Seizing the opportunity of the Belt and Road Initiative, many media companies 'overseas business is growing rapidly

In 2016, media listed companies seized the opportunity of the Belt and Road Initiative, accelerated overseas business expansion, and generated substantial revenue in the markets of countries and regions along the Belt and Road Initiative. In 2017, the expansion of overseas markets by related companies will continue to heat up.

Original title: The overseas business of many media companies is growing rapidly

In 2016, listed media companies seized the opportunity of the Belt and Road Initiative, accelerated the expansion of overseas business, and generated substantial income in the markets of countries and regions along the Belt and Road Initiative. In 2017, the expansion of overseas markets by related companies will continue to heat up.

Industry insiders said that it is not easy to "seamlessly connect" the cultural industry with the local market. It is necessary to fully understand the habits of overseas users, cultural environment, publicity channels and the development trends of related industries to avoid situations such as acclimatization due to cultural differences. Cross-border mergers and acquisitions are conducive to making full use of local resources to expand the market, but high valuations and high performance commitments may also bring potential risks.

Net profit growth data of 73 companies last year

shows that as of April 20, 64 listed companies in the Shenwan Media industry have disclosed their 2016 annual reports and 27 have disclosed their performance reports. Among the 91 companies mentioned above, 73 companies achieved year-on-year growth in net profit attributable to shareholders of listed companies in 2016.

Among them, Shenzhen Chase and Beijing Culture achieved a growth rate of more than 20 times in net profit attributable to shareholders of listed companies. In 2016, Shenzhen Chase achieved operating income of 1.029 billion yuan, a year-on-year increase of 236.97%; net profit attributable to shareholders of listed companies was 233 million yuan, a year-on-year increase of 3,830.87%. Beijing Culture achieved operating income of 927 million yuan, a year-on-year increase of 165.22%; net profit attributable to shareholders of listed companies was 522 million yuan, a year-on-year increase of 2,361.29%.

The net profit growth rate of 16 companies including Blue Cursor, Perfect World, Lianchuang Internet, and Beiwei Communications is between 1-9 times. In 2016, Blue Cursor achieved operating income of 12.431 billion yuan, a year-on-year increase of 48.92%; and achieved net profit attributable to shareholders of listed companies of 668 million yuan, a year-on-year increase of 887.38%. Perfect World achieved operating income of 6.159 billion yuan, a year-on-year increase of 25.87%, and achieved net profit attributable to shareholders of listed companies of 1.166 billion yuan, a year-on-year increase of 767.54%.

The net profit growth rates of Lianchuang Internet, Beiwei Communications, Guangdong Media, Cultural Investment Holdings, and Gigabit were 638.94%, 512.76%, 451.58%, 336.15%, and 234.59% respectively; the net profit growth rates of Mingjia United, Tianlong Group, *ST Biotech, Halo New Network, and Leo shares were 231.26%, 216.66%, 202.54%, 195.07%, and 153.32% respectively; The net profit growth rates of Huawei Culture, Contemporary Mingcheng, and Sanqi Mutual Entertainment were 151.78%, 128.51%, and 111.49% respectively.

In addition, the growth rate of net profit attributable to shareholders of listed companies of 11 companies including Enlight Media, Shunwang Technology, Changjiang Media, Zhongnan Culture, and Youjiu Games is between 0.5 and 1 times. In 2016, Enlight Media achieved operating income of 1.733 billion yuan, a year-on-year increase of 13.78%; net profit was 736 million yuan, a year-on-year increase of 83.12%. Changjiang Media achieved operating income of 13.789 billion yuan, a year-on-year increase of 15.98%, and achieved net profit of 592 million yuan, a year-on-year increase of 82.42%.

Net profit of 18 companies fell year-on-year. Among them, the net profit of the five companies including Great Wall Animation, Tengxin, Zhongqingbao, Storm Group and Oriental Fortune fell between 0.5 times and 5.5 times year-on-year.

