Scarce IP+fan economy = blockbuster manufacturing machine? Lehua Entertainment (02306) teamed up with Wakuku to decode trendy alchemy

Labubu, which is “hard to find in a box,” was sold for more than one million yuan. While the world's top ability to attract money was astonishing, it also made the capital market witness to the astonishing explosive power of IP value realization.

Meanwhile, the recent deep marriage between Lehua Entertainment (02306) and the emerging trendy gaming platform Wakuku has also made investors look forward to the hope that it will open up a definitive path of explosive incubation in addition to the Labubu myth.

The golden closed loop of building a “star IP - scarce and trendy game - fan economy”

Also from an ancient forest, they are all cute and slightly smelly plush dolls, and both Labubu and Wakuku are at the top of the trend IP.

Lehua Entertainment collaborated with Wakuku, which already has its own popularity, to establish a “golden closed loop of “star IP - scarce trendy game - fan economy”, and is probably writing an inevitable path of explosive industrialization.

First, top artists are deeply empowered to provide Wakuku with a rich wealth of native IP. Lehua Entertainment has a matrix of top artists such as Wang Yibo, Cheng Xiao, and Fan Chengcheng, all of which have unique stage symbols and fans' emotional memories. This is a great help in designing trendy characters with a sense of narrative and giving IP unique emotional value.

Second, Wakuku's platform-based operations unleash potential. With its accurate Gen Z user reach, immersive virtual display technology (such as 3D rotation, AR interaction), and active community ecology, Wakuku provides Lehua IP with a closed loop of “display-plant-transformation-socialization” that far exceeds traditional shelves. For example, Wakuku launched a special product, “Fat Tap,” which debuted at MINISO LAND's No. 1 store in Beijing, and quickly sold out within 2 hours.

Furthermore, with Leroy Entertainment's mature fan data and Wakuku's DTC channel, the two parties have achieved an efficient link of “insight into fan needs - agile product development - limited and accurate delivery”. According to the Zhitong Finance App, Wang Yibo's custom SKU was sold out in Wakuku within 48 hours and triggered a premium in the secondary market, confirming the explosive power of the superimposed effect of “star+scarce design+platform momentum”.

In short, the collaboration between Leroy Entertainment and Wakuku is based on the entertainment industry's precision IP operation as the engine and the digital platform as the superlauncher to continuously monetize “fan value” and build a new commercial universe.

In the long run, with the cooperation between Leroy and Wakuku, the company's in-depth development of the IP universe can be expected. Expanding from the image of a single spokesperson to multi-dimensional combinations of CP, virtual idols (such as A-SOUL), and classic stage/film and television characters, to build a “Lehua Trendy Play Universe” to enhance the thickness and life cycle of the product matrix. Second, global IP exports are slowly unfolding. Using Wakuku's cross-border channels and the influence of Leroy's overseas artists, the verified model was replicated in emerging trendy entertainment markets such as Southeast Asia, to achieve cultural outings.

CICC also said that the successful collaboration between Leroy Entertainment and Wakuku will efficiently monetize the huge fan assets accumulated by Lehua through the high-margin, highly sticky carrier of Trendy Games. Its self-built channel (Wakuku) control and data feed back form a moat that differs from traditional licensing models, and the valuation logic needs to be re-evaluated.

Follow the trend and welcome the millet economy: a new consumer password under the fan economy

In 2024, the first year of the “millet economy” arrived, and the imagination of pan-two-dimensional peripheral businesses was taken seriously by the outside world. In 2024, China's “millet economy” reached 168.9 billion yuan, an increase of 40.63% over the previous year. Driven mainly by popular IPs such as “Nacha no Demon Boy” and “Genshin”, as well as the rapid expansion of offline “millet stores,” it is expected to exceed 308.9 billion yuan in 2029.

And with the explosive growth of the idol industry, the fan economy continues to spawn new business models. As a leading domestic idol agency, Lehua Entertainment uses a mature artist operation system to deeply integrate traditional fan consumption with the emerging millet economy, opening up a high-stickiness and high-premium monetization path.

Specifically, the company launched a “millet” series exclusive to its artists, such as a concert co-branded, then linked with IP. For example, Wakuku mentioned above launched Wang Yibo's exclusive, and finally realized online and offline integration. Offline pop-up stores provided “breaking the valley” social expression, and online applet point redemption enhanced repurchases. As early as 2023, Lehua Entertainment collaborated with TOPTOY on the “Idol Energy Station” blind box series. Sales exceeded 10 million on the first day, and the second-hand market premium rate reached 300%. It can be seen that the “millet economy” of Lehua Entertainment was already budding at the time.

As a new consumer code under the fan economy, there is plenty of room for imagination in the profit economy of Lehua Entertainment's millet economy model.

First, “millet” is mostly standardized in small pieces, and the gross margin is higher than traditional peripherals, and the cost advantage is remarkable; second, peripheral sales can be continuously monetized during the artist's active period, and “millet” can be derived in a variety of ways to continuously provide performance increases. Therefore, under the combination of high gross profit and long-tail effects, there is considerable room for profit growth in Lehua Entertainment.

