HuaYuan Securities: Initiate coverage of STARPLUS LEGEND (06683) with a "buy" rating to create a new type of IP happiness experience platform.

Huayuan Securities released a research report stating that STARPLUS LEGEND (06683) is committed to integrating the emotional value of IP into diversified physical settings and innovative products, creating a tangible and perceivable experience of happiness for users. Through a series of strategic deployments, the company has transitioned from a traditional "IP creator and operator" to a "spreader of happiness", covering for the first time, giving a "buy" rating. Huayuan Securities' main points are as follows: Firstly, the rapidly growing STARPLUS LEGEND, based on the ability to cultivate time 1) The shaping of Zhou Tong's IP: The "Zhou Tong" IP is designed based on Jay Chou as a prototype and stylized as a two-dimensional character, jointly developed by the company and JVR music. The company has expanded the IP's influence by producing the "Zhou's Travel" series of reality shows. Currently, the official account of "Zhou Tong" on the Kuaishou platform has over 48 million fans. 2) The shaping of Liu Xianghong: In 2021, the company incubated the Liu Xianghong IP. In 2022, the operating team seized the opportunity of the rapid growth in home fitness demand during the epidemic, transitioning from traditional artist agency model to brand activities, advertising endorsements, program performances, creating the "Coach Liu" super-head fitness IP, and extending into new businesses such as e-commerce livestreams and short video customization. The number of fans on Liu Xianghong's Douyin account grew tenfold from April 2022 to May 2022, with nearly 60 million new fans. 3) The shaping of new consumer products: In April 2019, the company launched its core product, Moding Coffee, achieving market breakthrough by deeply associating it with the Zhou Xing brand. The popularity of "Zhou's Travel" in 2020 drove an increase in Moding Coffee sales, with the company selling 550,000 boxes of Moding Coffee in the second quarter of 2020, earning 333 million yuan, a 363% increase year-on-year. Next stop, the road of STARPLUS LEGEND 1) Investing in Galaxy, opening up cooperation channels with international superstars. The company subscribed to no more than 7% of the issued share capital of Galaxy Corporation, a well-known Korean artist management company owning globally influential resources such as G-Dragon, through its industrial fund. 2) Investing in Bird's Nest, seizing top venue resources, creating opportunities for cooperation with more celebrities. The company announced the acquisition of 1.17% equity in National Stadium Company Limited (Bird's Nest operator), becoming its sole private enterprise shareholder. STARPLUS LEGEND is expected to leverage its mature IP operation experience to deeply engage in the IP derivative business activities within the Bird's Nest. 3) Joining hands with Yushu Technology to promote the IP-ization and commercialization of Siasun Robot&Automation. The company's cooperation with the leading Siasun Robot & Automation company Hangzhou Yushu Technology has deepened, with both parties establishing a joint venture company with a 50% shareholding each, focusing on the development, operation, and sales of consumer-grade IPS and derivative products. The company has received orders for 6,000 units, totaling over 120 million yuan. The company is transitioning from a traditional "IP creator and operator" to a "spreader of happiness" through a series of strategic deployments The company is committed to integrating the emotional value of IP into diversified physical settings and innovative products, creating a tangible and perceivable experience of happiness for users. Regarding self-operated IP derivative products, STARPLUS LEGEND deeply cultivates core IPs such as "Zhou Tong" and has developed a self-operated product matrix covering categories such as trendy toys and clothing, transforming fans' emotional resonance into direct consumption experiences. In terms of scene expansion, the company has opened up opportunities for deeper integration of IP and scenes by strategically investing in the Bird's Nest, establishing windows for cooperation with more superstars. In the field of technological integration, the company's cooperation with Yushu Technology has led to the introduction of the "Superstar Dog" four-legged Siasun Robot & Automation, emotional connections that bridge virtual and real worlds. The bank believes that the company has successfully injected the emotional value of IP into a diverse range of touchpoints, from offline physical spaces to online interactions, from cultural experiences to technological products. This transformation allows fans' love for IP to evolve into perceivable, participatory, and shareable experiences of happiness in specific scenarios, the company's future core competitiveness will increasingly be demonstrated in its ability to provide an all-encompassing perception of happiness. Earnings forecast and rating With IP as the core, consumer product monetization, and omnichannel operation, the bank expects the company's total revenue for 2025-2027 to be 795 million/1.13 billion/1.53 billion yuan, with year-on-year growth rates of 36.2%/40.0%/39.5%, corresponding to (2025/12/24) PEs of 58/41/31 times. The company is transitioning from a traditional "IP creator and operator" to a "spreader of happiness" through a series of strategic deployments, covering for the first time, giving a "buy" rating. Risk warning: High dependence on IP, intensifying market competition risk, changes in industry regulatory policies.