Shares of Star Plus Legend (6683), founded by the mother of singer and actor Jay Chou, were once traded 10 times more than banking behemoth HSBC (0005) on the Asian superstar’s Douyin debut, joining the "new consumption" investment frenzy in Hong Kong.
However, the mainland investor-dominated trading pattern and the high dependence on Jay Chou's celebrity could add risks to the investment, an analyst warned.
After Jay Chou announced his debut on Douyin on July 9, Star Plus Legend surged more than 35 percent, marking a total gain exceeding 180 percent in past weeks. The stock was once up 22.02 percent, priced at HK$15.74, with a transaction volume of HK$2.97 billion. It has since retreated to HK$10.10.
Mainland investors have once again stirred up the market. In recent years, Star Plus Legend has experienced multiple unusual price movements coinciding with Jay Chou's concerts.
The most bizarre incident occurred last September during his Chengdu concert – Star Plus Legend's stock price plummeted 80 percent in a single day on heavy trading volume, hitting a record low of HK$0.24 post-IPO.
Lam Ka-kei, investment director at Meta Securities, believes the surge in Star Plus Legend’s stock price was largely driven by mainland capital flowing in through the Stock Connect program.
Lam said mainland investors were rushing into volatile stocks on the slightest hint of news. Star Plus Legend has a free float of only about 30 percent, so when liquidity tightens, its price can easily be pushed up.
Despite the company’s explosive rise, Jay Chou's paper wealth has not benefited – neither he nor his wife, Hannah Quinlivan, hold any shares.
However, Jay’s mother Ye Hui-mei holds an indirect stake of approximately 12.45 percent through a joint venture with Yang Jun-rong, a co-founder of the company. Based on market value, her stake is worth over HK$1.5 billion.
Besides Star Plus Legend, Fengshang Culture, which is involved in Jay Chou's concert planning, also rose 10 percent – hitting the daily upper limit and triggering China's trading halt mechanism.
Market analysts estimate that Jay Chou earns between HK$100 million to HK$200 million per concert in Hong Kong. With over 20 concerts scheduled this year, a portion of the profits from several shows will go to Star Plus Legend, boosting its performance.
Last year, the company invested in Jay Chou's concerts in Shenzhen and Nanjing, securing a five percent profit share.
Taking advantage of Jay Chou’s concerts at Kai Tak Sports Park, Star Plus Legend publicly announced in a high-profile media interview that the group will expand sales channels for its Classmate Chou products this year, including opening flagship stores and installing vending machines in mainland China.
Over the past five years, Classmate Chou IP products have collaborated with over 200 platforms, launching more than 700 product categories, including figurines, food, and cultural merchandise, effectively turning it into a major business.
Its latest and thus far most eye-catching move was the official announcement that Jay Chou has joined Douyin, strengthening and expanding the Classmate Chou IP as a moat for Star Plus Legend’s fan traffic.
Jay Chou had previously joined Kuaishou (1024), Douyin’s archrival, five years ago, where he has since posted 261 works and conducted seven livestreams.
Compared to last year when Star Plus Legend’s stock was hyped to unsustainable levels, Chou is confident that this is not another bubble.
The Douyin platform has huge future monetization potential, including livestream commerce and other product benefits, creating a Jay Chou IP plus Star Plus Legend "collaboration plus new consumption" model.
This gives the company a new opportunity that it can fully capitalize on, leading to a new breakout in stock price.
New consumption has in fact been one of the hottest investment themes in Hong Kong stocks this year.
This refers to emerging brands that drive new consumer habits, with customers often willing to pay a premium for such products, according to investment banks.
Leading examples in the category include Pop Mart (9992), which has taken the world by storm with its Labubu collectibles, and Laopu Gold (6181). Pop Mart’s stock has surged 180 percent this year, while Laopu Gold has soared 240 percent.
The group's performance has been rather unstable over the past five years. In 2024, revenue hit a five-year high of nearly 584 million yuan (HK$590.6 million), but shareholder profit dropped to 56 million yuan, below 2020 and 2022 levels. This revenue surge was largely driven by two TV programs – J-Style Trip and A Tune Music – boosting Star Plus Legend's IP-driven business. While the company's reliance on Jay Chou-related revenue has decreased from 90 percent in 2019 to around 60 percent, the risk remains concentrated.
Meta Securities' Lam said Star Plus Legend is highly dependent on the single IP of Classmate Chou. Although the group is trying to cultivate multiple star IPs, successful cases are limited to Jay Chou, reflecting the low success rate and high cost of building intellectual property.
Last year, the revenue from Star Plus Legend's star IP management business, which involves collaborating with celebrities and influencers to obtain sponsorship from brand owners, dropped by about 8.4 percent year-on-year.
Lam said the profitability contribution of Classmate Chou entering Douyin may be limited unless a breakthrough business model, such as Jay Chou personally live-streaming sales, is introduced. Otherwise, the company's stock price may face significant adjustment risks.
“Currently, the price-to-earnings ratio exceeds 200 times, far exceeding reasonable levels. Without other positive news, the likelihood of the stock price doubling again is low,” Lam said.
ANSON LUK
