Xinli Media's second IPO wants to be the first film and television company: ideals are full, reality is very bony

Xinli Media's original intention to become the "No. 1 film and television" on the main board does not seem to have changed. However, its ideals are full and its reality is very bony.

Original title: Xinli Media's first dream of film and television is very skinny.

Xinli Media's original intention to become the "first film and television" on the main board does not seem to have changed. However, its ideals are full and reality is very skinny.

Xinli Media, which is queuing up for its second IPO, has encountered trouble again-the TV series "White Deer Plain" it invested in has stopped airing...

So, will Xinli Media's IPO be affected by this? What kind of company is Xinli Media?

The reporter conducted a comprehensive physical examination of Xinli Media in six aspects: its main qualifications, independence, sustainable profitability, growth, standardized operation, and fundraising projects.

Based on a total score of 100, the reporter gave Xinli Media a total score of 67 points.

Reason for deducting points for subject qualifications of 12 points (total score of 20)

: There were flaws in the equity transfer process, and there was suspicion of proxy holding.

One of the sponsors of Xinli Media's listing was named Chen Defa. In 2011, he transferred 0.204% equity of the second shareholder for 5 million yuan. The shareholder was born in 1938 and is nearly 80 years old. He is suspected of holding shares on behalf of him.

Let's first take a look at the past and present lives of Xinli Media.

In November 2011, Xinli Media's predecessor, New Classic, was officially changed to a joint-stock limited company. The actual controller and controlling shareholder of the company were Cao Huayi. Judging from the prospectus, Xinli Media has a capital verification report and evaluation report issued by a qualified institution for every equity change.

However, it is worth noting that in September 2011, Wang Ziwen, the company's former second largest shareholder, transferred 0.204% of his shares to Chen Defa for 5 million yuan. The transfer price was based on the company's overall valuation of 2.45 billion yuan. Data shows that Chen De occurred in 1938 and is now nearly 80 years old. He is suspected of holding shares on behalf of him.

In addition, Lin Yong and Zhang Mengyu were also involved in the equity transfer with Chen Defa. Lin Yong and Zhang Mengyu also transferred 0.204% and 0.1224% of the shares of the second shareholder Wang Ziwen at prices of 5 million yuan and 3 million yuan respectively in September 2011. In December 2014, Chen Defa, Lin Yong and Zhang Mengyu also signed an "Equity Transfer Agreement" with Cao Huayi, transferring the 0.204% equity held at a price of 6.12 million yuan and the 0.1224% equity held at a price of 3.672 million yuan to the actual controller Cao Huayi. The transfer price is based on the company's overall valuation of 3 billion yuan. The reasons for the transfer are not disclosed in the prospectus.

Entering together and exiting together, what is the connection between these three shareholders? Is there any mystery behind the equity transfer?

The reporter asked Xinli Media's Secretary Office about this, and Xinli Media responded: "Whether the three shareholders, Chen Defa, Lin Yong, and Zhang Mengyu, whether they invest or withdraw, are their true wishes."

It is worth mentioning that the shareholders behind Xinli Media are strong, including the second shareholder, Enlight Media, Xi Shi Investment, which includes famous director Chen Kaige, actor Hai Qing and other romantic personnel, Ma Huateng's Century Triumph, and Wang Jianlin's Wanda Film and Television, etc.

Independence points of 13 points (total score of 20)

Reason for deduction points: The second shareholder Enlight Media and Xinli Media have horizontal competition and related transactions, and the impact cannot be ignored.

The second largest shareholder Enlight Media (holding 27.642%), as a giant in the domestic film and television company, has horizontal competition and related transactions with Xinli Media. At the same time, due to its large proportion of shares, Xinli Media has greater influence and may have an impact on Xinli Media in the future when commercial competition occurs.

The independence of a listed company includes the independence of personnel, assets, finance, institutions and business. Business independence states that there are no unfair related transactions between the listed company and the controlling shareholder or actual controller, and the listed company's business does not depend on the controlling shareholder or actual controller.

Although Xinli Media's business does not rely on the actual controller Cao Huayi and his holding company, the noteworthy second largest shareholder, Enlight Media, as a giant of domestic film and television companies, has horizontal competition and related transactions with Xinli Media. This point was also mentioned in the feedback from the China Securities Regulatory Commission.

