De Ying Holdings International Limited (hereinafter referred to as 'De Ying Holdings') was successfully listed on January 17, 2022, with an issue of 120 million shares at a price of HK$2.05 per share, raising a net amount of HK$20.7 million.
During the Hong Kong listing process, Frost & Sullivan mainly undertook the following tasks: helping the company accurately and objectively understand its positioning in the target market, using objective market data to discover, support, and highlight the company's competitive advantages, assisting the company, investment banks, and other intermediaries in completing the relevant parts of the prospectus (such as the overview, competitive advantages and strategy, industry overview, business, and other important sections), facilitating communication with the Hong Kong Stock Exchange and investors, helping investors quickly understand the market ecosystem and competitive landscape, and assisting the company in completing feedback on various industry-related issues from the Hong Kong Stock Exchange.
Overview of Image IP Licensing Markets in Mainland China and Hong Kong
Industrial Chain Introduction
An authorization business is a mechanism where the authorizing party or authorized agent grants the licensee the use of intellectual property rights through a contract, usually charging royalties or fixed fees based on the sales ratio of licensed goods over a period of time. The authorizing party can directly contact the licensee, or the authorized agent can act as an intermediary between the authorizing and licensee parties, supervising the licensee's use of intellectual property rights on behalf of the authorizing party. The main participants in the authorization market generally include intellectual property owners, authorized agents, authorized distributors, and licensees. The following table shows the value chain of the authorization market.
Source: Frost & Sullivan report
Market scale of licensed product sales based on avatar IPs
The retail sales of image IP licensed products in Mainland China and Hong Kong as a whole increased from approximately HK$39.3 billion in 2016 to approximately HK$40.4 billion in 2020, with a compound annual growth rate of about 0.7%. In 2020, the outbreak of COVID-19 led to a decline in the retail value of image IP licensed products in Mainland China. In the future, based on the continuous enhancement of domestic intellectual property creativity and consumers' awareness of intellectual property protection, the retail sales of image-based licensed products are expected to grow rapidly at a compound annual rate of about 7.6% from 2021 to 2025, reaching approximately HK$59.8 billion in Mainland China by 2025.
Sales of Image IP Licensed Products in Mainland China and Hong Kong
2016 to 2025 (estimated)
Source: Frost & Sullivan report
Market scale of image IP licensing revenue
For the image IP licensing market, royalty income generated from product sales constitutes a significant portion of the total revenue for both Mainland China and Hong Kong.
In Mainland China, the licensed merchandise segment accounted for approximately 76.7% of the total revenue from image IP licensing, reaching about HK$31 billion in 2020. In Hong Kong, the royalties generated from merchandise sales were relatively stable between 2016 and 2019. Despite the retail market being hit by the COVID-19 outbreak in 2020, the Hong Kong government has taken action to prevent further spread of the virus.
In terms of revenue from advertising and event royalties, from 2016 to 2020, the revenue from advertising royalties in Mainland China and Hong Kong increased at compound annual growth rates of 5.1% and 4.0%, respectively; the revenue from licensing fees for events in Mainland China and Hong Kong increased at compound annual growth rates of 3.0% and 1.9%, respectively. In the future, against the backdrop of continued popularity of interactive marketing, revenue from advertising and event royalties is expected to continue growing.
Revenue scale of the mainland China image IP licensing market
2016 to 2025 (estimated)
Source: Frost & Sullivan report
Revenue scale of China Hong Kong region image IP licensing market
2016 to 2025 (estimated)
Source: Frost & Sullivan report
driving factors
The awareness of intellectual property protection in the Chinese mainland has improved, along with changes in consumer behavior
The Chinese government has been promoting the importance of intellectual property protection. In 2019, the State Council issued the 'Opinions on Strengthening Intellectual Property Protection', emphasizing the significance of intellectual property protection and helping to educate the public to enhance their understanding of the value of intellectual property and its importance. With the improvement of China's awareness of intellectual property protection, consumers are increasingly valuing the brand value of intellectual property and prefer officially authorized products, which can be evidenced by the growth in purchases of such products. Consumers recognize the quality assurance, value, and concept embodied by officially authorized products. In addition, as disposable income increases, consumers are more capable of affording the prices of officially authorized goods.
Enhance the innovation ability of domestic intellectual property rights in the Chinese mainland
The creation and innovative development of original intellectual property in China have been rapid. In recent years, domestic intellectual property creators from upstream content markets such as animation, comics, games, and novels have begun to make a name for themselves in the Chinese mainland market. Domestic consumers are more likely to recognize and appreciate intellectual property originating from within China, so some multinational retailers have attempted to capitalize on the rising value of domestic intellectual property in marketing and engage in the sale of products with domestic intellectual property rights. The creative ability of original image intellectual property in the Chinese mainland has been continuously enhanced, promoting the development of the image IP licensing market.
Advanced technology applications in licensed businesses in Hong Kong
The adoption of advanced technologies such as virtual reality technology, augmented reality technology, and 3D projection has further enabled IPs to interact with consumers in a more immersive manner. This will create more commercial opportunities for intellectual property rights. For example, by using 3D projection, authorized images can interact directly with audiences in various scenarios such as museums and special events.
Competition Overview
The role licensing market in mainland China is highly competitive and fragmented. Both international and domestic licensors are active in the market. As of the end of 2020, there were over 300 active role licensors in the mainland Chinese role licensing market.
In 2020, in terms of licensing revenue, the company accounted for approximately 2.4% of the mainland China role licensing market and ranked among the top ten in the mainland China image IP licensing industry for the year. Among domestic licensors (i.e., those whose headquarters are registered in mainland China or Hong Kong), B.Duck, a well-known image IP company, is the second-largest domestic original image IP licensor in the mainland China image IP licensing market.
Frost & Sullivan has extensive research experience in the culture and entertainment industry, assisting well-known enterprises to successfully list on capital markets. Successful listings include: Qingpi Game (6633.HK), Pop Culture (CPOP.NASDAQ), Coconuts (02125.HK), Kook Music (KUKE.NYSE), Changxin Media (XJB.SGX), Brilliance Tomorrow (01351.HK), Yala Technology (YALA.NYSE), LeXiang Interactive (06988.HK), Zu Long Entertainment (09990.HK), Blue City Brothers (BLCT.NASDAQ), Liantian Film (09958.HK), Nine Dragons Digital Entertainment (01961.HK), Yusheng Culture (01859.HK), Donkey Trail Technology (01745.HK), New Stone Culture (01740.HK), Heartbeat Company (02400.HK), Travel Orange Culture (08627.HK), Friend Times (06820.HK), Wanda Sports (WSG.NASDAQ), Tu Yi Holdings (01701.HK), Hometown Interactive (03798.HK), Flying Group (01901.HK), Huoyan Holdings (01909.HK), Lingbang Group (02230.HK), Haitian Tianyue Travel (01832.HK), Zen Travel Technology (02660.HK), Ruhuan Holdings (RUHN.NASDAQ), Fosun Tourism Culture (01992.HK), Dream World (01119.HK), Imo Video (03700.HK), Huya (HUYA.NYSE), Snake (01337.HK), Read Wen Group (00772.HK), Meitu (01357.HK), China Digital Video (08280.HK).
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