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    Lex Zhang

    Research Analyst at Koi Investment

    Lex Zhang's questions to Kuke Music Holding (KUKE) leadership

    Lex Zhang's questions to Kuke Music Holding (KUKE) leadership • Q3 2021

    Question

    Lex Zhang from Koi Investment asked about the impact of supply chain disruptions and chip shortages on business margins, and questioned the increase in Q3 selling and distribution expenses despite a slight sequential revenue dip from Q2.

    Answer

    CFO Tony Chan clarified that by adjusting the pace of kindergarten deployments, the company maintained a stable gross margin of 64.2% in Q3, similar to Q2. He explained that the rise in selling and distribution expenses was tied to growth in the licensing and smart music education segments, while the slight overall revenue decline was due to the live events business, which has low associated selling costs.

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    Lex Zhang's questions to Kuke Music Holding (KUKE) leadership • Q2 2021

    Question

    Lex Zhang from Atlantic Investments inquired about the potential for increased competition from K-12 tutoring companies pivoting to arts education and the company's risk exposure to anti-monopoly regulations.

    Answer

    CFO Tony Chan addressed the competition question, highlighting the low penetration rate of music education in China and Kuke's competitive advantages, including its Naxos partnership, early mover status in R&D, and a comprehensive closed-loop ecosystem. President Patricia Sun responded to the regulatory concern, stating that Kuke's non-exclusive strategy with partners aligns with market diversity and mitigates monopoly risks, allowing for broader brand and artist promotion.

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