New Stock Preview | 2.1% Market Share Builds the "Invisible Barrier" of Independent Music: What is the geometric value of Taihe Music's complete industrial chain closed loop?

On June 22nd, Taihe Music submitted its prospectus to the Hong Kong Stock Exchange, with Deutsche Bank and China Securities Co., Ltd. acting as joint sponsors, marking the official start of the capitalization journey for this leading player in the Chinese independent music industry. As the leader in the global independent Chinese music content and service market, Taihe Music has built a one-stop ecological chain covering "music copyright library operation, artist management and live performances, ticketing and other services" based on iconic labels such as Taihe Field and Ocean Butterflies Music and over 860,000 recorded music copyrights. Profit and concerns behind the 13 billion revenue The prospectus shows that Taihe Music is on a nonlinear growth curve from 2023 to 2025, showing a "fluctuating income, gross profit recovery, and net profit surge" trend. After a sharp increase in revenue to 1.419 billion yuan in 2024, a 64.9% year-on-year increase, revenue fell to 1.3 billion yuan in 2025, an 8.4% decrease, which is not uncommon - live performance business naturally has the characteristic of uneven annual scheduling, with the concentration of major events in 2024 contrasting with the normalization of events in 2025. However, what is more noteworthy is that in the context of declining revenue, gross profit has increased from 388 million yuan to 397 million yuan, and gross profit margin has recovered from 27.4% to 30.5%. At the same time, operating surplus has surged from 1.18 billion yuan to 1.78 billion yuan, an increase of 51.6%. The core proposition revealed by this deviation in data is that Taihe Music's profit driver is shifting from "scale expansion" to "structural optimization", and whether this transformation is sustainable will be a key watershed in evaluating its investment value. Changes in revenue costs provide the first clue. Revenue costs were as high as 1.031 billion yuan in 2024, accounting for 72.6% of revenue, mainly due to the high artist appearance fees, venue rental, and production costs of the performance business. Revenue costs fell to 904 million yuan in 2025, accounting for 69.5%, but the absolute value is still high. If we split the business structure, artist management and performance revenue dropped by about 23% in 2025, while copyright operation revenue grew by nearly 18%, indicating that cost reduction is more of a result of business structure switching, rather than a substantial improvement in single project profitability. In other words, Taihe Music is transitioning from a "heavy asset, high volatility" model driven by performances to a "light asset, high stability" model driven by copyrights. This direction aligns with the macro trend of the global music industry returning from a flow economy to a copyright economy, but the transformation itself comes with birth pains - the contraction of the performance business may weaken the stickiness of artist management, while the growth of the copyright business is highly dependent on the continuous monetization efficiency of existing IP, creating a delicate balance between the two. The rigid characteristics of expenses further confirm this judgment. From 2023 to 2025, sales and marketing expenses decreased from 121 million yuan to 123 million yuan, general and administrative expenses remained around 101 million yuan, and research and development expenses remained in the tens of millions. The three expenses combined decreased from 26.8% to 18.1% of revenue. The compression of the expense ratio did not come from active cost reduction, but from the passive dilution effect of the revenue base expanding significantly in 2024. When revenue fell in 2025, expenses did not decrease in sync, showing that the company's investments in artist management, copyright operation, and platform maintenance have a strong rigidity. This characteristic is common in the music industry - maintaining a music library, artist relationships, and user experience of ticketing platforms all require continuous spending, but if future revenue growth continues to slow down, an increase in the expense ratio will directly erode profit margins. How to overcome the challenges of "head dependence" and IP metabolism? From an industry competition perspective, Taihe Music's financial performance carries deeper strategic significance. The global independent Chinese music content and service market had a size of approximately 61.8 billion yuan in 2025, with Taihe Music's revenue of 1.3 billion yuan corresponding to a market share of about 2.1%, which may seem low, but in the highly fragmented music content industry, it is already in a leading position. However, market share advantage does not equate to growth certainty - what truly determines its long-term value is not the 860,000 recorded music copyrights, but the efficiency of the IP system's self-iteration. Taihe Music's real moat lies in the integration capability of the entire industry chain. From copyright production, artist management, event organization to ticket distribution, it has built a rare closed-loop ecosystem in China. The advantage of this model lies in its revenue diversification and anti-cyclical resilience: when the live event market is cold, stable licensing revenue from the copyright library provides a bottom line; when industry hotspots shift, the data assets of the ticketing platform provide precise guidance for artist incubation. The revenue from ticketing and other services in 2025 was approximately 184 million yuan, although relatively small, behind this is the advantage of the Showtime platform with about 75% market share in the Livehouse ticketing market, forming Taihe's invisible barrier in the independent music vertical. This ecosystem should provide systematic support for continuous IP output, but the current situation exposes structural contradictions. Looking to the future, the Chinese music market is expected to reach 107.9 billion yuan by 2030, with a compound annual growth rate of approximately 12.7% from 2025 to 2030, significantly slower than the previous five years' 34.8% growth. The industry is transitioning from "explosive growth" to a new stage of "refined operation", and the core challenge facing Taihe Music has shifted from "growing revenue" to "thickening profits". The sustainability of copyright operation revenue depends on the metabolic ability of the content library - while the tail effect of classic songs is significant, the efficiency of incubating new IPs directly determines long-term growth potential. The prospectus does not provide a clear answer to the proportion of top content with sustained commercialization capabilities among the 860,000 recorded products. What is more worthy of attention is the "head dependence" issue that artist management and performance businesses need to solve: the decline in performance revenue in 2025 has proved that the disturbance of single artist or single year performance schedules is too great for overall performance, and once core artist contracts expire or market heat shifts, performance fluctuations will be significantly amplified. In conclusion, Taihe Music is in a strategic transition from "performance-driven" to "copyright-driven". The surge of operating surplus by 51.6% to 1.78 billion yuan in 2025 demonstrates the positive effects of this direction on the profit side, but the sustainability of the transition still depends on two core variables: first, whether copyright operations can establish a stable and efficient mechanism for incubating new IPs beyond the long-tail revenue of existing IPs, transforming the 860,000 music library from "quantity advantage" to "quality advantage"; second, whether artist management and performance businesses can reduce dependence on single top artists through diversified matrix construction, transforming live event revenue from "pulse fluctuations" to "step-by-step growth". For investors, Taihe Music's long-term value lies not in its current revenue scale of 13 billion yuan, but in its ability to transform its 2.1% market share into quantifiable bargaining power and sustainable cash flow creation capability in the new era of refined operation.