Tencent President Liu Chiping: Reading Group will spin off from Tencent and go public in Hong Kong

In the morning of March 23, Tencent plans to divest its e-book business in order to attract users by increasing expenses and content and enhance the stickiness of WeChat.

At Tencent's 2016 full-year results conference held on March 22, in response to the IPO of Reading Group, Tencent President Liu Chiping confirmed that Reading Group was about to be spun off from Tencent and the target listing location would be Hong Kong.

Liu Chiping said that as the largest reading platform in China, Reading Group can connect authors and users and accumulate a lot of novel copyrights. In the future, it can provide a lot of value to film, television, entertainment and games. Splitting the business is conducive to its long-term development.

Reading Group is formed by the integration of Tencent Literature and the original Shanda Literature. According to its official website, Reading Group is a genuine digital reading platform and a literary IP cultivation platform. Its brands include QQ Reading, Qidian Chinese. com, etc., with 10 million works reserve, 4 million creators, covering more than 200 content categories, occupying a dominant share in the domestic IP adaptation market, and exporting adapted works such as "Step by Step","Ghost Blows the Lantern","Tomb Robbing Notes","Langya Bang" and "Chance of the Sky".

Before the establishment of the Reading Group, Wu Wenhui, CEO of the current Reading Group, led Shanda Literature to launch an IPO in the United States twice, but failed. After leaving Shanda Literature and joining Tencent, Wu Wenhui never gave up the idea of listing. At the "IP Ecosystem Conference" of Reading in June 2016, Wu Wenhui once made it clear: "We are a joint-stock company of Tencent, but Reading itself is an independent company, and we would have pursued independent listing." However, regarding the listing time, Wu Wenhui said that there is no specific timetable,"listing when the capital market performs relatively well."

In February this year, Thomson Reuters 'IFR quoted sources as saying that Tencent's Reading Group plans to launch an IPO (initial public offering) in Hong Kong in 2017, raising up to US$800 million. But Tencent officials did not respond to this at the time. Tencent President Liu Chiping said they would consider other spin-off methods, but did not disclose specific goals. The company also runs a music and streaming video service.

In Tencent's 2016 performance report, the online literature business was placed under media and digital content platforms. Tencent said that the online literature business has strengthened its cooperation with leading authors and has benefited from the reduction of piracy. The number of daily paying readers is close to 2.5 million, a year-on-year increase of more than doubled.

Tencent's current main revenue still comes from online games, and its main competitors in this field include giants such as Netease. Tencent's value-added services revenue (including online games and chat services) increased 29% to 29.2 billion yuan in the quarter, and its online advertising revenue increased 45% to 8.3 billion yuan.

Although games are an important factor in Tencent's growth, they may become involved in political wrangling between China and South Korea.

Due to the "Sade" issue, some South Korean games operated by the company may be boycotted by some people. Liu Chiping said that this may also affect the approval of new games, but existing games will not be affected.

"It is logical for Tencent to target these growth areas-each area has growth potential and there are good market opportunities." Investment bank Sanford C. Bernstein analysts Bhavtosh Vajpayee and Bill Liu wrote in the research paper,"However, soaring video content costs, rising cloud computing costs and increased payment shares all need to be considered in stock prices over the next 12 to 18 months."

Yien.com compiled and released it based on relevant reports from The Paper News Network and Sina Technology.

Editor: yvette