The Temptation And Agitation Of The Tide Play Economy: 356 Times Subscription And 46 Billion Valuation, What Can Bubble Mart Take To Keep Young People?

Bubble Mart (09992. HK), with the halo of "the first strand of blind box", is about to appear on the Hong Kong stock exchange.

According to the announcement of bubble Mart on December 10, the offering price has been set at HK $38.50 per share. It is estimated that the net proceeds from the global offering will be about HK $5.025 billion, with 200 shares per hand. It is expected that the shares will be traded on the main board of the stock exchange at 9 am today (December 11).

According to the announcement, 479253 valid applications were received for the Hong Kong offer shares initially available for subscription under the public offering, with a total subscription of about 5.81 billion shares, which is equivalent to 356.74 times of the total number of Hong Kong shares initially available for subscription under the Hong Kong public offering, which can be described as a substantial oversubscription.

According to the price of HK $38.50, the global plan is to sell 135.7 million shares. Bubble mart will raise up to HK $5.224 billion (about US $670 million) in this IPO, and the valuation will reach US $7 billion after the IPO, equivalent to RMB 46 billion.

Another media report, on December 10, bubble Mart trading rose more than 90%, the highest at HK $81.

Can bubble mart's popularity last? What do you want to keep young people with it?

Bubble mart with gross profit rate over 60%

According to the "post-95 players chopping hands list" released by tmall in 2019, chaoplay ranks first, among which blind box collection has become the fastest growing field of hard core players.

It is reported that 200000 hard core players spend more than 20000 yuan a year on blind boxes every year. Some crazy consumers spend millions a year.

Recently, a more restrained player told the 21st century economic report that "if you buy one or two of them a week, you can buy your favorite IP, such as Harry Potter and Bobo & CoCo series. What's more infatuated is the instant feeling of opening the box.".

"After eating and shopping, I'll buy a cute thing to talk about for comfort." on December 10, another girl who had bought a blind box told the 21st century economic report that she would also bring two favorite blind box villains to increase her familiarity with the living environment.

A research report by Huajin securities roughly outlines the consumer portraits of blind box games. According to the research report, fashion toys help the gender distribution of consumers: female users account for about 75%, and users aged 18-34 account for about 78%. From this point of view, young people are obviously the main force of this part of consumption.

In the face of such consumer demand, bubble mart is undoubtedly on the wind.

Bubble Mart said in its prospectus that the company is already "China's largest and fastest growing fashion toy company" with a market share of 8.5% in 2019.

In terms of performance and gross profit margin, bubble mart is like riding a roller coaster.

From 2017 to 2019, the revenue of bubble Mart increased from 158 million yuan to 1.683 billion yuan, with the growth rates of 225% and 227% respectively in the last two years. In addition, its net profit was 1.56 million yuan, 99.52 million yuan and 451 million yuan respectively, with a 289 fold increase in net profit, which can be described as an explosive growth.

In addition, bubble Mart disclosed its "report card" for the first three quarters of this year in its latest prospectus after the hearing.

In the same period of 2019, the interest rate increased from RMB 1.544 billion to RMB 1.064 billion in the same period of 2019, from RMB 1.544 billion in the same period of 2019 to RMB 1.064 billion.

In addition to the rapid growth of revenue scale, bubble mart is also a very profitable company.

According to the prospectus, the gross profit margin of bubble Mart brand products (proprietary IP, exclusive IP and non exclusive IP) has exceeded 70% since 2018 and 71.3% in 2019. For example, if the average price of blind box in 2019 is 51 yuan, the cost is only 14.6 yuan.

Even the high gross profit representative of most people - real estate head companies - is not the rival of bubble Mart. Relevant financial reports show that the gross profit margin of Vanke Group in 2019 is 36.25%, of which the gross profit margin of real estate and related businesses is 27.2%. In 2019, Evergrande's gross profit margin is 27.8%. In contrast, the gross profit margin of bubble Mart brand products is almost twice that of the head real estate enterprises.

46 billion valuation concerns

According to the current valuation of 46 billion yuan, Wang Ning, founder of bubble mart, and his wife hold nearly 49.8% of the shares of bubble Mart. After the listing, the couple's fortune will exceed 20 billion yuan.

However, when the capital market gives a valuation of tens of billions, it also raises the question: what is supporting the rapid growth of bubble mart, and is this growth sustainable?

From the perspective of bubble mart's business model, "IP is the core of the company's business", and it needs more and more IP to keep its freshness to consumers.

According to the prospectus, as of June 30 this year, bubble Mart operated 93 IP, including 12 self owned IP, 25 exclusive IP and 56 non exclusive IP. Among them, self owned IP includes Molly, dimoo, Bobo & coco, Yuki, exclusive IP includes pucky and the monsters, and non exclusive IP includes Mickey Mouse, despicable me, Hello Kitty, etc.