In a nutshell, Leroy Entertainment relies on the fan economy chassis and IP linkage to gradually transform to a millet economic model, and in turn can be expected to enjoy the dividends of the high growth rate of the millet economy.

Monthly increase of 3.42 times, diversified strategies expand growth space

While Lehua is making a big splash at the Trendy Game Circuit, the company's stock price has increased 3.42 times over the past month. It can be seen that investors are appreciating its cross-border trendy game. Of course, the company's intensive buybacks and boosting market confidence are also a strong impetus for strong stock prices.

According to public information, since May, Leroy Entertainment has significantly accelerated the pace of repurchases. In particular, since the first 10 days of June, it has repurchased a total of 4.608 million shares at a cost of HK$10.896 million. The average repurchase price is about HK$2.37. If the timeline were extended to the whole of May, the company made 11 repurchases, for a total amount of HK$18.634 million.

Most of the shares repurchased came from direct purchases in the secondary market, and the single scale increased from hundreds of thousands of shares in the early days to over one million shares in June (1.158 million shares on June 10), indicating that the company is actively absorbing market pressure, and the intention to collect chips is obvious.

From the perspective of chip distribution, Lehua Entertainment chips are trending towards concentration. First, the pressure on the company to lift the ban is gradually being digested. As of the first quarter of 2025, the institutional shareholding ratio stabilized. As of June 11, the company's institutional shareholding ratio reached 25.32%. Furthermore, Nanxia Capital (Hong Kong Stock Connect) showed a net inflow in the second quarter of 2025 (the shareholding ratio increased from 3% at the end of 2024 to 5% in June 2025), indicating that some Chinese institutions are beginning to fall in line. Second, the company's chip concentration has further increased. According to Central Settlement System (CCASS) data, the retail shareholding ratio of Leroy Entertainment fell from 40% in mid-2024 to about 32% in May 2025, while the shares cancelled by the company through repurchases (over 12 million shares in total) further reduced circulation, objectively increasing chip concentration. By the close of trading on June 11, the company's chip range coincided by more than 78%, or the share price fluctuation was reduced accordingly.

In short, the recovery in institutional shareholding ratios+corporate repurchases formed a “double support” to protect the rise in stock prices.

In the long run, Lehua Entertainment is expanding growth space through diversified strategies to prepare for long-term growth.

In addition to the trendy gaming economy, virtual idols are another growth curve for Lehua Entertainment.

According to public data, the virtual idol industry has extended to peripheral markets such as figures, records, and comic shows. In 2022, the domestic virtual idol market was 186.61 billion yuan, and the CAGR in 2017-2022 was 87.3%. It is expected that the driving market size will reach 640.27 billion yuan in 2025, and the CAGR will be 50.8% in 2022.

As one of the first artist management companies to enter the virtual artist market in China, Lehua Entertainment has a far-reaching layout on the virtual circuit. First, A-SOUL's commercial closed loop has already been formed. Live streaming rewards, brand endorsements, and metaverse concerts have formed a monetization matrix with annual revenue exceeding 150 million dollars. Furthermore, AI technology reduces costs and strengthens the foundation for continued profits. The company collaborated with ByteDance to develop AIGC composition tools, and the cost of single production was reduced from 2 million to 800,000. In a virtual idol circuit that continues to grow, Leroy Entertainment's commercial monetization is objective, bringing it new incremental space.

Looking at it from a higher level, Lehua Entertainment is undergoing a business upgrade from an “agency” to a “fan operator.” Refer to Japan's “membership economy”: providing exclusive content, priority tickets for performances, virtual meetings (annual subscription fee revenue may exceed 100 million), or Korea's HYBE acquires US SB Projects to open up the European and American markets. Leroy can use the momentum to seize the bridgehead of cultural exports from Southeast Asia. Collaborate with TikTok to customize skits to output “Chinese idol industry” standards. Once the ecological transformation is completed, the capital market will naturally give Lehua Entertainment a higher valuation premium.

In summary, the in-depth cooperation between Lehua Entertainment and Wakuku not only successfully unlocked the golden closed loop of “Star IP - Scarce Trendy Gaming - Fan Economy”, but also demonstrated its forward-looking layout and strong monetization capabilities in the entertainment industry. The stock price nearly tripled during the month, which fully confirmed the market's high recognition of its cross-border trendy gaming strategy. In the future, as the virtual idol circuit continues to explode and global IP output accelerates, the growth space for Lehua Entertainment will be further opened up. Institutions such as CICC have clearly stated that their unique self-built channels and ability to feed back data will reshape valuation logic.

Investors should pay close attention to the development of Lehua Entertainment's diversification strategy: the high-profit monetization of the trendy game economy, the breakthrough commercialization of virtual idols, and the potential for cultural overseas expansion in the Southeast Asian market have all injected strong impetus into the company's long-term growth.