In terms of business competition, although Xinli Media's business focuses on TV dramas and Enlight Media's business center is the film field, in fact, the two companies have already had an obvious competitive relationship. In 2015,"Charlotte Worry" invested by Sunny Media and "Lost in Hong Kong" met in the National Day episode of Light Media. They are both comedy films, and competition is inevitable. In the prospectus, when Xinli Media mentioned its competitors in the industry, it also explicitly mentioned the second shareholder, Enlight Media.

In terms of related transactions, Xinli Media had a large number of related transactions with Enlight Media before, but the number has decreased significantly in recent years. Its prospectus shows that in 2012 and 2013, the transaction amounts between Xinli Media and Enlight Media were 59.14 million yuan and 882,700 yuan respectively. In 2014 and 2015, there was no transaction amount.

Although horizontal competition refers to the occurrence between the company and its controlling shareholder and actual controller, there is no direct relationship with the second shareholders. However, according to the proportion of shareholders, we can find that the controlling shareholder of Xinli Media and its concerted action, Xi Shi Investment, hold a total of 42.896%, which has not achieved absolute control. The second shareholder, Enlight Media, holds a stake of 27.642%, which has a greater influence on listed companies. Influence may have an impact on Xinli Media in the future when commercial competition occurs.

In terms of major customer dependence, Xinli Media does not have a serious tendency to rely on a single major customer. Sales situation, the sales revenue of the top five customers in each reporting period did not exceed 20% of operating income, and the overall proportion of the top five major customers remained at around 60%. The procurement and supply situation is good, and Xinli Media does not have a situation where the proportion of procurement from a single supplier exceeds 50% of the cost of the film industry.

Continued profitability of 8 points (total score of 10)

Reason for deduction points: There are certain flaws in operating cash flow

. Since 2012, Xinli Media has maintained its operating income at more than 300 million yuan, and its net profit has also exceeded 80 million yuan., meeting the requirements for continued profitability. However, there are flaws in operating cash flow. The cash flows in 2012 and 2013 were negative. The cash flow in 2014 was 24.6039 million yuan, which did not exceed 50 million yuan.

Xinli Media is a well-known film and television production and investment company in China. In recent years, it has produced many high-quality dramas and high-box office movies, and the prices of TV dramas sold by the dramas it produces have increased.

According to the prospectus, the cumulative single episode prices of TV series sold during the reporting period exceeded one million. The single episode prices of "Kitchen","Floating and Sinking","One Servant and Two Masters","Ten Years of Love","If Life Deceives You" and other high-quality dramas have exceeded 2 million yuan. The single episode prices of "Real Husband","Real Story of Hot Mom" and "Tiger Mom and Cat Dad" have exceeded 4 million yuan."Real Story of Hot Mom","Tiger Mom and Cat Dad", The prices of the second round of dramas such as "Real Man" and the single episode released by Duolun exceeded 1 million yuan.

The main board requirements for sustainable profitability show that the company needs to have positive net profits for the last three fiscal years and cumulatively exceed 30 million yuan. The net cash flow generated from operating activities in the last three fiscal years exceeds 50 million yuan; or the cumulative operating income for the last three fiscal years exceeds 300 million yuan.

According to the disclosed financial data, Xinli Media has maintained its operating income at more than 300 million yuan since 2012, and its net profit has also exceeded 80 million yuan, meeting the requirements for sustainable profitability. However, there are flaws in operating cash flow. The cash flows in 2012 and 2013 were negative. The cash flow in 2014 was 24.6039 million yuan, which did not exceed 50 million yuan.

Growth points of 14 points (total score of 20)

Reason for deduction points: The gross profit margin is only at the normal level of the industry, and the net profit growth rate is not stable

enough. From the perspective of financial data, Xinli Media's operating income has performed well, and the gross profit margin has remained stable. The stability of the growth rate of net profit is worrying.

Good growth is manifested in the rapid growth of operating income and net profit (30%+), while gross profit margin and net profit margin are also rising; if operating income and net profit margin grow rapidly, but gross profit margin and net profit margin continue to decline, it may be regarded as the market. Competition is fierce and the profit prospects are not optimistic.

