Core Viewpoint - Suplay Inc is seeking to become the "first card stock" by submitting its prospectus to the Hong Kong Stock Exchange, highlighting its leading position in the collectible card market in China and its significant growth in revenue and profit margins [1][2][3]. Financial Performance - For the first three quarters of 2023 to 2025, Suplay reported total revenues of 146 million yuan, 281 million yuan, and 283 million yuan, with adjusted net profits of 15.97 million yuan, 64.81 million yuan, and 86.42 million yuan respectively [1][3]. - The company's flagship collectible card product saw sales volume increase from 1.56 million units to 4.58 million units, with average revenue per unit rising from 31 yuan to 43 yuan [1][3]. - The revenue share from collectible cards rose significantly from 32.9% to 70.0%, with gross margins increasing from 57.9% to 69.5%, leading to an overall gross margin exceeding 54% and an adjusted net profit margin of 30.5% [1][3][4]. Dependency on Licensed IP - Suplay's revenue growth is heavily reliant on licensed intellectual property (IP), with licensed IP contributing 54.2% of total revenue in 2023 and projected to increase to 95.0% by September 2025 [2][5][6]. - The company has seen a significant increase in revenue from licensed IP, with a 202.1% year-on-year growth in 2024, reaching 239 million yuan [2][5]. - The reliance on top licensed IP is increasing, with the top five licensed IPs accounting for 77.7% of revenue by 2025, while self-owned IP revenue has decreased by 80.2% [3][5][6]. Risks Associated with IP Licensing - Suplay's business model is vulnerable due to its dependence on non-exclusive licensing agreements, with many agreements set to expire soon, creating uncertainty for future revenue [5][6][19]. - The cost of IP licensing has risen significantly, with costs reaching 31.59 million yuan in the first three quarters of 2025, accounting for approximately 11.1% of total revenue [5][6][18]. - The company acknowledges that the success of its licensed IP products is contingent on factors beyond its control, such as the potential non-renewal of popular IPs [6][19]. Inventory and Valuation Concerns - Suplay has reported increasing inventory impairment provisions, with provisions exceeding the book value of inventory, indicating potential devaluation risks [7][20]. - The inventory value for 2023 and 2024 was reported at 21.08 million yuan and 33.92 million yuan, with impairment provisions of 8.83 million yuan and 23.28 million yuan respectively, showing a growing trend [20]. - Concerns are raised regarding the long-term value of collectible cards, as the market for collectible cards is projected to grow but remains a small fraction of the global entertainment goods market [21].

Core Viewpoint - Suplay Inc. has submitted its IPO application to the Hong Kong Stock Exchange, focusing on high-end collectible non-battle cards, but faces risks related to its reliance on licensed IPs and increasing competition in the card industry [1][5]. Company Overview - Suplay was founded in 2019 and initially sold trendy toys through a WeChat mini-program. It acquired a toy design and manufacturing company in 2021 and launched its own brands, becoming a significant player in the collectible card market [2]. - The company ranks first in China's collectible non-battle card market by GMV and is the only Chinese brand among the top five global collectible non-battle card brands [2]. Market Strategy - Suplay targets adult consumers with a strong emotional connection to classic Western IPs, offering collectible items that are more accessible than their Western counterparts. The company emphasizes high-end products with a single card price exceeding RMB 10 [3]. - Approximately 99.5% of Suplay's collectible card consumers are adults, with women making up 52.7% of the customer base [3]. Financial Performance - Suplay's revenue from collectible and consumer products is growing, with revenues of RMB 146 million, RMB 281 million, and RMB 283 million projected for 2023, 2024, and the first three quarters of 2025, respectively [3]. - The revenue share from collectible products has increased significantly, rising to 70% in the first three quarters of 2025, while consumer products dropped to 30% [4]. IP Dependency Risks - Suplay heavily relies on licensed IPs, with revenue from licensed IPs increasing to 95% by the first three quarters of 2025, while revenue from self-owned IPs has decreased to 4.1% [5]. - The company faces uncertainty regarding its largest revenue-generating IP, as its licensing agreement has expired, and there is no guarantee of renewal [6]. Competitive Landscape - The card industry is experiencing rapid growth and increased competition, with several companies pursuing IPOs and significant investments in the sector [7]. - Despite the industry's attractiveness, the path to capitalization remains challenging, with no pure card companies having successfully gone public yet [7].

Core Insights - The collectible card market in China is entering a monetization phase, with companies like Hitcard and the industry leader, Kayo, pursuing IPOs [1][4] - Hitcard, founded in 2021, focuses on adult collectible cards and has secured significant investments from various entities, including a 10% stake from Reading Group [1][3] - The company has seen substantial revenue growth, achieving approximately 400 million RMB in revenue last year, with a projected 100% growth this year [3][4] Company Overview - Hitcard specializes in adult collectible cards and has developed partnerships with popular IPs, including anime and film franchises [3] - The company has launched successful products, such as the "Celebration Year" card series, which generated a GMV of 20 million RMB [3] - Hitcard's flagship store on Taobao features a card from the drama "Hush, the King is Hibernating," which has sold over 7,000 units, outperforming many well-known anime IPs [3] Market Analysis - The collectible card market in China is dominated by a few major players, with Kayo holding a 71.1% market share and generating 10.057 billion RMB in revenue [4] - The market is still in need of regulatory improvements, which may delay IPOs for companies like Kayo and Hitcard [4] - Compared to developed countries, China's per capita spending on collectible cards is significantly lower, indicating substantial growth potential in the coming years [4] - The collectible card market in China is projected to reach 44.6 billion RMB by 2029, with a compound annual growth rate of 11.1% from 2024 to 2029 [4]

