Alibaba movie unit's pivot, rebrand bring US$2 billion value gain
Since its May 19 earnings report, which highlighted a pivot towards intellectual property (IP) licensing and live events, the company's shares have roughly doubled, making it the top performer on Hong Kong's Hang Seng Composite Index and adding US$2 billion in market valuation. Several analysts have since upgraded their outlooks.
The rebrand to Damai Entertainment, effective this month, reflects this broader focus. While its core film production business shrank, Damai still posted double-digit growth in both sales and profit for the fiscal year ended Mar 31 – driven by its IP merchandising and live entertainment arms.
The Damai name, originally tied to its concert and event unit, now represents the company's alignment with China's 'new consumption' trend. Young consumers are increasingly drawn to tech-driven, emotionally engaging experiences, and Beijing is encouraging more spending to boost the economy.
The name change and strategic shift are a 'turning point', signalling Damai's ambition to become a more well-rounded offline entertainment provider, Citigroup analysts said in a note.
The stock has already surpassed Citi's HKD$0.92 target and China International Capital's revised HKD$0.98 target.
BT in your inbox
Start and end each day with the latest news stories and analyses delivered straight to your inbox.
Sign Up
Sign Up
Still, Damai remains a penny stock with notable risks. Its film and TV segment shrank 9.6 per cent last year, and content investment remains volatile. Citi maintains a 'Buy/High Risk' rating, citing margin uncertainties.
Its valuation has also become high, according to Shen Meng, a director at Beijing-based Chanson & Co. 'Short-term stock price fluctuations increase valuation risks,' he said. The stock is trading at nearly 29 times its forward earnings estimates, far above a ratio of around 10 for the Hang Seng Index, data compiled by Bloomberg showed.
But he believes the pivot towards younger consumers is smart: 'Young people have a longer consumption cycle.'
Pokemon and Sanrio
The move is already playing out. Gen Z's spending on hobby goods and celebrity merch has fuelled stock surges for companies such as Pop Mart International Group and Bloks Group – and now Damai. The IP merchandising unit, including the sub-licensing business AliFish, partners with brands such as Pokemon, Sanrio, and Chiikawa, and sub-licenses them to merchants. The unit's revenue grew 73 per cent last year.
The Citigroup analysts call AliFish 'the nation's largest IP licensing agent' and the 'young people's underlying supplier for IP merchandising'.
Meanwhile, Damai's live entertainment business – concerts, festivals, exhibitions – saw a 236 per cent revenue jump. It also runs a major ticketing platform and expects more growth from international concert sales.
'Entertainment in China has strong, diverse demand,' Shen said. 'If one has liked something since childhood, they will basically always like it.' BLOOMBERG
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Straits Times
11 minutes ago
- Straits Times
Xiaomi founder's bold EV bet paying off where Apple's failed
Sign up now: Get ST's newsletters delivered to your inbox Xiaomi succeeding where Apple failed has burnished Mr Lei Jun's reputation, made his company one of the most valuable in China. Hong Kong – Lei Jun, founder and chairman of Xiaomi, the only tech company to have successfully diversified into carmaking, couldn't resist. Speaking at a triumphant launch event in Beijing in June for Xiaomi's second electric vehicle, a long-anticipated SUV, Mr Lei pointedly mentioned Apple, which spent a decade and US$10 billion (S$12.7 billion) trying to make a car before giving up in 2024. 'Since Apple stopped developing its car, we've given special care to Apple users,' he said, noting that owners of the US giant's iPhones would be able to seamlessly sync their devices to Xiaomi's vehicles. The not-so-subtle dig was followed by a flex: Xiaomi then said it had received more than 289,000 orders for its new sport utility vehicle within an hour of its announcement, more than its first EV, a sedan launched in March 2024. Xiaomi succeeding where Apple failed has burnished Mr Lei's reputation, made his company one of the most valuable in China and shaken up both the tech and automobile industries. The collapse of Apple's moonshot car programme has only underscored the effectiveness of Xiaomi's grounded approach, which took inspiration from proven designs from Tesla and Porsche Automobil Holding while staying true to the affordable ethos that's made it a cult brand for Gen Z consumers. Crucially, it also launched into the most fertile EV ecosystem in the world – China. With state subsidies, existing charging infrastructure