News Column

China : CHINA FILM GROUP plans a $740 million in its first IPO

June 23, 2014

After years of negotiations, the China Film Group is planning a $740 million initial public offering (IPO) ahead of a stock market listing in Shanghai.

China Film is a giant in the Chinese film industry. In addition to producing, importing, exporting and distributing films, it also operates theater chains, sells film equipment and manages talent.

China's film market is the second biggest in the world and has grown rapidly, and the listing of China Film Group is a sign of concerted efforts to build up an infrastructure for future growth and help the industry compete with Hollywood.

The Chinese government unveiled a major policy document from several ministries to boost the film industry with tax incentives and a fund to support certain state-approved movies.

China Film Group participated in the production of 63 all types of films and accounted for 18.37% of the national box office.

China Film Group plans to issue 467 million new shares at $0.16 (one yuan) per share to raise $740 million (4.618 billion yuan) in its Shanghai IPO.

The prospectus shows that domestic ticket sales have been growing by 25% annually for the past 8 years, and ticket revenues at theater chains controlled by China Film grew by 19% between 2012 and 2013.

Net profit between 2011 and 2013 was $82.63 million, $89.85 million and $68.67 million. Net profit rose 8.79% in 2012 year-over-year.

The 24% decline in net profitability was due to changes in film import rules which meant it earned less income from importing films.

In the last 3 years, the company has been involved in releasing 591 domestic films and 225 imported films and its market share reached up to 78%.

The figures showed that the market for exporting films is difficult.

China's biggest cinema chain, Wanda Cinema Line Co., plans to raise $320 million in a Shenzhen stock exchange listing, while Shanghai Film Group plans to raise $155.45 million from its listing.

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Source: TendersInfo (India)

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