PLBY announced a JV with Charactopia Licensing, the brand management arm of Fung Group, to manage the China market licenses and drive growth in the region. This is a positive step in capturing more of the economic value created by the Playboy brand in China. PLBY has to give up some of the upside to its new partner, but having a strong, established player with the right relationships while having the business and political power to get the deals structured and compensated appropriately will be valuable to PLBY. The timing here makes sense with a full China reopening and return to ‘normal’ catalyst and opportunity ahead for the brand.
The JV is being valued at $250mm (for accounting purposes there is likely some conservatism here), but let’s say that is $126mm in value to PLBY, which makes up about 40% of the EV today. So the remainder of global licensing, and other assets including Honey Birdette(purchased for $328mm in 2021) are being valued at less than $200mm. We think this is far too low given the relevance of the brand and the assets the company holds. At the same time, the company needs to deliver some quarters of solid revenue and profit trends before the market will likely assign a materially higher value to the asset base. We’ll look for more color on the structure of the deal and the value opportunity for PLBY when the company reports 4Q (likely late Feb).