Financial data shows that Xinli Media's operating income growth rates in 2013 and 2014 were 45.72% and 47.62% respectively. The net profit growth rate reached 55.55% in 2013 and dropped sharply to 3% in 2014.

During the reporting period, the company's comprehensive gross profit margins of film and television dramas from 2012 to January to June 2015 were 54.95%, 64.20%, 50.38%, and 52.55% respectively, while the industry average gross profit margins were 54.95%, 64.20%, 50.38% and % 41.80% respectively. It can be seen from the table that the overall industry gross profit margin of the film and television company is relatively high, and Xinli Media is at the industry average level.

Growth is the main focus of GEM companies, while main board companies pay less attention to it. However, judging from financial data, Xinli Media's operating income performed well, its gross profit margin remained stable, and the stability of its net profit growth rate was worrying.

6 points for standardized operation (total score of 10)

Reason for deduction points: Share transfers occurred during the review period

. Xinli Media's current operating system is relatively complete. However, judging from the standardization of shareholder changes, there is a problem that there are many new shareholders since its establishment, and the second largest shareholder is Enlight Media, a listed company with business competition.

The prospectus shows that Xinli Media has established a relatively complete operating system, and there were no major illegal activities in the three years before the prospectus was submitted, and there were no illegal guarantees or capital occupation before the issuance and listing.

In 2015, the China Securities Regulatory Commission released feedback on Xinli Media's IPO documents. One of the normative issues is worth noting. The application materials show that in October 2013, Wang Ziwen transferred all of his 27.642% equity interests to Enlight Media. After the equity transfer was completed, domestic film and television company magnate Enlight Media became the second largest shareholder of Xinli Media, holding 27.64%.

Regarding the reasons for the equity transfer on the eve of the IPO, Xinli Media stated in a subsequent update of the prospectus that the transfer was due to Wang Ziwen's constant willingness to immigrate. Based on the policy restrictions of the domestic film and television industry prohibiting foreigners from holding shares, equity transfer was required.

In principle, it is not advisable for a joint-stock limited company to have another equity transfer during the IPO filing period. Some analysts pointed out that if this happens, the intermediary agency should re-perform its due diligence responsibilities. In principle, it needs to withdraw the application documents and re-declare after going through the industrial and commercial change registration procedures and internal decision-making procedures.

Reason for deducting points for 14 points (total score of 20 points) for fundraising projects

: Good profit prospects, but there are risks.

Due to the current risk of TV drama investment, the increasing salary of stars has greatly increased production costs. Whether profits can be achieved as expected remains at risk.

The proposed funds raised this time are 920 million yuan, which will be used to supplement the working capital of the film and television drama business. Xinli Media's prospectus shows that as of December 31, 2013, the total operating capital of the company's film and television business to achieve the film and television drama production capacity target was 920.2 million yuan.

Xinli Media said that based on the company's current investment amount in single episodes of TV series or single films and target production capacity in the film and television drama business, it is conservatively estimated that the company needs to achieve the production capacity target to be 1.067 billion yuan, including an investment of 199 million yuan in 6 films and a total of 12 TV series. The investment budget for a total of 585 episodes is 868.4 million yuan.

Public information shows that Tencent paid 810 million yuan for the online premiere rights of Xinli TV's 150 million yuan high-paying blockbuster "The Legend of Ruyi", and satellite TV's bid for the first round broadcast rights was as high as 15 million yuan per episode. In addition, the sales price of the sequels to the hit dramas "One Servant, Two Masters 2" and "Beijing Love Story 2" released by Xinli TV are also expected.

Filming the second film based on the hit drama is one of the shortcuts for many film and television companies to "get rich". However, whether the script adaptation meets the needs of the audience and whether the filming of the second season is the original crew are all factors that affect the success of the TV series. At the same time, the increasing salary of stars has greatly increased the production cost, and whether it can achieve profit as expected remains a risk.

Due to the high risk of current TV drama investment, Xinli Media's profit prospects for fundraising projects are highly uncertain. This score is 14 points (total score of 20 points).

Editor: Nancy