and a ready made supply chain, Xiaomi had a structural tailwind Apple lacked. Top stories Swipe. Select. Stay informed. World Trump says US nears trade deals as tariff effective date delayed Singapore MPs should not ask questions to 'clock numbers'; focus should be improving S'poreans' lives: Seah Kian Peng Singapore Sequencing and standards: Indranee on role of Leader of the House Singapore NUS College draws 10,000 applications for 400 places, showing strong liberal arts interest Singapore Life After... blazing biomedical research trail in S'pore: Renowned scientist breaks new ground at 59 Business Beyond the 9 to 5: Why side hustles are becoming a way of life for more full-time workers Singapore Smart sensors used in study to detect cognitive decline in seniors who live alone Life Star Awards 2025: 11 looks that shocked and charmed on the red carpet Xiaomi declined to comment for this story. Mr Lei and Xiaomi's 'charisma, brand recognition and ecosystem cannot be underestimated,' Yale Zhang, the managing director of Shanghai-based consultancy Automotive Foresight, said. 'It's a big influence on young consumers who have filled their homes with Xiaomi products. When it comes time to buy an EV, they naturally think of Xiaomi.' Recruitment tactics Xiaomi's public narrative is that Mr Lei and his team learned by visiting multiple Chinese automakers, including Zhejiang Geely Holding Group and Great Wall Motor, and talked to more than 200 industry experts in some 80 meetings. The reality is also that he used Xiaomi's reputation as an innovative consumer behemoth to get close to China's large carmakers and pick off their top talent. Geely and its billionaire founder Li Shufu welcomed Mr Lei to the automaker's research institute in Ningbo in the months leading up to Xiaomi's announcement that it would enter the car business to discuss topics, including potential collaboration. It's Geely lore that Mr Lei added the WeChat contacts of many staff at the institute, including then-director Hu Zhengnan. Mr Hu later joined Shunwei Capital Partners, the investment firm co-founded by Mr Lei. Mr Hu, known for his love of the German luxury marque Porsche, was one of the team members credited as being instrumental to developing Xiaomi's EV business, Mr Lei said at the SU7 launch in 2024. He added that Mr Hu left his previous employer after his contract ended. Other executives who joined Xiaomi came from companies including BAIC Motor, BMW, SAIC-GM-Wuling Automobile – the General Motors joint venture with SAIC Motor and Wuling Motors Holdings – and auto supplier Magna Steyr. Besides assembling top Chinese automaking talent, Mr Lei made a prescient bet on investing in a self-controlled supply chain – insulating Xiaomi's operation from manufacturing vagaries. This came from painful lessons learned in Xiaomi's early smartphone-producing days, when external suppliers would cut off components unpredictably. With the 10 billion yuan (S$1.8 billion) it committed to the first phase of its EV venture, Xiaomi also built its own factory, rather than going down the contract manufacturing route that some Chinese makers, including Nio and Xpeng, did when they started out. 'Among tech companies that now build electric vehicles, those who previously had hardware products seem to be more successful than those who only had software products or information services,' said Paul Gong, UBS Group's head of China autos research. Copycat allegations Despite its early success, there are many who argue Xiaomi's one hit car is copied from elsewhere – and that a sole successful vehicle does not a successful auto producer make. Mr Lei's aggressive approach has also raised hackles in China's car industry. Yu Jingmin, vice president of SAIC's passenger car division, reportedly described Xiaomi's approach as 'shameless' in a critique of the SU7 resembling Porsche. The SU7 has been colloquially dubbed 'Porsche Mi' by netizens. Xiaomi's design team, led by former BMW designer Li Tianyuan, has defended the SU7's aesthetics, emphasizing that the choices were driven by aerodynamic efficiency and performance benchmarks. In late March, there was another setback after a fatal accident involving the SU7. The car had its advanced driver assistance technology turned on before the crash, which afterward led to authorities reining in the promotion and deployment of the technology. The usually vocal Mr Lei kept a low profile on social media for more than a month post the March accident. He returned to more active engagement in May with a missive that said this period of time was the most difficult in his career. Fortunately for Xiaomi, its consumer base is sticky. Known as 'Mi Fans,' the loyal customers have played a pivotal role in the company's rise. Xiaomi cultivated this fandom early on by