The review of "star securitization" is tightening, and the new third board film and television companies rush to A-share listings is booming

In recent years, the behavior of many companies to acquire film and television companies with celebrity IP aura at high premiums has attracted the attention of regulators, and "celebrity securitization" is facing increasingly stringent scrutiny.

Original title: The A-shares of the New Third Board Film and Television Company have tempted

the New Third Board Film and Television Company to merge and restructure with listed companies. It is not easy to go. In recent years, the behavior of many companies to acquire film and television companies with celebrity IP aura at high premiums has attracted the attention of regulators, and "celebrity securitization" is facing increasingly stringent scrutiny.

New Third Board companies are rushing to go public in A-shares.

On the afternoon of April 20, Gu Bin, executive manager of the Shanghai Stock Exchange's Issuance and Listing Center, pointed out in a speech entitled "The Current Situation of IPOs and Recent Prospects for the Future","As of the end of the first quarter of 2017, a total of 400 new third board companies have announced their plans to apply for IPO in the A-share market. Among them, 211 companies are in the IPO listing guidance stage, and 78 companies have applied for materials and been accepted by the China Securities Regulatory Commission, and are in the IPO queuing review stage."

New Third Board film and television companies are also in this wave.

Statistics from reporters found that since 2016, there have been 61 mergers and acquisitions of film and television companies by listed companies, including 4 cases involving listed companies acquiring new third board film and television companies. In addition, there are 4 film and television companies that intend to launch IPOs in the A-share market.

Reporters from listed companies

reviewed the progress of film and television mergers and acquisitions and found that two of them had been terminated and two were in progress.

Including mergers and acquisitions, and fixed-increase subscriptions, the new third board film and television companies favored by listed companies include Qingyu Media, Midsummer Star Sky, Zhonghui Film and Television, Lemi Technology, Lehua Culture, Dana Films, Sanshang Media and Jiaxing Media.

What kind of New Third Board film and television companies can be "targeted" by listed companies?

Huang Guofeng, senior analyst at Analysys Interactive Entertainment, told reporters: "IP resources, star resources, film and television production capabilities, etc. are all the focus of listed companies."

First of all, star resources are rich. In midsummer, there are Ma Tianyu and Tian Liang; Jiaxing Media has Yang Mi and Liu Kaiwei; Qingyu Media has Zu Feng and Sun Honglei; Lehua Culture has Han Geng and Zhou Bichang.

Secondly, IP resources are reserved. Jiaxing Media holds IPs such as "Fire Like Song","Negotiator","Tsundere and Prejudice", and "Beauty Seeking Law"; the starry sky in midsummer has "Song of Longevity","Secret Investigation", etc.; Zhonghui Film and Television, which was once favored by Sanqi Mutual Entertainment, claims to have the development rights and adaptation rights of more than 50 popular IPs including "The Dedication of Suspect X".

Finally, there are many film and television representative works from various companies. Midsummer Star has successively launched film and television works such as "The Sun Is Like Me","Fate Comes Happiness", and "Beautiful Mountains and Rivers Long Songs"; Jiaxing Media's hit dramas "Three Life Three Ten-Mile Peach Blossom" and "Beautiful Li Huizhen" have aroused enthusiastic responses from the market; Lehua Culture, centered on Han Geng, launched "Summer With Arbor Elegance Looking at Paradise" and "Journey to the West 3", both of which received good box office results.

However, the path of mergers and acquisitions between New Third Board film and television companies and listed companies is not easy. In recent years, the behavior of many companies to acquire film and television companies with celebrity IP aura at high premiums has attracted the attention of regulators, and "celebrity securitization" is facing increasingly stringent scrutiny.

In August 2016, Sanqi Mutual Entertainment planned to acquire 100% equity of Zhonghui Film and Television. However, due to "changes in the market environment", it announced the cancellation of the acquisition of Zhonghui Film and Television in October of the same year.

On February 28, 2017, Gongda Electroacoustic officially announced the termination of the major reorganization of the proposed acquisition of 100% equity of Lehua Culture, a new third board media company, for 1.89 billion yuan. Prior to this, Lehua Culture had lowered its price twice in order to successfully go public. However, this "aggrieved" merger and reorganization was still terminated after continuous inquiries from the China Securities Regulatory Commission.

Direct sprint IPO

Due to the difficulties in mergers and acquisitions of New Third Board film and television companies, some New Third Board film and television companies have taken a different approach and chosen to directly promote IPOs and launch a sprint into the A-share market.

According to incomplete statistics from reporters, the new third board film and television companies that have officially announced the launch of IPOs include Heli Chenguang, Kaixin Mahua and Guangmei Media. In addition, Du Hua, chairman of Lehua Culture, which failed twice in mergers and acquisitions with listed companies, once expressed the idea of a separate IPO to the media.

So, do these three film and television companies listed on the New Third Board have the ability to sprint for A shares?

In June 2016, Heli Chenguang, who had just been listed on the New Third Board for two months, submitted an application for initial public offering and listing to the China Securities Regulatory Commission. It is worth mentioning that Heli Chenguang's star shareholder is Guo Jingming.

Guo Jingming and his "Tiny Times" series of films helped Heli Chenguang significantly improve his performance. According to public information, Heli Chenguang's performance in 2013, 2014, 2015 and 2016 was amazing. Its operating income increased from 40.6079 million yuan in 2013 to 602 million yuan in 2016, and its net profit also increased from 17.1668 million yuan to 185 million yuan.

In terms of performance, Heli Chenguang's IPO prospects seem very optimistic. However, it is worth noting that one of Heli Chenguang's important customers is LeTV. The 2016 annual report shows that among the top 5 accounts receivable, Xizang Letv Information Technology Co., Ltd. ranks third, but its bad debt reserve ranks first. The book balance in 2016 was 53.385 million yuan, of which 3.8985 million yuan was provided for bad debts.

On January 9, Kaixin Mahua, which became famous with "Charlotte Worries", announced that it was preparing to receive IPO guidance and sprint to the GEM. However, Kaixin Mahua's 2016 annual report shows that the company achieved operating income of 292 million yuan in 2016, a year-on-year decrease of 23.81%, and net profit of 71 million yuan, a year-on-year decrease of 45.08%. The company's 2016 performance declined instead of increasing, and its continued profitability was in doubt.

On March 28, Goodview Media issued a reminder announcement for listing guidance and filing. The company's 2016 performance pre-increase announcement shows that the company expects to achieve a net profit of 27 million yuan to 28 million yuan in 2016, an increase of 33.49% to 38.44% over the same period last year.

A strategic analyst at China Post Securities told reporters,"Film and television companies, as representatives of asset-light, are not easy to define valuations, and there are greater risks in the IPO."

"It's not just valuation, but whether it can continue to be profitable is also a key concern for regulators." Some industry insiders engaged in film and television investment told reporters.

Editor: Nancy