Bona Film joins hands with Wanda to accelerate IPO profit model, single or challenging

In fact, Bona Films did not accurately grasp the best time to enter the domestic capital market. Due to the single film model, the company's performance is mostly affected by whether there are hit films.

Recently, Bona Film Group Co., Ltd.(hereinafter referred to as "Bona Film"), which was listed in the United States, has accelerated its return to the domestic capital market.

On the evening of May 15, Wanda Cinema Line Co., Ltd.(hereinafter referred to as "Wanda Cinema Line") announced that it plans to invest 300 million yuan in Bona Films and obtain a 1.875% stake, which is only 12 days after Bona Films disclosed the news of listing guidance and filing in Xinjiang.

Regarding why it chose to cooperate with Wanda Cinema and the related progress of returning to A-shares, the relevant person in charge of Bona Film told reporters,"Since the company has entered a counseling period, it is inconvenient to comment on the issue of listing now." The reporter repeatedly tried to contact Yu Dong, chairman of Bona Films, but received no response after making phone calls and sending interview text messages.

Although the alliance between Bona Film and Wanda Cinema is gradually forming a corner, trying to break the current dominant pattern of the five major private film and television companies, several interviewed experts analyzed that in fact, Bona Film did not accurately grasp the best time to enter the domestic capital market. Due to the single film model, the company's performance is mostly affected by the availability of hit films.

Holding hands with Wanda may speed up the IPO

. However, now Bona Film has indeed embarked on the IPO road and there are signs of accelerating the process.

On the evening of May 3, Bona Films disclosed on its official website a reminder announcement on listing guidance filing. The announcement shows that Bona Film Group Co., Ltd. has recently submitted the filing materials for initial public offering and listing guidance to the Xinjiang Securities Regulatory Bureau, and received a confirmation letter from the Xinjiang Securities Regulatory Bureau on May 2. Currently, Bona Films is receiving listing guidance from CITIC Securities.

It is reported that Bona Films changed its registered address from "Poly Building in Dongcheng Area, Beijing City" to "Weitai Building in Urumqi Economic and Technological Development Zone, Xinjiang" as early as last year.

Relocation to Xinjiang is the first step for Bona Films to open up the listing gap. Economist Song Qinghui said that under normal circumstances, by registering companies for IPOs in remote areas such as Xinjiang, you can enjoy "preferential treatment" from the IPO green channel, which will help speed up the IPO process. "However, truly high-quality enterprises, especially those with core market competitiveness, will not relocate easily, and the comprehensive cost is too high. For companies planning to be listed, in the face of temptation, they should still make rational choices and plan before acting."

Twelve days later, Bona Pictures once again showed a positive signal for the company's prospects. On the evening of May 15, Wanda Cinema announced that Wanda Cinema had signed an agreement with Bona Pictures to carry out strategic cooperation in terms of capital increase and share expansion, cinema franchise, advertising cooperation, and film investment.

In addition, Wanda Cinema also plans to inject 300 million yuan into Bona Films to obtain a 1.875% equity. In December 2016, Bona Films had received 2.5 billion yuan in Series A financing led by Alibaba Pictures and Tencent.

It is understood that Bona Films and Wanda Films, a subsidiary of Wanda, as well as Light Media, Huayi Brothers, and LeTV Pictures, constitute the first echelon of private film and television companies in my country. Some industry views believe that the alliance between Bona Film and Wanda Cinema may touch the current competitive landscape and use this good news to accelerate its listing process.

Delisting from the United States due to low valuation

"What really made me decide to go back to the A-share listing was" Taking Tiger Mountain by Wisdom ". Bona achieved such good box office results and was unanimously praised by the domestic market. It also led the way. The topic of creating a red classic. But at the same time, Boehner's share price on Nasdaq has been falling, which makes me very sad." Yu Dong said.

It is reported that since the introduction of Sequoia Capital in 2007 and embarked on the path of U.S. stocks, Bona Films spent five years and finally listed on the NASDAQ in December 2010, becoming the once-enviable U.S. capital market. The first stock in China's film and television media, and it is also the first film and television company in the mainland of China to list overseas.

Unfortunately, Bona Films 'IPO closing price on the first day was only US$6.58/share, down US$1.92, or 22.6%, and the company's market value evaporated by 100 million yuan. When it announced its privatization and delisting in April 2016, Bona Films's total market value was only 5.56 billion yuan.

Chen Shaofeng, deputy dean of the Institute of Cultural Industry at Peking University, analyzed to reporters that from a business perspective, Bona Films is only listed in the United States, its main operating business remains in China, and its service targets are also domestic consumers. This has caused the company's popularity in the United States is not high, its price-to-earnings ratio is low, and its stock price continues to fall."Currently, Bona Films's domestic valuation is higher than in the United States. It is estimated that there will not be much room for growth after listing."

This is indeed the case. After the Series A financing led by Alibaba and Tencent and the 300 million yuan capital injection from Wanda Cinema, Bona Film's valuation has soared to 16 billion yuan. It can be said that after leaving the U.S. capital market, its market value has almost tripled.

Missing the best opportunity for the development of China films? Yin

Hong, vice chairman of the China Literary Critics Association and director of the Film and Television Communication Center of Tsinghua University, said that Bona Film's capital strategy caused it to miss the best opportunity to enter the domestic market."At that time, there were restrictions on the A-share listing of domestic media companies, so Bona Film moved to the United States for an IPO. Now when Bona Films wants to come back, the entire A-share market in China has suffered a serious decline."

In this regard, Yu Dong also publicly stated in an interview with the media,"We went to the United States five years ago. When we came back, we found that China's capital market had undergone earth-shaking changes. On the contrary, those (film and television) companies that did not go out at that time came from behind and expanded rapidly and developed."

In addition to the shocks in the A-share market, the entire film market faced by Bona Films has also shown weakness. According to data from the State Administration of Press, Publication, Radio, Film and Television, compared with the year-on-year growth rate of 48.69%, the national movie box office in 2016 was only 45.7 billion yuan, a year-on-year increase of 3.7%. Zhang Xiaoming, deputy director of the Cultural Research Center of China Academy of Social Sciences, described this phenomenon as a "young year" in the film market.

After 14 consecutive years of rapid growth, China's film market has reached an inflection point in growth. Chen Shaofeng believes that after five years of moderate and low-speed growth, China's film market will almost stop growing.

In addition, Bona Films mainly relies on blockbusters to make profits, which is too single compared with Disney and other full-industry-chain development models. In this case, as long as one or two blockbusters perform well at the box office, the company's performance will rise, otherwise the performance may decline to varying degrees.

"Most film companies in China mainly focus on single-industry operations and single-window market returns. This is mainly due to factors such as fragmentation and institutional barriers in the cultural media industry." Therefore, Yin Hong pointed out that even if companies are listed and invested, it is still difficult to play the role of comprehensive media like Disney and Time Warner.

Chen Shaofeng said that based on China's national conditions, the transformation of film companies to the Disney model is still a good direction, and three changes must be grasped: first, with the family as the core and producing family-style film content; second, extend the industrial chain and develop surrounding industries; third, go to the international market and learn from Hollywood.

Editor: yvonne