prioritising user feedback and the grassroots allegiance has helped it build strong brand equity, especially in China. The SU7 has remained a top selling model even after the accident in March. Small scale The EVs are also showing financial promise. Xiaomi posted record revenue for first quarter this year, driven by car and smartphone sales. Its EV division is expected to turn profitable in the second half of 2025, Mr Lei said in an investor meeting in June. But even if the popularity of Xiaomi's EVs can spring beyond the company's devoted base, production is still on a much more boutique scale. China's top car brand, BYD, sold around 4.3 million EVs and hybrids last year, many overseas, while Tesla moved about 1.78 million vehicles globally. Toyota Motor, the world's No. 1 automaker, sold some 10.8 million vehicles and boasts a lineup of approximately 70 different models. Mr Lei doesn't seem to be prioritizing the mass market of below US$20,000 yet, which drives significant volume and is where BYD dominates, Automotive Foresight's Zhang said. Without a lineup in that segment, Xiaomi cars will remain niche purchases for middle to higher-income consumers and Xiaomi may face the same risks as Tesla, which is seeing its sales slump exacerbated by a narrow consumer base and limited models. Nonetheless, Mr Lei seems buoyed by Xiaomi's early wins and is now looking at global expansion. Xiaomi will consider selling cars outside China from 2027, he said last week. Success or otherwise, the European Union, the US and Turkey have all slapped tariffs on Chinese EVs, but Xiaomi wants to set up a R&D centre in Munich and may test sales starting in European markets such as Germany, Spain and France when the time is right, Chinese media 36Kr reported in April. 'Xiaomi is a latecomer to the auto industry,' Mr Lei admitted on Weibo in June. But, he said, in a market driven by technology and innovation and the rising global influence of China's EV culture, 'there are always opportunities for latecomers.' BLOOMBERG
Business Times
11 minutes ago
- Business Times
Xiaomi founder's bold EV bet is paying off where Apple's failed
[HONG KONG] Lei Jun, founder and chairman of Xiaomi, the only tech company to have successfully diversified into carmaking, could not resist. Speaking at a triumphant launch event in Beijing late last month for Xiaomi's second electric vehicle (EV), a long-anticipated SUV, Lei pointedly mentioned Apple, which spent a decade and US$10 billion trying to make a car before giving up last year. 'Since Apple stopped developing its car, we have given special care to Apple users,' he said, noting that owners of the American giant's iPhones would be able to seamlessly sync their devices to Xiaomi's vehicles. The not-so-subtle dig was followed by a flex: Xiaomi then said it had received more than 289,000 orders for its new sport utility vehicle within an hour of its announcement, more than its first EV, a sedan launched in March 2024. Xiaomi succeeding where Apple failed has burnished Lei's reputation, made his company one of the most valuable in China and shaken up both the tech and automobile industries. The collapse of Apple's moonshot car programme has only underscored the effectiveness of Xiaomi's grounded approach, which took inspiration from proven designs from Tesla and Porsche Automobil Holding while staying true to the affordable ethos that's made it a cult brand for Gen Z consumers. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up Crucially, it also launched into the most fertile EV ecosystem in the world – China. With state subsidies, existing charging infrastructure and a ready made supply chain, Xiaomi had a structural tailwind Apple lacked. Xiaomi declined to comment for this story. Lei and Xiaomi's 'charisma, brand recognition and ecosystem cannot be underestimated', Yale Zhang, the managing director of Shanghai-based consultancy Automotive Foresight, said. 'It's a big influence on young consumers who have filled their homes with Xiaomi products. When it comes time to buy an EV, they naturally think of Xiaomi.' But building cars is a far more complex, capital intensive challenge than making phones or rice cookers. It requires mastering safety regulations, global logistics and production at scale, all while competing against legacy automakers with long histories and large model lineups. Any international expansion will also require navigating complex geopolitical landscapes. As one of the first tech giants to actually manufacture a car, Xiaomi is in uncharted territory. Apple's failings Apple's car project, internally dubbed Project Titan, failed in large part because it was not just an EV – it was at one point an attempt to leapfrog the auto industry with a fully autonomous, Level 5 self-driving machine. Its goals were