Zhitong Financial APP learned that Tai Fung Culture Holdings Limited (Tai Fung Culture) submitted an application for listing to the main board of the Hong Kong Stock Exchange, with Future Finance as the exclusive sponsor, according to the disclosure by the HKEx on October 31. It is reported that the company submitted two listing applications to the Hong Kong Stock Exchange on June 30, 2020 and February 1, 2023.

According to the prospectusTaifeng Culture is a trading platform for well-known contemporary Chinese paintings.Taifeng Culture is headquartered in Suzhou, Jiangsu Province, China. Since its establishment in 2013, the company has strategically established operations in the Yangtze River region, especially in Jiangsu Province, where the art industry has benefited from a number of local government preferential policies. During the track record period, the company held 168, 352, 466 and 308 online or offline exhibitions respectively, most of which were held in the middle and lower reaches of the Yangtze River and most in Jiangsu Province.

According to the Frost Sullivan report, in terms of transaction volume, the year ended December 31, 2022The company ranks first among all contemporary Chinese painting trading agencies in China.The market share is 18.3%. According to the same report, contemporary Chinese painting usually refers to paintings created after 1949, and in the year ended December 31, 2022, (I) the trading volume of contemporary Chinese painting in the intermediary market was 11.6 billion yuan, accounting for 48.8% of the overall market size of traditional Chinese painting; and (ii) ranked first in the trading volume of traditional Chinese painting among all trading agents in China, with a market share of 8.4%.

According to Frost Sullivan's report, the Chinese painting trading intermediary market is moderately concentrated in the top 10 companies, accounting for 41.3% of the market share in terms of traditional Chinese painting transaction volume in 2022, of which the Group accounts for 8.9% of the market share, with a total transaction volume of 2 billion yuan in 2022, making it the largest trading intermediary in China. In particular, according to Frost Sullivan's report, according to the transaction volume of contemporary Chinese painting in 2022, the Chinese painting trading intermediary market is also moderately concentrated in the top 10 companies, accounting for 60.3% of the market share. Among them, the Group is the largest contemporary Chinese painting trading intermediary in China, with a market share of 18.3%.

From the perspective of the business model, the prospectus shows that Tai Fung Culture purchases contemporary Chinese paintings from the sellers of paintings (including artists and owners), who provide and entrust the sale of contemporary Chinese paintings for sale through the platform. In order to attract popular contemporary Chinese paintings, Taifeng Culture may pay a deposit to the seller of the painting in advance. After completing the sale, Taifeng Culture, on behalf of the seller of the painting, collects payment from the buyer of the painting and delivers the painting to it, and earns money by charging the seller a commission.

Tai Fung Culture pointed out that during the track record period, the actual amount of the commission deposit paid to the painting seller is decided through consultation between the painting seller and Tai Fung Culture on the basis of various factors, such as the market conditions of the contemporary Chinese painting market at the relevant time, the past transaction prices of similar categories of paintings and the credit status of the painting sellers.

Financially, for the six months ended June 30, 2020, 2021, 2022, and 2022 and 2023, Tai Fung Culture realized income of about 134 million yuan (RMB, the same below), 194 million yuan, 269 million yuan, and 110 million yuan and 205 million yuan respectively; annual profits were 31.858 million yuan, 67.595 million yuan, 86.030 million yuan and 28.225 million yuan and 73.599 million yuan respectively.

In addition, according to the prospectus, the company faces a number of risks and there are investment-related risks, any of the following developments may have a significant adverse impact on the company's business, operating results, financial position and future prospects: (I) there is no guarantee that the company will recover the full amount of the deposit paid to the client. (ii) companies may not be able to predict changes in the preferences and needs of painting buyers, or may not be able to identify, respond to and correctly judge future trends and changes in the contemporary Chinese painting market. (iii) if the company is unable to maintain its existing business relationship with contemporary Chinese painting sellers (including artists and painting owners), or fails to further identify, expand and develop the customer base of new contemporary Chinese painting sellers, the company's business may be adversely affected; (iv) the company may not be able to maintain or expand its relationship with painting buyers. (v) the company's business faces risks related to the identification, certification, verification and pricing of contemporary Chinese paintings, and its determination depends on the subjective judgment of management and staff; and (vi) all of the company's revenue during the track record period comes from the provision of painting agency services related to the sale of contemporary Chinese paintings, so the company's business is exposed to concentration risks.