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South China Morning Post
24-06-2025
- Business
- South China Morning Post
With The Monsters, Monkey King and Ne Zha, China's IP-driven businesses brace for growth
The rise of Pop Mart 's The Monsters series, as well as new games and animations reimagining mythological figures like the Monkey King and Ne Zha, has driven rapid growth in China's intellectual property (IP) industry in recent years, with analysts saying the trend is likely to continue. 'While the economy is sluggish, it continues to grow and generate consumption,' wrote Ivan Su, a senior equity analyst for Morningstar. 'This increasing growth in China will help lead to the creation of and investment in more home-grown IPs.' He said IPs were targeting consumers with rising incomes who desired social belonging and esteem. He added that consumers accustomed to spending on IPs made up a growing share of the population. For toys, China's IP sales were projected to grow at an annual rate of 17.2 per cent through 2029 after reaching 7.6 billion yuan (US$1 billion) in 2024, investment bank CICC said in a report last week, citing data from China Insights Consultancy. Over the same time period, global IP growth was expected to reach 8 per cent a year after hitting 525.1 billion yuan in 2024, CICC said, adding that China and Southeast Asia were expected to contribute nearly half of the industry's total growth over the next four years. But analysts said the industry's long-term momentum also depended on companies' ability to keep their IPs hot after the initial buzz faded. Pop Mart is an illustrative recent example. The Beijing-based toymaker behind the popular 'Labubu' dolls saw its shares plunge nearly 15 per cent last week after restocking its latest Labubu 3.0 series. The move sent resale prices tumbling temporarily and raised concerns that the company's rapid growth was cooling.
Yahoo
20-06-2025
- Business
- Yahoo
Tencent Music Shares Double on Break From China Price Cut Script
(Bloomberg) -- China tech investors weary of the nation's relentless price competition can look to one pocket that's thriving by moving in the opposite direction: online music. Security Concerns Hit Some of the World's 'Most Livable Cities' JFK AirTrain Cuts Fares 50% This Summer to Lure Riders Off Roads Taser-Maker Axon Triggers a NIMBY Backlash in its Hometown NYC Congestion Toll Cuts Manhattan Gridlock by 25%, RPA Reports How E-Scooters Conquered (Most of) Europe Hong Kong-listed shares of Tencent Music Entertainment Group and smaller rival NetEase Cloud Music Inc. have more than doubled since the end of 2023, outperforming most Chinese internet peers. That's come as they shift to focus on monetization of their loyal user bases while beefing up their podcast and live event offerings. Tencent Music has notched four-straight quarters of growth in revenue per paying user by successfully driving subscribers to more expensive plans. That's a refreshing break from the frequent headlines on deep price cuts for EVs and e-commerce that has sparked volatility in China tech stocks in recent years. 'Music is becoming more important to the lives of young people in China, and you're not going to just save one or two yuan to abandon all your playlists and jump to another platform,' said Ivan Su, an analyst at Morningstar Inc. 'The monthly subscription price — which costs about the same as a cup of coffee — is very low.' The Chinese online music industry has consolidated over the past few years, leaving the units of Tencent Holdings Ltd. and NetEase Inc. in a virtual duopoly. Spotify is blocked by a firewall in China. Tencent Music is the leader with about 555 million monthly active users as of the end of March, some 22% of which were paid subscribers. That compares with a paid penetration rate of around 40% for Spotify. One of the key planks of Tencent Music's monetization strategy is its Super Premium VIP tier, where users pay roughly $4 per month for exclusive content plus early access to special artist merchandise and live events. Subscribers pay about $2 for a basic monthly subscription. The percentage of premium members relative to all paying users could rise to 19% in 2027 from 12% this year, Goldman Sachs Group Inc. analysts including Lincoln Kong wrote in a note this week. The bank added they expect 10% growth in average revenue per paid user this year and high-single digits for 2026 onward. Like Spotify, Tencent Music is also making moves into other services. This month it announced a plan to buy Chinese podcasting startup Ximalaya, and in May it disclosed its purchase of a stake in South Korean K-pop agency SM Entertainment Co. 'There are a lot of innovative ways for the leading players to monetize their users, and all of these are very affordable items in this environment,' said Agnes Ng, a portfolio specialist at T. Rowe Price Group Inc. 