Core Insights - The collectible card market is entering a "monetization era" with companies like Hitcard and the industry leader, Kayo, pursuing IPOs [1][4] - Hitcard, founded in 2021, focuses on adult collectible cards and has secured significant funding from various investors, including major players like Reading Group and CyberAgent [1][3] - The company has achieved approximately 400 million RMB in revenue last year, with a projected 100% year-on-year growth this year, and has already reached profitability [3][4] Company Overview - Hitcard is a brand under Shanghai Qixing Network Technology Co., Ltd., specializing in collectible cards for adults [1] - The company has developed partnerships with popular IPs, including anime and film franchises, enhancing its product offerings [3] - Hitcard's collaboration with Reading Group allows access to over 1,000 IPs and offline channel resources [1] Market Dynamics - The collectible card market in China is still developing, with significant growth potential compared to developed countries [4] - In 2024, the top five companies in the collectible card industry will hold 82.4% of the market share, with Kayo leading at 71.1% [4] - The market is expected to grow at a compound annual growth rate of 11.1%, reaching 44.6 billion RMB by 2029 [4]

Core Insights - The collaboration between KAYOU Animation and China Aviation Cultural Creative has led to the launch of a new series of collectible aircraft cards at the China International Fair for Trade in Services, showcasing the integration of culture and technology [1][2]. Group 1: Event Overview - The China International Fair for Trade in Services serves as a barometer for the development of service trade in China and a platform for cultural exchange and industrial cooperation, attracting over 70 countries and regions [1]. - The theme of this year's fair is "Empowering Technology, Leading Creativity," focusing on traditional Chinese culture and new cultural productivity [1]. Group 2: Product Highlights - KAYOU's exhibition features a diverse range of global IP products, including collaborations with international brands and reinterpretations of traditional Chinese culture [2][3]. - The "Chinese Aircraft Collection Card - Winning in Air and Space" series, launched to commemorate military parades, includes various military aircraft models and innovative "imaginary cards" depicting future aircraft concepts [3]. Group 3: Cultural Impact - The dual transformation of "international IP localization and traditional IP trendification" allows each card to serve as a cultural window, attracting both foreign and domestic audiences [3][6]. - The exhibition aims to make Chinese culture more accessible and engaging to a broader audience, moving beyond traditional cultural exports [6]. Group 4: Market Strategy - KAYOU has been actively participating in international toy exhibitions, such as those in Jakarta and Tokyo, to capture local gaming culture trends and customize products for regional preferences [4][5]. - The strategy of launching customized products in emerging markets while showcasing craftsmanship in mature markets is seen as key to expanding KAYOU's global presence [5].

Summary of Conference Call on the Toy Card Industry Industry Overview - The toy card industry has been significantly impacted by the entry of Japanese brands into the Chinese market, which has altered the sales model and led to the closure of many low-quality stores [1][3][4]. Key Points Company Performance - 卡游 (Kawoo) has successfully adapted to market changes by enhancing its product line and expanding distribution channels, resulting in a dramatic sales increase in 2024 [1][4]. - 凯钰 (Kaiyu) has a competitive edge in IP procurement, allowing for rapid selection of popular international IPs and quick product updates, leading to high revenue [1][6]. Market Dynamics - The influx of Japanese brands like 宝可梦 (Pokémon) has educated consumers in China about card games, but many small, poorly managed stores failed to meet consumer needs, leading to a market shakeout [2][3]. - The overall market evolution has improved consumer awareness and acceptance of card games, benefiting companies like 卡游 [4]. Distribution Strategies - 卡游 focuses on high-quality first-level distributors, while 布鲁可 (Blucor) employs a traditional toy industry model that includes multiple levels of distributors [7][8]. - The differing strategies affect how each company gathers market feedback and manages pricing [9]. Product Lifecycle Management - Both 卡游 and 布鲁可 rely on established IPs for product development, facing challenges in creating original IPs due to the high investment required [11][12]. - Continuous product updates and innovative collaborations are essential for extending the lifecycle of their offerings [13][14]. Supply Chain Considerations - 卡游 benefits from owning its production facilities, allowing for better control over production timelines and market responsiveness [16]. - 布鲁可's reluctance to invest in a complete supply chain is attributed to high costs and the nature of its product offerings [17]. Competitive Landscape - The domestic derivative product market is growing slowly, with companies like 卡游, 布鲁可, and 泡泡玛特 (Pop Mart) competing closely, often mirroring Japanese market leaders [10][24]. - 泡泡玛特 has differentiated itself through original content and collaborations with well-known brands, while 卡游 and 布鲁可 leverage rich storytelling from their IPs [10][11]. Future Outlook - 卡游 plans to expand into international markets, particularly in Japan and Thailand, while facing challenges in the competitive Japanese market [18][19]. - 布鲁可 is accelerating its product launch pace to maximize revenue from newly acquired IPs [27]. Additional Insights - The choice of IP and product form must align with the company's strengths and market demands, considering factors like target demographics and cultural relevance [22][23]. - The ability to manage production costs and maintain quality is critical, especially in the printing and manufacturing processes [25][26].