Analysts said that more than half of the 2016 annual report was disclosed, the game sector showed good performance growth, and some film, television and theater companies had stable performance. Against the background of industry shocks and lack of hot spots, the performance of individual stocks will continue to diverge. It is recommended to focus on targets with stable performance, certain growth, and low valuations during the intensive period of annual reports and quarterly reports; be optimistic about companies with high-quality IP resources and professional and high-quality content production capabilities. In addition, production companies that have advantages in providing paid content and theater companies that have the right to speak on film scheduling and scale advantages deserve attention.

Seizing the opportunity of the Belt and Road Initiative

is worth noting that many media companies have seized the opportunity of the Belt and Road Initiative to accelerate the expansion of overseas business, and overseas business revenue has shown rapid growth.

Taking Aofei Entertainment as an example, the company's overseas (including Hong Kong) operating income in 2016 reached 1.01 billion yuan, a year-on-year increase of 138.21%, accounting for 30.04% of operating income. In 2015, overseas operating income was 424 million yuan, accounting for only 16.37% of operating income.

Wang Jing, secretary of the board of directors of Aofei Entertainment, told a reporter from China Securities Journal that IP is the core strategy of Aofei Entertainment's development, and internationalization and moving towards the "Belt and Road" are the basis for maximizing the value of IP. The company will accelerate the development of overseas markets for IP products. At present, the company's products have covered the markets of many countries and regions along the "Belt and Road". By deepening cooperation with local companies, jointly cultivating IP and helping brands promote better.

According to reports, as China's leading animation and pan-entertainment group, Aofei attaches great importance to international cooperation between industries. Aofei has carried out a series of cooperation with partners in more than 20 countries and regions along the Belt and Road Initiative in animation broadcasting, toy sales, IP licensing, international projects, etc.

It is worth noting that listed game companies have a lot of revenue in the markets of countries and regions along the Belt and Road Initiative. Hong Tao, founder of Gamelook, said that among many mainstream overseas game markets, China's game products have a market share of 10% in the top 50 rankings, and some markets can reach 20%-30%. In key overseas markets such as Japan, South Korea and North America, China's game products have achieved good results.

Taking Chinese Media as an example, its holding subsidiary Zhimingxing Tong achieved operating income of 927 million yuan, 3.124 billion yuan and 2.781 billion yuan in 2014, 2015 and January to July 2016 respectively. Among them, among the operating income of 2.781 billion yuan from January to July 2016, overseas market revenue reached 2.666 billion yuan, accounting for 95.85%; from 2014 to 2015, overseas market revenue accounted for 89.66% and 95.56% respectively.

In 2016, Youzu Network's overseas market revenue was 1.268 billion yuan, accounting for 50.11% of the company's total revenue. The company said that during the reporting period, overseas market revenue maintained rapid growth, mainly benefiting from the strong performance of the ARPG mobile game "Wings of Fury", the card mobile game "Three Kingdoms" and the page game "Goddess Alliance 2". In the next step, the company will focus on exploring emerging markets such as Russia, South America, India, and the Middle East while maintaining its distribution advantages in Southeast Asia, North America, and European markets, and continue to regard globalization as the company's development strategy.

In addition, Palm Technology achieved total operating income of 1.874 billion yuan in 2016, a year-on-year increase of 66.80%; net profit attributable to shareholders of listed companies was 519 million yuan, a year-on-year increase of 10.40%. In 2016, the company actively integrated resources and exerted synergy effects. The game business operated well. Self-developed game products such as "King of Fighters 98 Ultimate Battle OL" and "National Miracle" performed well in domestic and overseas markets.

According to the ranking of the top 30 overseas brands in China released by WPP and Kaidu Huatongminglue jointly with Google, the influence of China's game brands has increased rapidly, with 8 game companies including Smart Star Tong, Youzu Network, and Tencent on the list. Analysts said that the demographic dividend in the domestic game market has gradually weakened and the market structure has gradually solidified. When game companies go to overseas markets, they must fully seize the "Belt and Road" policy opportunities, pay attention to the situation of acclimatization due to cultural differences, and develop and improve products based on the special conditions of overseas markets.