'With only two major players left in the market, competition is very benign and market share is stable.' Morningstar's Su said that NetEase Cloud's stock has outperformed as it 'turned profitable a lot quicker than people expected.' On the other hand Tencent Music has a 'much more robust content library,' with a broader user base. The subsector's big gains have made the stocks somewhat pricier. Tencent Music shares are trading at 21 times forward earnings estimates, above their three-year average but well below Spotify's nearly 60 times. NetEase Cloud Music is at 24 times. Tencent Music's valuations 'still look attractive, particularly when compared to Spotify,' while content-related stocks overall have been enjoying a premium due to lower exposure to tariffs, said Kevin Net, head of Asian equities at Financiere de L Echiquier. 'I think investors like its 70%+ market share in an underpenetrated market, with potential for price increases.' Ken Griffin on Trump, Harvard and Why Novice Investors Won't Beat the Pros Is Mark Cuban the Loudmouth Billionaire that Democrats Need for 2028? The US Has More Copper Than China But No Way to Refine All of It Can 'MAMUWT' Be to Musk What 'TACO' Is to Trump? How a Tiny Middleman Could Access Two-Factor Login Codes From Tech Giants ©2025 Bloomberg L.P. Sign in to access your portfolio
Yahoo
03-03-2025
- Business
- Yahoo
Chinese consumer stocks are back in favour as Mixue rides Hong Kong IPO revival
Consumer stocks are making a comeback in Hong Kong after the city's initial public offering (IPO) market recovered from a multi-year slump and stocks gained a valuation upgrade induced by DeepSeek's breakthroughs. Mixue's IPO attracted a record HK$1.8 trillion (US$231 billion) of orders from retail investors before the Chinese fresh drinks chain started trading on Monday. Cosmetics producer Mao Geping gained 153 per cent since December, while jewellery maker Laopu Gold has risen more than 1,000 per cent since its debut in June. Toymaker Pop Mart has soared 442 per cent over the past 12 months as sales gained momentum in overseas markets, while peer Bloks Group, whose retail portion of IPO was 6,000 times subscribed, has advanced 36 per cent since its first day of trading last month. Do you have questions about the biggest topics and trends from around the world? Get the answers with SCMP Knowledge, our new platform of curated content with explainers, FAQs, analyses and infographics brought to you by our award-winning team. "Retail investors' enthusiasm is rooted in the fact that sizeable consumer companies with solid fundamentals and sector tailwinds have finally emerged after a lull," said Richard Lin, chief consumer analyst at Shanghai-based investment bank SPDB International. "If you're a market leader and your valuation is cheap enough, people are going to clamour for you." Consumer discretionary stocks within the Hang Seng Composite Index have risen 23 per cent this year, outpacing the 17 per cent gain of the benchmark Hang Seng Index. Part of the run-up was fuelled by improved sentiment, after DeepSeek sparked a bull run in technology stocks and the broader market. Meanwhile, some analysts said consumer stocks may fail to live up to expectations if Beijing holds back on injecting further economic stimulus in the forthcoming two sessions later this month, said Ivan Su, a senior equity analyst for Morningstar. "If no major stimulus is introduced, growth for the remainder of 2025 is likely to remain at current levels," he said. While this might initially be viewed negatively by the market, many Chinese consumer stocks - particularly those with strong shareholder distribution policies - still present forcing value." For now, investors are indeed looking at the brighter side of the story. Mixue's IPO subscription ratio, for one, reflects their confidence in the size of its business, its brand power and its appealing stock valuation despite the cutthroat competition in the bubble-tea sector. Customers waiting to place their orders at a Mixue bubble-tea store in Beijing in September 2024. Photo: Reuters alt=Customers waiting to place their orders at a Mixue bubble-tea store in Beijing in September 2024. Photo: Reuters> Other consumer-focused companies appear to be making a beeline for IPOs in Hong Kong, after the China Securities Regulatory Commission and bourse operator Hong Kong Exchanges and Clearing both pledged to help more Chinese companies raise funds in the city, which is Asia's third-biggest stock market. Jiangxi Aimei Culture and Technology, which operates a chain of 800-odd Mei KTV karaoke outlets in mainland China, announced plans last month to list its shares in Hong Kong, after opening its first outlet in Lan Kwai Fong. Shanghai-listed Anjoy Foods Group, which sells frozen hotpot ingredients, submitted its IPO application in January. Other notable companies in the pipeline include Fashion Momentum group, the owner of fast-fashion brand Urban Revivo, which was reported to be planning a US$100 million IPO. Chagee, another mainland bubble-tea chain operator, was said to be seeking US$300 million in a New York listing. "More discretionary categories like sportswear have yet to show an acceleration in sales" with the first-quarter numbers largely in line with the preceding quarter, Morningstar's Su said. "That said, the absence of further deterioration supports our positive long-term theses for these companies." This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2025 South China Morning Post Publishers Ltd. All rights reserved. Copyright (c) 2025. South China Morning Post Publishers Ltd. All rights reserved. Sign in to access your portfolio
