According to Merriam-Webster, the word, Hypebeast, generally refers to a person who is devoted to acquiring fashionable items, especially luxury clothing and shoes. Typically, they will wear a mixture of streetwear names such as Supreme, Off-white, Antisocial Social Club, and Bape.
In a 2019 article by Strategy&, it mentioned that Streetwear has emerged as one of the most striking retail and fashion trends in recent years. Consumers often rallied together via social media to be the first to buy products from a particular brand, either in-store or online. The anticipation of a time-limited chance to buy helps create a tight-knit and almost cult-like relationship between streetwear brands and their consumers.
Source: Strategy&
This has helped to propel streetwear from being an eye-catching fashion phenomenon into a multi-billion dollar retail market today. One company that is standing at the forefront of this trend would be Hypebeast Limited (0150.HK).
From A Sneaker Blog To A Listed Digital Media Empire
Hypebeast was founded by Mr. Kevin Ma Pak Wing back in 2005, which first started as a sneaker blog. In 2016, Hypebeast was listed on HKEX’s secondary board, Growth Enterprise Market (GEM), and subsequently transferred its listing status to HKEX’s Mainboard in 2019.
Currently, Ma is the single largest shareholder in the company (73.70% stake) and holds the position of Executive Chairman and CEO in Hypebeast.
What started as a personal passion project, Hypebeast has since evolved into a digital media and e-commerce group, standing at the forefront of fashion and culture. The group comprises of three major divisions:
- HYPEMEDIA (Online editorial & social media platform)
- HBX (e-commerce platform and offline store)
- HYPEMAKER (In-house creative production agency)
Awards Achieved, Cooperation with Avex Entertainment
Hypebeast was named as one of Forbes’ “Asia’s 200 Best Under A Billion” in 2018 and one of Fast Company’s “Most Innovative Companies” in 2017. In an interview with Forbes back in 2018, Ma has highlighted that his ultimate aim is to create a brand that lasts beyond his lifetime and which people still gravitate towards in 100 years.
Kudos to his visionary thinking, Ma has since led Hypebeast to a series of achievements. One of them would be the partnership with Avex Entertainment in September 2020.
Established in 1988, Avex is the largest entertainment company in Japan, with business spanning across talent management, hosting live events and music/video streaming subscription services.
Through this partnership, Hypebeast aims to further develop its business segment in Japan with the support of Avex’s strong domestic connection, wide influencer network, and strength in content distribution to boost Hypebeast Japan into the next phase of growth and further Hypebeast’s penetration in Japan market.
With that, Avex became a strategic long-term partner with Hypebeast. Furthermore, to solidify this partnership, Avex has agreed to subscribe to a total of 6.53 million shares at a subscription price of HKD1.05 per share, which represents a premium of approximately 14% to the closing price of HKD0.92 at that point of the agreement.
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Active On Social Media With A Long List Of Major Clients
Hypebeast has achieved a monthly page view of 50 million, with 15.6 million of them belonging to monthly unique visitors. Their total social media followers of 26.2 million are also at the top of the industry. This shows the attractiveness and influence that Hypebeast has in the industry.
Source: Hypebeast
With such an extensive reach and a huge amount of monthly page views, Hypebeast has managed to attract a long list of major clients, as seen from below. From the list, we can see that Hypebeast’s clients come from different industries, from luxury fashion houses like Louis Vuitton and Gucci to car brands such as Lexus and Infiniti. These clients will work with Hypebeast by making use of their digital marketing channels to promote their products/services, hoping to capture a wider range of fashion-conscious audiences.
Source: Hypebeast
Record-Breaking Results For 1H FY2022
In the latest 1H2021/2022 result, Hypebeast delivered a record-breaking financial performance, with revenue growing by 55% year-on-year to HKD441 million. Both its gross and net profit margin shows significant improvement. In particular, its net profit margin has doubled to 14% in the latest reporting period. This goes to show that the robust growth is boosting Hypebeast’s bottom line.
Despite the strong performance, we have to take note that the growth of its 1H FY2022 performance is being partially benefited from a low base effect, as its 1H2020/2021 results declined due to the COVID-19 pandemic.
Nonetheless, when comparing the figures against the pre-pandemic period (1H 2019/2020), Hypebeast managed to perform better than ever, which shows that the company has shrugged off the effects of the pandemic and is back on its growth track.
Source: Hypebeast
On the other hand, its E-commerce platform, HBX, continues to see growth in its gross profit even as revenue remained flat. The higher gross profit was attributed to the higher average unit value and order value in the financial period. Hypebeast mentioned that this trend was due to customers’ willingness to spend on high-quality products.
Source: Hypebeast
Attractive Valuation With Decent Growth Prospects
Hypebeast has grown by leaps and bound across the years, from being just a sneaker blog to a mainboard-listed company on the Hong Kong stock exchange, that is worth HKD1.6 billion (S$280 million) in market cap today.
No doubt, Ma is an influential figure within Hypebeast as he brings about his idea and philosophy to the company and pushes Hypebeast to scale greater heights. On top of that, Ma’s majority stake in Hypebeast shows that his interests are aligned with other shareholders.
Also, the partnership with Avex Entertainment is just one example that showcases his ability to guide the company to expand into a new market to secure future growth. With all these initiatives in place, it is not hard to imagine the amount of growth it has in the medium to long term horizon.
At the point of writing, Hypebeast’s share price stood at HKD0.80, which has fallen by 27% year-to-date. No doubt its share price performance is affected by the broader market decline, this also allows Hypebeast’s share to be more attractive in terms of valuation, with a trailing Price/Earnings ratio of less than 15 times. With a decent financial performance and growth prospects on hand, this could very well be a growth counter for investors to keep on their watchlist.
Source: Google Finance
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4 Stocks This Week is not a recommendation from us to buy or sell any of these stocks. For investors who are keen to find out more, you should continue researching about them before making your investment decisions.
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