However, it should be noted that bubble mart's two best selling IP (Molly and dimoo) are acquired.

Among them, the income contribution brought by Molly, the "blockbuster", has shown a significant downward trend.

In 2017, 2018, 2019 and as of June 30, 2020, the revenue share of brand products based on Molly image was 89.4%, 62.9%, 32.9% and 16.3%, respectively.

In this regard, bubble mart is also aware of the limitations of a single popular IP, "the company can not ensure that Molly's popularity can remain at its current level. If Molly is damaged or fails to maintain its current attractiveness to consumers, it will face the dilemma of no substitute."

In addition, according to the prospectus, bubble Mart independently developed nine self owned IPS by employing full-time designers. Among them, Bobo & coco, the best performing one, has a revenue of 32.94 million yuan in the first half of 2020, accounting for 4.8% of its operating revenue, while the remaining eight IP accounts for less than 0.5%.

On the other hand, the exclusive IP created by bubble mart and co artists also needs a longer time to consolidate.

Although the revenue share of exclusive IP in independently developed products of bubble Mart has increased year by year from 2017 to 2019, which are 10.6%, 31.2% and 43.2%, respectively, but the revenue contribution has not been more than half.

Exclusive IP needs to be authorized by selected artists, which also has certain uncertainty. According to the prospectus, "the term of the IP license agreement may also pose a risk, as some products are developed according to the license agreement, and the authorization period is usually 1-4 years. Some of them will not be automatically renewed. At that time, they will no longer have the right to sell products, which may have adverse effects on performance."

Soochow securities also pointed out in the research report that the fast iteration of trend culture will accelerate the aging of bubble mart's core IP life cycle, which will directly affect the company's business.

In addition, bubble Mart was also involved in a suspected plagiarism scandal this year.

Bubble mart's Ayla Rabbit series, which was launched on February 8, 2020, has been complained by netizens that it is suspected of plagiarizing dollchateau's products. After the work was launched, it was found by netizens that it had high similarity with many characters of DC doll, Netease fifth personality and Yin Yang master game.

After that, bubble Mart issued an apology statement: it decided to immediately remove the Ayla animal fashion show series through all channels, and refund and recall the sold series.

Some people believe that if we want to look at the market value and valuation of bubble Mart in the long run, we should not limit ourselves to toys or blind boxes, but should pay more attention to the emotional value in the process of drawing the blind box.

As for bubble mart, which is highly sought after by capital, is its valuation unreasonably high? On this issue, Bao fan, chairman and CEO of Huaxing capital, has publicly stated that judging whether an enterprise's valuation is "expensive or cheap" can not be judged only from today's perspective, but also from the Perspective of long-term ism, that is, whether the enterprise can achieve rapid growth in the next 5-10 years.

Bubble Mart (09992. HK), with the halo of "the first strand of blind box", is about to appear on the Hong Kong stock exchange. -Visual China

Can the "surprise economy" continue?

Under a lot of controversies, bubble Mart also shows a foresight side: in its prospectus, it will launch more than 30 new IP addresses in 2020.

In addition, in the latest announcement, bubble Mart also mentioned that according to the estimated net proceeds from the global offering of about HK $5024.4 million (assuming the over allotment rights are not exercised), about HK $905 million (18%) is expected to be used to expand the company's IP pool; and about HK $1357 million (27%) is expected to be used for potential investment, acquisition of upstream and downstream companies in the industry's value chain and construction with such companies Set up strategic alliance and allocate funds.

In addition to expanding the company's IP library, 21st century economic report reporters have found that bubble mart is also seeking cross-border cooperation with other brands to launch co branded products.

As early as 2019, Yili's flavor milk brand weikezi and bubble mart's IP Molly cooperated to launch a limited series of Molly milk drinks.

In the new year of 2020, Fanta and bubble Mart launched a joint gift box.

In addition, in September this year, bubble mart and Za jointly launched a series of color make-up, with the elements of cloud, small tree, dream, unicorn, seed, deer and long hat as seven pucky elves, including four-color isolation cream, clear makeup remover and eight color eye shadow disk.

Wang Yueqin, deputy director of the Department of publishing and media, School of film and television, Shanghai Normal University, said in an interview that the blind box craze is essentially a "surprise economy". She believes that "surprise economy" can create unexpected spiritual value and material value, which is a convenient means to generate psychological pleasure function. It can make users feel extraordinary stimulation and shock in simple shopping, obtain more joy through low economic cost, and complete social intercourse, consensus and identity through circle communication and sharing.

According to Bao fan, "at present, bubble Mart has formed a platform based ecological closed-loop, from the upstream design end, the fashion toy exhibition that excavates outstanding artists and works, to the construction of supply chain system such as the sales channel in the middle reaches, and the downstream chaoplay cultural community."

It is worth mentioning that Huaxing new economy fund of Huaxing capital participated in the last round of financing before bubble Mart IPO.