Good News on Listing | Frost & Sullivan Assists BRK Group Limited to Successfully List in Hong Kong (0325.HK)

Bruc Group Co., Ltd. (hereinafter referred to as 'Bruc') was successfully listed on January 10, 2025.

During the process of listing in Hong Kong this time, Frost & Sullivan mainly undertook the following tasks: helping the issuer accurately and objectively understand its positioning in the target market, using objective market data to discover, support, and highlight the issuer's competitive advantages, assisting the issuer, investment banks, and other intermediaries in completing the relevant parts of the prospectus (such as overview, competitive advantages and strategy, industry overview, business, and other important chapters), helping the issuer complete communication with the Hong Kong Stock Exchange and investors, assisting investors in quickly understanding the market ecosystem and competitive landscape, and assisting the issuer in completing feedback on various industry-related issues from the Hong Kong Stock Exchange, etc.

• The company is the third largest Chinese company in the global puzzle role-playing toy market;

   

• The company operates in the building block toy market, which is the fastest-growing and most promising segment of the global toy industry.

   

• The company's own IP and well-known authorized IPs form a rich IP matrix, enabling the company to reach global consumers of all ages and genders;

   

• The company has a leading unique production process and customized equipment in its industry, achieving a gross profit margin higher than the industry average. It can also quickly and mass-produce high-quality products, laying a foundation for responding to rapid development.

According to a report by Frost & Sullivan:

• Ranked third globally and first in China in terms of GMV in 2023, the company operates in the building block toy market.

   

• In terms of GMV, the market scale of Chinese building block toys is RMB 5.8 billion, accounting for 5.5%, 14.3%, and 24.4% of the Chinese toy market, building block toy market, and construction toy market in 2023 respectively.

   

• China's building block role-playing toy market grew from RMB 1.2 billion in 2019 to RMB 5.8 billion in 2023, with an average annual compound growth rate of 49.6%. It is expected to increase from RMB 5.8 billion in 2023 to RMB 325 billion in 2028, with an average annual compound growth rate of 41.3%.

The global toy market is huge in scale and is expected to show a stable growth trend in the future. In terms of GMV, the global toy market size increased from RMB 631.2 billion in 2019 to RMB 773.1 billion in 2023, with an average annual compound growth rate of 5.2%. It is expected that it will further grow to RMB 993.7 billion in 2028, with an average annual compound growth rate of 5.1%.

Regionally divided, North America, Europe, and the Asia-Pacific region are the top three toy markets, with market sizes reaching RMB 243.3 billion, RMB 214 billion, and RMB 213.6 billion in 2023 respectively. China is one of the world's largest toy producers and consumers, accounting for most of the global toy production by volume. In recent years, China's per capita toy consumption has grown rapidly, but its market size is still lower than that of major toy-consuming markets such as the United States and Europe, indicating broad growth potential in the future. With the continuous expansion of toy consumers and the growing preference for IP toys among consumers, coupled with the continuous improvement in local enterprises' R&D capabilities, product quality, and IP commercialization on the supply side in recent years, as well as the emergence of new toy categories, China's toy market is expected to show accelerated growth in the future. The average annual compound growth rate of China's toy market is expected to reach 9.5%, with the market size increasing from RMB 104.9 billion in 2023 to RMB 165.5 billion in 2028, approaching one-sixth of the global toy market share.

The building block toy market is a rapidly growing and highly promising segment within the global toy industry. The global market size of building block toys increased from RMB 132 billion in 2019 to RMB 278 billion by 2023, with a penetration rate of 8.0% in the global role-playing toy market, and an average annual compound growth rate of 20.5%. Building block toys combine the advantages of building play and role-playing toys, enabling them to continuously expand their share in the role-playing toy market. It is expected that the average annual compound growth rate from 2023 to 2028 will be 29.0%, with the market size reaching RMB 996 billion by 2028, and a penetration rate of 18.4% in the global role-playing toy market. In China's role-playing toy market, the building block toy segment is the fastest-growing sub-market, with its expected growth from RMB 58 billion in 2023 to RMB 325 billion by 2028, and an average annual compound growth rate of 41.3%. The proportion of the Chinese building block toy sub-market in the overall Chinese role-playing toy market is expected to increase from 14.3% in 2023 to 18.4% by 2028.