Rational treatment of cross-border mergers and acquisitions

The Blue Book on Foreign Investment and Risk shows that China's investment in countries and regions related to the Belt and Road Initiative will continue to maintain rapid growth in 2017, and when the fields of public utilities, tourism, minerals, entertainment and technology expand overseas, Cross-border mergers and acquisitions will continue to emerge. Industry insiders said that the cultural industry needs to fully understand the habits of overseas users, cultural environment, publicity channels and the development trends of related industries when going abroad. Cross-border mergers and acquisitions are conducive to making full use of local resources to expand the market, but cross-border mergers and acquisitions should be treated rationally to avoid the risks brought by high valuations and high performance commitments.

Taking Palm Technology as an example, the company encountered twists and turns when exploring the overseas game market. On February 28, the company stated in its performance report that based on IP value and international market expansion, it has made a joint venture with Webzen Inc., a well-known South Korean game company. Make strategic investments. However, considering factors such as its performance, in this performance report, the impairment provision for this long-term equity investment was temporarily estimated to be 180 million yuan, which had a significant impact on the company's 2016 annual results. Data shows that NetZen focuses on the development and distribution of PC and mobile games. Its main products include "Miracle MU" and "Ninth Continent".

"There are many skills in how to combine game products with culture, and we need to constantly explore when exploring the market." Chen Mo, chairman of Molin Group, told reporters that user fees vary greatly in domestic and overseas markets, and their demands for games are also many different.

IGG Chief Operating Officer Xu Yuan told reporters that if game companies want to go further, they need global R & D capabilities, independent operation capabilities and market expansion capabilities. "Half of the company's 1200 people are in mainland China, and the other half are in overseas markets. The company has R & D bases in Singapore, South Korea, Japan, Canada, the United States, Russia and other places." When designing games through teams from different countries and regions, the main consideration is global thinking.

An expert who declined to be named told reporters that the process of cultural industries going to sea is usually accompanied by capital operations, but in the process of integrating cultural products with the local market, whether it is necessary to give up the dominant power needs to be handled flexibly according to specific circumstances. After Alibaba Pictures invested in Amperin, the cooperation between the two parties "A Dog's Mission" achieved double box office gains. After Alibaba Pictures cooperated with Amperin, it did not interfere in artistic creation with its strong capital.

In the tide of overseas mergers and acquisitions in the cultural industry, mergers and acquisitions with high valuations and high performance commitments bring many potential risks, and performance commitments fail to meet the standards from time to time. Against this background, regulatory policies related to overseas mergers and acquisitions have become tighter. In December 2016, the National Development and Reform Commission, the Ministry of Commerce, the Central Bank, and the State Administration of Foreign Exchange jointly issued a statement stating that they should pay close attention to some recent irrational foreign investment tendencies in real estate, hotels, studios, entertainment, sports clubs and other fields, as well as large-scale non-main business investment. There are hidden risks in foreign investment such as limited partnerships,"mother-child big", and "fast-set-up and fast-release", and it is recommended that relevant enterprises make prudent decisions.

Analysts believe that the Belt and Road Initiative provides broad market space. Under the promotion of the "Belt and Road" initiative, the trade structure has been further optimized. Business promotion methods can be carried out through mergers and acquisitions of high-quality overseas companies and assets, strategic cooperation with overseas companies and the establishment of subsidiaries.

Taking Changjiang Media as an example, the company stated that it closely follows the national "Belt and Road" initiative and actively integrates into the international cultural industry system. By promoting the implementation of key projects and cooperation with important partners, the "going global" work has been carried out from point to point, and the current progress and results have exceeded expectations. The company has established subsidiaries in the UK and Africa, and Chinese Bookstores in London, UK and Kuala Lumpur, Malaysia are under preparation, realizing business, personnel and capital going global.

At the same time, policy dividends continue to increase. The "Belt and Road" Cultural Development Action Plan of the Ministry of Culture (2016-2020)"proposes to give full play to the advantages of China's animation and game industry's strong innovation capabilities and large industrial scale, cultivate key enterprises, implement key projects, carry out international production capacity cooperation, and achieve a significant expansion in the scale and level of cooperation between China's animation and game industry and countries and regions along the route. Industry insiders believe that the expansion of overseas markets by related companies will continue to heat up in 2017.

Editor: yvette