First mainland media firm to launch IPO in HK
By Liu Baijia (China Daily)
Updated: 2004-12-14 10:32

The first overseas initial public offering (IPO) of a Chinese newspaper-related business is a breakthrough of the country's reform of the media industry. It may also become the biggest selling point of Beijing Media Corp Ltd, associated with China's second largest newspaper group, Beijing Youth Daily.

The Beijing-based media company said yesterday in a statement to the Hong Kong Stock Exchange that it had applied to launch an IPO on the market and trading is expected to start next Wednesday.

Beijing Media Corp Ltd will sell 47.74 million shares to the public in the offering, or 25.02 per cent of its total.

With an over allotment option, the underwriters can sell 7.16 million shares in addition and the number of total outstanding shares will be 54.90 million, or 27.82 per cent of the company's capital structure. The IPO is led by HSBC.

The stocks are expected to be priced between HK$14.95 (US$1.92) to HK$18.95 (US$2.43),the figure is to be settled on Friday.

Calculated from the middle point of the range - HK$16.95 (US$2.17) - net proceeds from the offering will be HK$677 million (US$86.79 million) or HK$778 million (US$99.74 million), when the over allotment option is exercised.

Since Beijing Media Corp Ltd is engaged in selling advertising space, printing and sales of printing materials for Beijing Youth Daily, it is the first newspaper-related company to make an IPO in an overseas stock market.

"It is a big breakthrough in China's reform of the media industry and it may be a model for the sector," said Wang Ran, CEO of China eCapital Corp, a Beijing-headquartered technology, media and telecommunications industry-focused investment bank.

However, he said he believed the Chinese Government will remain very cautious in giving the green light to future overseas listings of newspaper-related companies, as it needs to see the results and focuses on organic reforms.

With the scarcity of the supply of stocks from such companies, Wang said he believed Beijing Media Corp will be very attractive to overseas investors.

"The fact it is the first and only media company from the Chinese mainland will attract someone," said Renee Tai, a media industry analyst with Hong Kong-based G. K. Goh Securities.

South African media giant Naspers said on Sunday it would acquire 9.9 per cent of stocks of Beijing Media Corp.

Some people say the timing of the IPO is not so favourable, as fund managers will be on Christmas vocation and institutional investors are running out of their budgets at the year's end.

However, Du Min, executive vice-president and executive director of Beijing Media Corp, said he believed his company's performance will convince investors.

Beijing Media Corp's revenues in 2003 were 1.07 billion yuan (US$129 million), compared with 914 million yuan (US$110 million) in 2002. Net profits were 153 million yuan (US$18.48 million) in 2003 and earnings per share were 1.04 yuan (12.56 US cents).

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