lofty and the direction constantly shifting, the result being over a decade of effort with nothing to show. Lei, 55, was comparatively stingy with time and resources and staked his personal reputation on the endeavour, claiming that making cars would be his 'last entrepreneurial project'. Xiaomi's public narrative is that Lei and his team learnt by visiting multiple Chinese automakers, including Zhejiang Geely Holding Group and Great Wall Motor, and talked to more than 200 industry experts in some 80 meetings. The reality is also that he used Xiaomi's reputation as an innovative consumer behemoth to get close to China's large carmakers and pick off their top talent. Geely and its billionaire founder Li Shufu welcomed Lei to the automaker's research institute in Ningbo in the months leading up to Xiaomi's announcement that it would enter the car business to discuss topics, including potential collaboration. It's Geely lore that Lei added the WeChat contacts of many staff at the institute, including then-director Hu Zhengnan. Hu later joined Shunwei Capital Partners, the investment firm co-founded by Lei. Recruitment tactics Xiaomi headhunters also courted Geely staff intensely, according to sources familiar with the matter. While it's common for talent to move between companies in the same industry, it was unusual to see this level of aggressiveness around recruitment, the sources said, asking not to be identified discussing information that's private. Geely did not respond to a request for comment. Hu, known for his love of the German luxury marque Porsche, was one of the team members credited as being instrumental to developing Xiaomi's EV business, Lei said at the SU7 launch in 2024. Lei added that Hu left his previous employer after his contract ended. Other executives who joined Xiaomi came from companies including Baic Motor, BMW, Saic-GM-Wuling Automobile, the General Motors joint venture with Saic Motor and Wuling Motors Holdings, and auto supplier Magna Steyr. Besides assembling top Chinese automaking talent, Lei made a prescient bet on investing in a self-controlled supply chain, insulating Xiaomi's operation from manufacturing vagaries. This came from painful lessons learnt in Xiaomi's early smartphone-producing days, when external suppliers would cut off components unpredictably. In 2016, some members of Xiaomi's supply chain team displeased Samsung Electronics representatives and the South Korean firm threatened to halt the supply of its industry-leading Amoled screens. To mend the fractured relationship, Lei flew to Shenzhen to meet with Samsung's China head at the time. The pair drank five bottles of red wine during their dinner meeting, according to a Xiaomi company biography, and Lei also made multiple trips to Samsung's headquarters in South Korea to apologise and negotiate the resumption of supply. Representatives from Samsung declined to comment. After Xiaomi went into the carmaking business, it invested into almost all parts of the EV supply chain, from batteries and chips to air suspension and sensors. It pumped more than US$1.6 billion via Shunwei or other Xiaomi-led funds into over 100 supply chain companies between 2021 and 2024, according to data compiled by Chinese analytics firm Zhangtongshe and Bloomberg. The components from some of the companies that Xiaomi invested in have ended up in its cars, such as lidars from Hesai Technology and onboard chargers and voltage converters from Zhejiang EV-Tech. With the 10 billion yuan (S$1.8 billion) it committed to the first phase of its EV venture, Xiaomi also built its own factory, rather than going down the contract manufacturing route that some Chinese makers, including Nio and Xpeng, did when they started out. 'Among tech companies that now build EVs, those who previously had hardware products seem to be more successful than those who only had software products or information services,' said Paul Gong, UBS Group's head of China autos research. Copycat allegations Despite its early success, there are many who argue Xiaomi's one hit car is copied from elsewhere, and that a sole successful vehicle does not make a successful auto producer. Lei's aggressive approach has also raised hackles in China's car industry. Yu Jingmin, vice-president of Saic's passenger car division, reportedly described Xiaomi's approach as 'shameless' in a critique of the SU7 resembling Porsche. The SU7 has been colloquially dubbed 'Porsche Mi' by netizens. Saic did not respond to questions about Yu's remarks. Xiaomi's design team, led by former BMW designer Li Tianyuan, has defended the SU7's aesthetics, emphasising that the choices were driven by aerodynamic efficiency and performance benchmarks. In late March, there was another setback after a fatal accident involving the SU7. The