Niche cultural and creative industries have a "ceiling too low"; Master Tong's stock price halves on its first day of listing

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March 31, Master Tong (00664.HK) debuted on the Hong Kong stock market, opening below the offering price. The company was priced at HKD 60 per share, with the first-day opening price at HKD 35.42, a 40.97% discount to the issue price. By the close of that day, Master Tong’s stock price was HKD 30.5 per share, down 49.17%. In the afternoon of April 1, the stock rebounded to around HKD 34.

Master Tong mainly produces copper cultural and creative products, including traditional cultural IP ornaments such as Guan Gong, God of Wealth, Sun Wukong, and Gourd, as well as some licensed IP collaborations (like Nezha, Transformers, etc.). According to public information, the company’s founder Yu Guang previously worked in the sanitary ware industry. His love for Guan Gong statues led him to want to buy a copper Guan Gong over a meter tall, but was told the price was as high as 1.2 million yuan. The huge price difference inspired him to start a business in the copper cultural and creative industry.

The prospectus shows that from 2022 to 2024, Master Tong’s revenue remained around 500 million yuan, approximately 503.2 million, 506.4 million, and 3.29M yuan respectively; net profits were 57 million, 44 million, and 79 million yuan; net profit margins were 11.3%, 8.7%, and 13.8%. Preliminary unaudited financial data for 2025 indicates the company’s full-year revenue will be 617 million yuan, an increase of about 8.1% year-on-year; net profit is approximately 47.9 million yuan, down about 39.4% year-on-year, marking a significant decline after the drop in 2023.

During the IPO application process, Master Tong emphasized its absolute leading position in its niche segment in its prospectus. It states that since its establishment, Master Tong has focused on integrating traditional craftsmanship with modern design and usage scenarios to develop copper cultural and creative products. According to a report by Frost & Sullivan, based on 2024 total revenue, Master Tong ranks first in China’s copper cultural and creative craft products market, with a market share of 35.0%. The market for copper cultural and creative craft products is relatively concentrated, with the top three players accounting for over 71.9% of the total market, making Master Tong’s leading position relatively stable.

However, looking at the entire cultural and creative market, copper cultural craft products like copper Guan Gong statues account for a very small proportion. This places Master Tong in a market with a relatively low ceiling. The prospectus shows that in 2024, copper cultural craft products accounted for about 6.3% of China’s metal cultural and creative craft products market, while Master Tong held only about 0.2% of the broader cultural and creative craft products market in 2024.

Against this backdrop, Master Tong is also trying to expand its business scope. Besides copper cultural and creative products, it has experimented with products made from wood, gold, silver, and plastic materials.

Financial data shows that from 2022 to 2024, revenue from Master Tong’s plastic trendy toys was 13.3M, 14.25M, and 4.23M yuan, accounting for 0.7%, 2.6%, and 2.5% of total revenue in those years; silver cultural and creative products earned 4.77 million, 3.32 million, and 1.27M yuan, making up 0.9%, 0.7%, and 0.7%; in 2024, gold cultural products revenue was 1.274 million yuan, accounting for 0.2%. Master Tong also offered limited wooden cultural products under the “Weitan” brand, but since the company decided to cease production of wooden cultural products from 2022, its revenue dropped sharply, accounting for 3.0%, 0.4%, and less than 0.1% of total revenue.

Clearly, Master Tong has yet to find its second growth curve. Plastic trendy toys, as the second-largest product line, account for only about 2.5% of total revenue. Some media outlets citing the “GuCang New National Goods Research Institute” report mentioned that Yu Guang had expressed interest in learning from Pop Mart, saying that Pop Mart focuses on trendy toys, while Master Tong produces traditional-themed trendy toys.

Additionally, the high offering price may have been a key reason for the stock’s first-day decline. The company set the IPO price at HKD 60 per share, with an implied P/E ratio of about 43 times based on 2024 annual results; using 2025 estimates, the P/E ratio exceeds 70 times. Before listing, Master Tong brought in a cornerstone investor, Jiantou International, which subscribed for HKD 30 million. Industry analysts also believe that the core consumer group for copper jewelry is “middle-aged men,” a fixed customer base with slow growth and low repurchase rates, which limits future growth potential.

Notably, in December 2025, the Hong Kong Securities and Futures Commission, in conjunction with the Hong Kong Stock Exchange, issued a concern letter to all sponsors involved in Hong Kong IPO applications, expressing worries about declining quality of recent Hong Kong IPO applications and some irregular practices, including excessive use of marketing language and selective presentation of industry data to exaggerate applicants’ market positions. Market commentary suggests that for companies in niche markets with small scale, low growth ceilings, and narrow customer bases, lacking clear sustainable growth paths, diversification capabilities, or strong barriers, it will be difficult to demonstrate long-term value and investor protection after listing.

(Author: Du Yuan)