500 million, Tencent subscribed US$30 million through Grand Hematite Limited, at a cost of 76 per share$5. Before the IPO, Sequoia and Tencent each held 1050% and 3%, and the company's founder Li Qibin holds 82% of the shares.
Its financial data shows that in the year and the first nine months of 2023, the revenue of card games was 229.8 billion yuan, 413.1 billion and 19$5.2 billion; During the same period, the average gross profit margin of card game products was as follows. 3% and operating profit of 93.2 billion yuan, 180.3 billion and 48.2 billion yuan.
As a comparison, the gross profit margin of Bubble Mart, another trendy toy listed company in Hong Kong, will be in 2021, 2022 and the first half of 2023, respectively. 5% and 604%。
According to data from CIC Consulting, trading cards are the fastest-growing industry in China's pan-entertainment toy industry, and have reached tens of billions of yuan. In 2022, this category accounted for 17 percent of the total market size6%, and this share is expected to grow further to 24 by 20271%。The market size of China's pan-entertainment toy industry is expected to reach 128.9 billion yuan in 2027.
One Card Business ranks second in the pan-entertainment toy industry
Li Qibin, a post-70s native of Zhejiang, became a civil servant after graduating from secondary school. In the early 90s, his father's luggage company was on the verge of bankruptcy with a debt of more than 3 million yuan. In order to repay his debts, Li Qibin had to go to the sea to start a business. Inspired by the big bubble gum that was popular at the time, Li Qibin entered the container card market with a printing business.
For many people at that time, it was still a marketing method used by merchants to stimulate sales. But in Li Qibin's hands, small pieces of paper have become a business. In 2011, Li Qibin founded Kayou, and a few years later, he began to expand upstream, acquiring the operation rights of world-renowned IPs such as Ultraman, Transformers, Naruto, Douluo Continent, and Harry Potter.
As a pioneer in the field of trading cards in China, the core product of card games is undoubtedly a trading card product that covers many well-known IPs. Li Qibin revealed that by 2019, card games have won more than 70% of popular animation IPs at home and abroad; As of September 30, 2023, the Company has built a diversified IP matrix consisting of 44 IPs; And it has begun to launch related products of the original IP card game in the Three Kingdoms.
According to a report by CIC Consulting, as the leader in the field of trading cards, card games rank second in the pan-entertainment products and pan-entertainment toys industry, second only to Lego, and better than Disney and Bubble Mart.
The company's performance is deeply dependent on Ultramanka
In fact, although it is the leader of the category, card games are not without their hidden concerns. The biggest suspicion from the outside world comes from the business it started out in - cards.
Although the product line of card games is divided into three categories: cards, stationery and trendy toys, a reporter from Beiqing Daily learned that it is still deeply dependent on the card business, and the income of trading cards still accounts for more than 85% of the total income, and even more often than 951%。Among them, the Ultraman series contributed the majority of the revenue, and the number of cards in the Ultraman series accounted for 65% of the total number of trading card series in the reporting period.
In other words, at present, the main business of card games is to obtain IP such as Ultraman, design, produce and sell derivative cards and other products.
In fact, there are many types of Ultraman character images, and the card game has not obtained the exclusive authorization of all Ultraman image IPs. At the beginning of 2023, due to the use of unauthorized "Father of Ultra", "Ultraman Jack", "Ultraman Ace" and "Ultraman Tailuo" characters, Kayou was sued for infringement by Zhuhai Qiao Tianzun Cultural Development, and finally lost the lawsuit. At the same time, according to the disclosure in the prospectus, the validity period of the exclusive authorized IP of Ultraman is until 2029, and the agreement is usually not automatically renewed.
In addition, card drawing has a certain addictive nature, which can easily lead to irrational consumption, while the main business category of card games, Ultraman Card, is mainly aimed at students. As a card mystery box, if you want to collect a set or draw a rare card, you need to buy it repeatedly. There are even ** reports that some parents spent 2 million to draw cards for their children, but they still failed to collect them. Starting from 2022, disputes between students and parents, parents and businesses have been exposed in many places** due to the purchase of Ultraman cards, and People's Daily Online, CCTV, etc. have also commented that "the out-of-control Ultraman card should be managed." ”
China has also issued the "Guidelines for the Code of Conduct for Blind Box Operations" and other norms, which strictly restrict the sales objects and ages of blind box products, require that they are not sold to minors under the age of 8, and require blind box operators to take effective measures to prevent minors from becoming addicted.
The appeal of Ultraman cards is fading
Card games are also aware of this problem, and the proportion of cards in their revenue has also increased from 95 at its peak in 20221% to 85 in the first nine months of 20238%。
But at the same time, the performance of card games has also declined significantly. In the first three quarters of 2023, card game trading card sales decreased by 49 year-on-year46% to 104 billion packs (boxes), which has significantly dragged down the company's performance. In the first three quarters of 2023, the company's revenue was 195.2 billion yuan, a year-on-year decrease of 4656% and operating profit 48.2 billion yuan, a year-on-year decrease of 7339%。
Although the company achieved a turnaround during this period, the fair value change mainly from financial liabilities became smaller, and the company's profitability still decreased significantly from the perspective of adjusted performance.
In recent years, Kayou has gradually owned at least 48 stores in Shanghai, Beijing, Hangzhou, Chongqing and other places, but its sales are still heavily dependent on dealer channels. The number of its dealers decreased from 326 at the end of 2021 to 230 at the end of September 2023, a decrease of nearly 30%.
From the above data, it is not difficult to see that the sharp decline in the sales of its Ultraman Card is not the "strong man breaking his wrist" of the card game, but the choice of the market. Whether it can be "speculated" is one of the ways for the second-hand market to test whether this type of IP is still competitive in the market. Since last year, a variety of Ultraman cards have been declining in the second-hand market. "There are fewer people playing, and there are naturally fewer people buying rare cards. ”
In this regard, analysts believe that as the earliest fans of Ultraman cards have grown up, the appeal of this album card game has gradually declined. Once it is no longer the social hard currency of elementary school students, the market for Ultraman cards will quickly be replaced by other products. At present, there have been digital collection cards, toy-style blind boxes and other products on the market, and the form of collection cards is single.
First, the problem of poor interaction is also highlighted.
Text: Beijing Youth Daily reporter Zhang Xin.
Edited by Field.
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