New Stock Outlook | Da Hong Pao Makes Another Move into the Hong Kong Stock Exchange: "A Cup of Tea" Supports an IPO

After the initial submission failed nine months later, Wuyi Mountain Cultural and Tourism flagship once again knocked on the door of the Hong Kong Stock Exchange. On October 14, Impression Dahongpao Limited updated its prospectus, continuing its journey in the capital market, with CISI FIN and Kasen as its joint sponsors. V-shaped performance rebound with joy and concern for profit recovery path Public information shows that Impression Dahongpao is a state-owned cultural and tourism service enterprise headquartered in Wuyi Mountain, Fujian Province, with main business including performance and entertainment services, Impression Cultural and Tourism Town, and tea-themed hotels. Looking at its performance, for the first half of 2022 to 2025 (referred to as the reporting period below), Impression Dahongpao achieved revenues of approximately 63.039 million yuan, 144 million yuan, 137 million yuan, and 55.884 million yuan. The explosive growth in revenue in 2023 (a year-on-year increase of 128.3%) directly reflects the pent-up demand for tourism that was released after adjustments in epidemic prevention and control policies. However, the slight decrease in full-year revenue in 2024 compared to 2023 (a decrease of about 4.7%) may indicate that after the first wave of retaliatory consumption wave, the growth of the tourism market is returning to normal and facing certain economic pressure. Profit performance is even more impressive. The company successfully turned around its loss of 2.599 million yuan in 2022, recording profits of 47.504 million yuan and 42.809 million yuan in 2023 and 2024 respectively, significantly improving its profitability. The net profit for the first half of 2025 was 6.775 million yuan. A deeper analysis of the profit statement reveals that the improvement in profitability primarily comes from the improvement in gross profit. The company's gross profit increased significantly from 17.178 million yuan in 2022 to 83.122 million yuan in 2023 and 74.893 million yuan in 2024. The key factor in this rise is the gross profit margin. It can be calculated that the gross profit margin increased from 27.3% in 2022 to 57.8% in 2023, remaining at a high level of 54.6% in 2024. This change reveals the high operating leverage characteristics of the cultural and tourism industry: with fixed costs (such as actor salaries and equipment depreciation) relatively stable, revenue growth can bring a rapid increase in marginal profit. However, high gross profit also comes with hidden concerns. The slight year-on-year decline in gross profit and gross profit margin in 2024, as well as the decline in gross profit to 23.753 million yuan (gross profit margin of about 42.5%) in the first half of 2025, indicate the emergence of cost rigidity. As revenue growth slows down or slightly falls, the decrease in selling costs (mainly direct costs of performance operation) is not synchronized, eroding its profit space. In addition, administrative and other operating expenses greatly increased year-on-year in the first half of 2025, reaching 8.571 million yuan, requiring attention to whether the cost ratio can be effectively controlled in the future. "Success and failure both come from the same source": Deep dependence on a single IP The biggest highlight of Impression Dahongpao's business model, as well as its core risk, comes from its flagship product - "Impression Dahongpao" landscape performance. According to the prospectus, this performance is the "first large-scale outdoor landscape performance in Fujian Province" and has always been the absolute revenue pillar of the company. Data shows that in the past three complete fiscal years and the most recent two and a half years, the revenue contribution of this performance accounted for as high as 91.4%, 94.3%, 94.6%, 93.0%, and 87.8% respectively. These figures clearly indicate that the success or failure of Impression Dahongpao is almost entirely attributed to "Impression Dahongpao". This deep dependence is a double-edged sword. On the positive side, Impression Dahongpao has built a strong brand moat. As one of the "Impression Series" works led by the famous director Zhang Yimou, it has high artistic value and market appeal. It deeply integrates the natural landscapes and tea culture of Wuyi Mountain, providing an irreplaceable immersive experience, making it a "must-see project" for visitors to Wuyishan. This unique positioning ranked it eighth in the 2024 Chinese cultural and tourism performance market, giving it strong pricing power and a stable customer base. However, the negative side is that the prospectus also explicitly points out the risk of high dependence of performance and entertainment services on performance. This risk specifically manifests in: first, weak risk resistance ability, the company's performance is highly vulnerable to external shocks. Extreme weather, natural disasters, public health events, etc., could directly lead to the suspension of performances, adversely affecting the company's revenue; second, there is a clear growth ceiling, with a single performance having a physical limit on reception capacity. The number of performances per day and the number of seats per performance are fixed. This means that, without raising prices, there is a bottleneck in revenue growth. Third, pressure for innovation and iteration. Once the product becomes outdated and loses its appeal, the company will lack other significant sources of revenue for hedging. Diversification exploration faces a long and difficult road Realizing the risks of single dependence, Impression Dahongpao is not standing still. The company is trying to diversify its business by focusing on the two major business segments of "Impression Cultural and Tourism Town" and "Tea-themed Hotels". This strategic direction is undoubtedly correct. It attempts to leverage the customer flow advantage of "Impression Dahongpao" for secondary development and monetization, creating a one-stop experience of "watching performances + touring the town + tea culture-themed accommodation", extending the length of stay for tourists and increasing the average spending per visitor. However, in terms of revenue composition, these new businesses have not yet been able to shake the absolute dominance of the performance business. In the first half of 2025, the proportion of performance revenue was still as high as 87.8%, meaning that new businesses contributed only about 12.2% of the revenue. While diversification exploration has begun, it is still in its early stages, awaiting time to verify its scalability and profitability. In addition, the operation of cultural and tourism towns and themed hotels involves a different logic from the performance business, involving more complex format management, higher capital expenditure, and more intense market competition. Their success depends not only on the flow effect, but also on their own product strength, operational efficiency, and brand shaping. For Impression Dahongpao, which has long been deeply involved in the performance business, this is undoubtedly a profound internal capability challenge. In summary, Impression Dahongpao's journey to the Hong Kong stock market is not just a fundraising event, but a comprehensive test of the sustainability and growth potential of its business model. Whether this "Dahongpao" from Wuyi Mountain can brew long-lasting sweetness in the boiling water of the capital market remains to be seen.