NEW YORK - Kuke Music Holding Limited (NYSE: KUKE), a prominent classical music service platform in China, is currently facing compliance issues with the New York Stock Exchange (NYSE). The company has received notifications regarding its failure to meet the NYSE's market capitalization and share price listing standards.
On September 24, 2024, the NYSE informed Kuke Music that its total market capitalization had fallen below the required $50 million over a 30 trading-day period, and its stockholders' equity was under the $50 million threshold. Specifically, the company's market capitalization was approximately $47 million, and its shareholders' equity stood at roughly $3.3 million as of December 31, 2023.
Adding to the company's challenges, on October 8, 2024, Kuke Music was notified of non-compliance with the NYSE's minimum average closing price standard, with its American Depositary Shares (ADSs) trading at an average price of about $0.98 over a 30 trading-day period.
To address these issues, Kuke Music must submit a business plan within 45 days from the September notice date, outlining steps to regain compliance with the market capitalization and stockholders' equity standards within nine months. If the plan is not timely submitted or accepted, the NYSE will begin suspension and delisting procedures. However, if the plan is approved, the company will be subject to quarterly monitoring for compliance.
Regarding the share price deficiency, the company has six months from the October notice to elevate its share price and average share price above $1.00. Failure to achieve these benchmarks by the end of the cure period will trigger the initiation of suspension and delisting processes by the NYSE.
Kuke Music has expressed its intention to comply with the requirements outlined in both notices and to regain compliance within the specified cure periods. The notices have no immediate effect on the listing or trading of the company's ADSs on the NYSE, which will continue as long as the company complies with the NYSE's requirements.
The company's business operations and reporting obligations with the Securities and Exchange Commission remain unaffected by these notices. Kuke Music is known for its extensive classical music content library and its partnership with Naxos, the world's largest independent classical music content provider. The company also offers music licensing services, subscription services, and has hosted the Beijing Music Festival for 24 consecutive years.
This news is based on a press release statement from Kuke Music Holding Limited.
In other recent news, Kuke Music Holding Limited has regained compliance with the New York Stock Exchange's listing standards by meeting the minimum market capitalization and shareholders' equity requirements. This development marks the end of the company's non-compliance status that began over a year ago. Kuke Music will now enter a 12-month monitoring period to ensure continued adherence to the NYSE's listing standards.
In addition to this, Kuke Music is nearing the completion of its "KUKE Music for Cars" application, an AI-powered music app designed to enhance the in-car audio experience. The company has also announced its partnership with Shanghai Jidou Science and Technology Co., a leading automotive software provider, to integrate Kuke's AI music application into Jidou's in-car application store.
Furthermore, Kuke Music is planning to acquire majority stakes in Angelina Assets Limited and HNH International Limited, both subsidiaries of Naxos One Holding Limited. The company is also setting up a new Technical Research and Development Center in Guangzhou, focusing on product development and technical maintenance services. These are recent developments that reflect Kuke Music's ongoing efforts to innovate and expand its market reach.
InvestingPro Insights
Recent data from InvestingPro sheds further light on Kuke Music Holding Limited's financial challenges. The company's market capitalization currently stands at $26.32 million, significantly below the NYSE's $50 million threshold mentioned in the article. This aligns with an InvestingPro Tip indicating that the stock has "taken a big hit over the last week," with a one-week price total return of -38.62%.
The company's struggle to meet NYSE listing requirements is further reflected in its financial performance. InvestingPro data shows that Kuke Music is not profitable over the last twelve months, with an operating income of -$4.97 million and an EBITDA of -$3.9 million for the same period. This unprofitability is likely contributing to the stock's poor performance, as highlighted by another InvestingPro Tip stating that the "price has fallen significantly over the last three months."
Despite these challenges, it's worth noting that Kuke Music's revenue for the last twelve months was $15.07 million, with a gross profit margin of 47.31%. This suggests that while the company is generating sales, it's struggling with profitability and market valuation.
For investors seeking a more comprehensive analysis, InvestingPro offers 11 additional tips for Kuke Music, providing a deeper understanding of the company's financial situation and market performance.
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