Hong Kong Stocks "Said" | The entertainment industry for Hong Kong-listed companies is still tough to "mix" in

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Reporter: Zeng Zijian | Editor: Yuan Dong

Recently, the entertainment industry among Hong Kong stock companies has been very lively.

First, Television Broadcasts (TVB) finally returned to profitability after many years, thanks to the drama “Queen of News 2” starring Sheren Tang.

Next, “the first stock of artist management,” Yuehua Entertainment, made a big move by planning to grant 12.5 million shares to Wang Yibo as a reward, worth over 20 million HKD.

The reason Yuehua Entertainment is willing to spend such a large sum to reward Wang Yibo is very simple: only by deeply binding top artists can the company solidify its core business. Take Yuehua Entertainment’s recently announced 2025 annual report as an example; the company’s revenue last year was 900 million, with 748 million coming from artist management (income generated from artist concerts, etc.), accounting for a staggering 82.5%. Wang Yibo is undoubtedly one of the core figures in their artist team. Therefore, for Yuehua Entertainment, as long as Wang Yibo continues to sign contracts with the company, there won’t be much concern about revenue for at least the next few years.

In May of last year, Yuehua Entertainment’s stock price doubled due to the “Wang Yibo concept.” However, looking at the longer term, its overall trajectory has still been in a sluggish adjustment state over the past year. Moreover, I found that other Hong Kong stocks that are closely tied to top artists also performed poorly. For instance, although TVB turned a profit last year, its stock price is still falling, recently hitting a new low. Another company, Superstar Legend, which is closely tied to Jay Chou, also saw significant stock price fluctuations, soaring to 11.15 HKD on March 17 but dropping to around 6 HKD nine trading days later.

The aforementioned companies all rely on currently popular artists to maintain their image. Other companies, like the Gao Group, which is linked to Stephen Chow, have a market capitalization of only over 300 million HKD. These companies are not favored by investors, likely due to unstable performance and high stock price volatility. The only puzzling case is the China Star Group under the Xiang family, whose stock price increased by 422% last year and has risen by 156% since the beginning of this year. However, China Star Group issued a profit warning yesterday, stating the company expects a loss of 400 million to 480 million HKD last year. In this light, what do you think are the factors supporting the significant rise in China Star Group’s stock price? It’s honestly hard to understand.

In my opinion, these entertainment companies among Hong Kong-listed firms are not suitable for ordinary investors to allocate. First, the performance and stock price elasticity of these companies are too great, making it difficult to grasp trend opportunities amid wild fluctuations. Secondly, these companies may be overly dependent on single artists; if an artist terminates their contract or their popularity quickly declines, it could pose risks to the company. Therefore, the uncontrollable potential risks that exist will ultimately be borne by the investors. Lastly, I want to mention that the liquidity trap in the Hong Kong stock market is quite evident, with many companies having low trading volumes; if one must participate, it is best to focus on companies with relatively good liquidity.

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Cover image source: Zhang Jian

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Editor: Gao Jia