Canxing's annual profit of 720 million yuan is valued at only 5 billion yuan, or it will independently list A shares

In the current variety industry, Canxing has become the largest and most mature program production company in China (none of them). For the company that generated a net profit of 720 million yuan in 2015, the valuation of 5 billion yuan is obviously low.

5 billion yuan, this is the latest valuation of Canxing Culture, the producer behind "The Voice of China."

This company was once a household name for "The Voice of China". Its programs also include "King of Masked Singers","Good Songs of China","Outstanding China" and so on. Canxing, who is used to studio filming, is still trying out outdoor reality shows this year. Although "The Great Challenge" encountered many changes during its broadcast, it was very popular among the post-95s and 2000s group and became popular on the B station.

At the beginning of this year, Canxing and the model party Talpa Company of the Netherlands "broke up" due to copyright issues. However, Canxing made it clear that this summer,"The Voice" will continue to be done, and the cooperation with Zhejiang Satellite TV remains the same., and even announced the lineup of mentors in advance-Na Ying, Jay Chou, Wang Feng, and Yu Chengqing.

Canxing's capitalization path has always attracted much attention.

As early as 2014, we had exclusively revealed the capitalization path behind "The Voice of China." During an interview at that time, Tian Ming, chairman of Canxing Culture, proposed a spin-off listing plan-Canxing followed its parent company Star Media to go public in Hong Kong, and Canxing's brother company Mengxiang Qiangyin was listed on the A-share market.

Star Media was once a joint venture between Murdoch's News Corporation and Li Ruigang Chinese Culture Fund. In 2014, Murdoch withdrew and the Chinese Culture and Star Management Team took over the offer.

However, this investment announcement by Zhefu Holdings not only disclosed the financial data of Canxing Culture for the first time, but also revealed the latest changes in the capital operation of "Good Voice of China"-Dream Sound and Strong Voice has been incorporated into Canxing Culture. In the future, the two companies will obviously be packaged and listed. The capital operation path of "The Voice of China" has quietly changed.

Investors "withdraw" from their dreams and invest in Canxing Culture

. On March 31, A-share listed company Zhefu Holdings announced that it plans to increase Canxing Culture with 300 million yuan in cash and obtain 6.0698% equity.

Prior to this, Zhefu Holdings had already made "two-in and two-out" against Mengxiang Qiangyin, another company behind "The Voice of China." In March and April 2014, Zhefu Holdings purchased a total of 40% of Mengxiang Qiangyin shares in two separate installments for a price of 840 million yuan. At that time, Mengxiang Qiangyin's valuation reached 2.1 billion yuan.

According to public information, Mengxiang Qiangyin is an affiliated company of Canxing, responsible for artist brokerage, brand management and Internet derivative business of "The Voice of China" and has signed contracts with "The Voice" artists such as Wu Mochou and Jin Zhiwen.

Before the acquisition, Mengxiang Qiangyin's shareholding structure was 60% held by Shanghai Minxing Culture Media Partnership (Limited Partnership) and 40% held by Cuican Xinghe. The actual controllers of Minxing Culture and Cuican Xinghe were Tian Ming. Tian Ming is the chairman of Canxing Culture.

But from September to November 2015, these shares were sold one after another. The company announcement at that time pointed out that the reason for the sale of equity was the integration of investment objects and changes in the securitization path, but did not disclose the specific reasons.

But this time, Zhefu Holdings has invested in Canxing Culture, and data shows that Mengxiang Qiangyin has become a holding subsidiary of Canxing Culture, rather than the previous "brother company."

This means a major adjustment in the capitalization path of "The Voice of China".

In 2014, Tian Ming, chairman of Canxing Culture and executive director and CEO of Star Chinese Media, once proposed that Mengxiang Qiangyin and Canxing's parent company Star Chinese Media should enter the capital market in the future. Mengxiang Qiangyin is a domestic-funded company and plans to backdoor listing on A-shares in the future. Star Chinese Media is an overseas media company. In addition to Canxing Productions, it also has 3 TV channels and a movie library. It plans to list in Hong Kong.