In the global building block toy market, ranked by 2023 GMV, our group is the third largest building block toy company globally. The leading players in the building block toy market outside our group are mainly well-known multinational companies in the toy industry. The global building block toy market has a high degree of industry concentration, with the top five companies accounting for 87.1% of the total market share in 2023, with two well-known multinational toy companies holding a significant market share.

Based on 2023 GMV, the top five market participants in China collectively account for 76.9% of the role-playing toy market share, indicating a high industry concentration. As the largest market participant in China for role-playing toys, our group holds a market share of 30.3%.

●Demand for high-quality experiences and personalized products

Against the backdrop of an increasingly rich selection and gradually improving quality of toy products globally and in China, experiential and personalized consumption has become mainstream. Puzzle play toys precisely fit into this consumption trend. Puzzle play is popular among different consumer groups because it satisfies consumers' comprehensive interests, including creativity, imagination, and spatial sense. The combination of puzzle play with character toys not only endows character toys with an enjoyable experience but also extends the toy category and its lifecycle. On the other hand, consumers desire to express themselves and establish connections with products through participation and investment in the puzzle-making process. The growing consumer demand for high-quality experiences and personalized products has driven the continuous growth of the puzzle play character toy market.

●Expansion of consumer base

Building block role-playing toys can provide a variety of functions including educational, parent-child interaction, association with IPs, and collectibles. They can effectively meet the needs of toy consumers across all age groups, thereby promoting the continuous expansion of the consumer base. The educational nature and parent-child interaction of building block play attract more and more families that previously bought building blocks and traditional role-playing toys for children to switch to purchasing building block role-playing toys. In addition, since a large number of building block role-playing toys are based on IPs with fan bases, the demand for building block role-playing toys among young consumers is increasing day by day. Due to the IP attributes and collectible value of building block role-playing toys, more and more adults with higher disposable income and stronger purchasing power have also become an important consumer group for this category of products. The diverse functions of building block role-playing toys meet consumers' evolving product needs as they age, thus having a longer user lifecycle. With the widespread dissemination of various IPs such as film and television characters and anime across the globe, the consumer base for building block role-playing toys has also expanded globally and in China.

●The trend of cost-effective consumption

Driven by global and China's trend towards cost-effective consumption, consumers are paying more attention to price while pursuing high-quality products. As a result, toys that are good but not expensive have gained strong appeal and a huge market space. With the emergence of products with extreme cost-effectiveness and the expansion of sales channels, consumers in lower-tier cities can now experience high-quality products, thereby promoting consumption growth in the underserved market.

●The emergence of high-quality supply

The market's demand for building block toys that combine both construction play and character-based play is growing rapidly, attracting more and more high-quality supply into this category. Especially in recent years, innovative toy companies have emerged in the market, further enriching the supply. These toy companies have built factory systems specialized in producing building block toys, achieving efficient output, stable quality, and cost advantages to meet the rapidly growing consumer demand. The investment of leading companies has driven industry progress and expanded supply, forming a virtuous cycle that has promoted the significant development of the building block toy market.

●The wide application of IP

As consumers' demand for cultural products continues to rise, IP categories become increasingly diverse, and the ways of creating and disseminating IPs are becoming more varied, IP copyright holders have begun to actively explore ways to expand IP influence and commercialize beyond animation and film. Since building-block role-playing toys can efficiently commercialize IPs and launch products that cover a wide range of demographics, price ranges, and global markets, IP copyright holders are increasingly favoring this category. From the perspective of toy companies, the widespread application of well-known IPs in building-block role-playing toys not only enhances consumer awareness of the category but also attracts more IP fans to purchase. Leading building-block role-playing toy companies build a rich IP matrix through independent development and IP licensing, and combine IPs with different audience adaptabilities to launch a diversified product portfolio, which can better meet consumer needs and promote market development.

●Unique consumer ecosystem by category

Building block role-playing toys have a unique consumer ecosystem due to the nature of the building process and their deep integration with IPs. Consumer emotions and interests are important factors in the consumption of building block role-playing toys. The gameplay can stimulate fans' and creators' creativity and desire to share content. Each well-known character IP has a large number of fans and resonates strongly with them. Therefore, based on product themes and IP influence, fans and creators create and disseminate rich and high-quality content, driving consumer awareness and more purchases. The positive feedback from consumers on fans' and creators' self-created content further stimulates the enthusiasm for self-creation within the ecosystem, thus forming a positive cycle. The expansion of the ecosystem increases the stickiness and repurchase rate of consumers and fans.