car had its advanced driver assistance technology turned on before the crash, which afterwards led to authorities reining in the promotion and deployment of the technology. The usually vocal Lei kept a low profile on social media for more than a month post the March accident. He returned to more active engagement in May with a missive that said this period of time was the most difficult in his career. Fortunately for Xiaomi, its consumer base is sticky. Known as 'Mi Fans', the loyal customers have played a pivotal role in the company's rise. Xiaomi cultivated this fandom early on by prioritising user feedback and the grassroots allegiance has helped it build strong brand equity, especially in China. The SU7 has remained a top-selling model even after the accident in March. Indeed, dealers have reported that nearly 50 per cent of customers plump for the SU7 without comparing it to other brands. 'A significant number of older consumers are buying the SU7 for their children, indicating that the model has built trust among more conservative buyers thanks to its safety and quality,' said Rosalie Chen, a senior analyst from investment research firm Third Bridge. Small scale Xiaomi has set a delivery target of 350,000 units in 2025, up from its previous goal of 300,000, buoyed by demand for the newly launched YU7 and a ramp-up in production. The starting prices for the SU7 sedan, at 215,900 yuan, and its SUV, at 253,500 yuan, make them competitive alternatives to models such as Tesla's Model 3 and Model Y. The EVs are also showing financial promise. Xiaomi posted record revenue for the first quarter this year, driven by car and smartphone sales. Its EV division is expected to turn profitable in the second half of 2025, Lei said in an investor meeting in June. But even if the popularity of Xiaomi's EVs can spring beyond the company's devoted base, production is still on a much more boutique scale. China's top car brand, BYD, sold around 4.3 million EVs and hybrids last year, many overseas, while Tesla moved about 1.8 million vehicles globally. Toyota Motor, the world's No 1 automaker, sold some 10.8 million vehicles and boasts a lineup of approximately 70 different models. Lei does not seem to be prioritising the mass market of below US$20,000 yet, which drives significant volume and is where BYD dominates, Automotive Foresight's Zhang said. Without a lineup in that segment, Xiaomi cars will remain niche purchases for middle to higher-income consumers and Xiaomi may face the same risks as Tesla, which is seeing its sales slump exacerbated by a narrow consumer base and limited models. Nonetheless, Lei seems buoyed by Xiaomi's early wins and is now looking at global expansion. Xiaomi will consider selling cars outside China from 2027, he said last week. Success or otherwise, the European Union, the US and Turkey have all slapped tariffs on Chinese EVs, but Xiaomi wants to set up an R&D centre in Munich and may test sales starting in European markets such as Germany, Spain and France when the time is right, Chinese media 36Kr reported in April. 'Xiaomi is a latecomer to the auto industry,' Lei admitted on Weibo in June. But, he said, in a market driven by technology and innovation and the rising global influence of China's EV culture, 'there are always opportunities for latecomers'. BLOOMBERG
Business Times
an hour ago
- Business Times
TikTok building new version of app ahead of expected US sale: report
[BENGALURU] TikTok is building a new version of its app for users in the United States ahead of a planned sale of the app to a group of investors, The Information reported on Sunday (Jul 6), citing unnamed sources. This comes as US President Donald Trump said on Friday he will start talking to China on Monday or Tuesday about a possible TikTok deal. He said the United States 'pretty much' has a deal on the sale of the TikTok short-video app. TikTok has developed a plan to launch the new app to US app stores on Sep 5, the report said. Last month, Trump extended to Sep 17 a deadline for China-based ByteDance to divest the US assets of TikTok. The report added that TikTok users will eventually have to download the new app to be able to continue using the service, although the existing app will work until March of next year, though the timeline could change. TikTok did not immediately respond to a Reuters request for comment. Reuters could not immediately confirm the report. A deal had been in the works earlier this year to spin off TikTok's US operations into a new US-based firm, majority-owned and operated by US investors. That was put on hold after China indicated it would not approve it following Trump's announcements of steep tariffs on Chinese goods. Trump said the United States will probably have to get a deal approved by China. REUTERS