Today, Canxing Culture has put the strong voice of dreams into it and accepts investment from A-share listed companies. Canxing's "independent listing" has become a high probability event.

Canxing's financial status was disclosed for the first time, with an annual profit of 720 million

yuan. This capital increase is the first disclosure of Canxing Culture's financial status. According to the announcement, Canxing's operating income and net profit in 2015 were 2.21 billion and 720 million respectively. In the first quarter of 2016, the operating income and net profit were 160 million and 44 million respectively.

Although Canxing's operating income is not high, its net profit can definitely "kill" most listed film and television companies. In the 2015 A-share listing net profit rankings, its net profit is second only to Huayi Brothers, which is 980 million yuan., ahead of the second-place Yinji Media by 150 million yuan.

Not only that, Canxing, which has a net profit of 720 million yuan, has also become the most profitable company in the field of variety show production in China.

In contrast, Canxing's counterpart, Blue Flame, had a net profit of only 235 million yuan in 2015 due to the poor performance of projects such as "Dreammaker" and "Going to the End of the World". It did not even complete the performance commitment of 250 million yuan made by the listed company Hualu Baina when it acquired it.

In addition, companies such as Energy Communications performed even lower, and Enlight Media, which was once dominant in the TV business, even abolished its TV division in 2015.

With a valuation of 5 billion yuan and 6.9 times PE, is Canxing Culture underestimated?

Canxing

Culture's program production capabilities have always been at the forefront of the industry. In addition to the phenomenal variety show "The Good Voice of China", in recent years, programs such as "The Great Challenge","Good Songs of China" and "The King of Masked Singers" have also performed quite well.

Even though the copyright of "The Voice of China" in the fifth season is "sidelined", the industry is still optimistic about the development prospects of Canxing Culture. In the "confrontation" between Canxing and Donde at the beginning of this year, Canxing showed a lot better coping ability than Donde in terms of response strategies and public relations skills.

However, in this capital increase transaction of Zhefu Holdings, Canxing Culture's valuation is only 5 billion yuan. If divided by the net profit of 720 million yuan, the resulting PE (P/E ratio) is only 6.9 times. Does this mean that Canxing Culture is seriously underestimated?

At present, among A-share listed film and television companies, PE is concentrated between 40 and 100, and some even exceed 200. Even among companies that are not listed, Qianzu Culture, whose main business is variety show production, is valued at 2.1 billion "sold" In the case of Shanghai's new culture, PE far exceeds Canxing Culture.

Qianzu Culture has produced programs such as CCTV's "Running Bar Classroom" and Shandong Satellite TV's "Huayang Dream Factory". In 2015, its operating income was only 140 million yuan. Although the net profit has not been announced, it is conservatively estimated that the PE exceeds 20, which is based on program quality, operating income, net profit and cooperation platform are far from those of Canxing Culture, but the PE is significantly higher than that of Canxing Culture.

What's more, Mengxiang Qiangyin, the subsidiary controlled this time, had an acquisition valuation of 2.1 billion yuan as early as two years ago. While the valuation of the film and television industry has "exploded", Canxing Culture, which has front-line program production capabilities, has a valuation of 5 billion yuan. The valuation is obviously low.

"It is possible that Zhefu Holdings is going back and forth to help Canxing go public. This price may be a 'friendship price'." An investor friend finally reminded Xiaoyu.

This explanation may be reasonable. In 2014, Murdoch's News Corporation intended to withdraw from Star Media. At that time, Star Media's team and the Chinese Cultural Industry Fund invested in acquiring Murdoch's 47% stake in Star Media. This arrangement was similar to an MBO (Management buyout).

It was against this background that Mengxiang Qiangyin sold its 40% stake to Zhefu Holdings. Through this operation, the Star Sky Chinese team obtained the initial funds needed for MBO.

Now that two years have passed, the A-share market is still pursuing cultural media assets. In the future, if Canxing can successfully list on the A-share market, it will surely set off another subscription craze.

Editor: yvonne