Summary of Key Points
On June 22, Taihe Music Group submitted an application to list on the Hong Kong Stock Exchange. Although it ranked first in the global Mandarin music market in 2025 (with a catalog of 860,000 recordings, 7,200 audio-visual works, and 16,900 songs and compositions), and has collaborated with artists such as JJ Lin and Xue Zhiqian, it also exposed several issues: its revenue in 2025 decreased by 8.4% year-on-year, with its core artist management and performance business declining by 23%; for two consecutive years, the company spent over 300 million yuan on a single artist, accounting for more than 30% of its total costs; as of the end of 2025, its net current liabilities exceeded 600 million yuan, yet it also invested 600 million yuan in cash management products. The artists it collaborates with do not have exclusivity agreements and could switch to competitors at any time. Its ticketing platform, "Xiudong," although holding 75% of the Livehouse market share, only generated 3% of the company's revenue and faced risks due to non-compliant refund policies.
Detailed Analysis
1. Core Revenue Decline, with Copyright Business Being the Only Stable Source
Taihe Music's revenue comes from three main sources: artist management and performance (54.4%), copyright operations (42.6%), and ticketing (3%). Overall revenue in 2025 dropped from 1.419 billion yuan in 2024 to 1.3 billion yuan, with the biggest decline coming from its artist management and performance business, which fell by 23% (possibly due to fluctuations in the performance market or fewer artist activities). In contrast, copyright operations generated 554 million yuan, accounting for nearly half of the total revenue, acting as a stabilizing factor. The gross profit margin also fluctuated: from 38% in 2023 to 27.4% in 2024 (perhaps due to increased payments to artists), and then rebounded to 30.5% in 2025, but it was still lower than in 2023.
2. Overreliance on One Artist for 30% of Costs
A significant portion of Taihe Music's costs is spent on artists. For two consecutive years (2024 and 2025), the company spent over 300 million yuan on "Supplier B," a prominent artist, accounting for 31.2% and 33.5% of total purchases respectively. This means nearly one-third of the company's costs were allocated to this one artist. If this artist encounters negative news (such as legal issues or a scandal), terminates the contract, or reduces cooperation, the company's revenue and profits could be severely affected, as its core business relies on these artists. The prospectus acknowledges that negative publicity about artists can limit music distribution and damage the company's reputation.
3. High Debt and Confusing Financial Management
As of the end of 2025, Taihe Music had a net current liability of 620 million yuan, meaning it owed more money in the short term than it could earn. This was mainly due to "convertible preferred shares" issued during previous financings (shares that investors have the right to request the company to repurchase). Interestingly, the company also invested 616 million yuan in cash management products during the same period. It's unclear whether the returns from these investments were higher than the interest on the debt or if there were issues with financial planning.
4. Lack of Artist Exclusivity, Threatening Business Stability
Taihe Music works with two types of artists: those under 3-5-year management contracts and those for specific events only. The problem lies with the latter, as they have no exclusivity obligations and can switch to competitors at will without any consequences. Some influential artists are in this category, and their performance frequency directly affects the company's revenue. For example, if JJ Lin collaborates with other companies, Taihe would receive less performance income; if key collaborators leave, the company's performance business could be severely impacted.
5. Dominant Ticketing Platform but Low Revenue
Taihe Music's ticketing platform, "Xiudong," is very successful, handling 18,000 events in 2025 with a transaction volume of 3.7 billion yuan, accounting for 75% of China's Livehouse market. However, this only generated 38.87 million yuan for the company, or 3% of its total revenue, indicating a low profit margin. Additionally, there are compliance issues: some tickets on Xiudong were labeled as "non-refundable," but the Ministry of Culture and Tourism requires tiered refund systems for large-scale events. If Xiudong does not comply, it could face penalties, affecting both transaction volume and revenue.
Conclusion
Although Taihe Music holds a significant position in the Mandarin music market, the issues revealed before its listing are concerning: declining revenue, excessive reliance on a single artist, high debt pressure, uncertainty around artist stability, and weak profitability with high compliance risks. These factors are important for investors to consider and may impact the company's listing process and future development.