Kaixin Mahua's net profit fell 45% in 2016, and its IPO path may be blocked

Kaixin Mahua Securities Representative said in an interview that the company is currently preparing for an IPO and it is inconvenient to explain too much about the decline in performance. However, some brokerage analysts believe that the bubble in the film and television industry is receding. If Kaixin Mahua's performance plummets, it will definitely affect the company's transformation.

In recent years, the capitalization process of film and television companies has gradually accelerated, and many of them have taken advantage of the "wind outlet" to rise rapidly. Kaixin Mahua is a typical case. This company was listed on the New Third Board in 2015, with a market value of 5.1 billion yuan. It is known as the "first drama stock" of the New Third Board and moved to IPO a year later.

However, things did not go smoothly. On April 20, Kaixin Mahua released its 2016 annual report, stating that during the reporting period, the company achieved operating income of 290 million yuan, a year-on-year decrease of 23.81%; achieved net profit attributable to listed shareholders of 71.875 million yuan, a year-on-year decrease of 45.08%; After deducting non-profit, the net profit was only 60.6382 million yuan, a year-on-year decrease of 51.77%.

Kaixin Mahua Securities Representative said in an interview that the company is currently preparing for an IPO and it is inconvenient to explain too much about the decline in performance.

However, some brokerage analysts believe that the bubble in the film and television industry is receding. If Kaixin Mahua's performance plummets, it will definitely affect the company's transformation.

Kaixin Mahua's performance is like a "roller coaster"

. In September 2015, Kaixin Mahua released the "Public Transfer Specification" for the first time, announcing its entry into the capital market. That month, the company's first movie,"Charlotte Worries", was released, and its popularity exploded at the box office. Two months later, the box office of "Charlotte Worry" exceeded 1.4 billion yuan, and Happy Mahua was also popular in the capital market.

It is this movie that caused Kaixin Mahua's performance to rise steadily in 2015. Looking back at the company's performance over the years, in 2014, Kaixin Mahua achieved operating income of 150 million yuan, all from stage dramas and derivative income; in the first half of 2015, the company achieved revenue of 83.0173 million yuan, of which stage dramas and derivative income accounted for 95.4%.

After the release of "Charlotte Worries", the company's performance soared by leaps and bounds. According to its 2015 performance report (after correction), Kaixin Mahua achieved operating income of 383 million yuan in 2015, a year-on-year increase of 154.8%, of which the proportion of stage drama revenue fell to 48%. Net profit attributable to shareholders of listed companies was 131 million yuan, a year-on-year increase of 234.15%.

Kaixin Mahua said in its annual report that the company's net profit increased significantly in 2015, mainly due to the higher returns achieved by film projects in 2015.

In fact, hot products do not happen every year. 2016 was a turning point for the film market. The bubble was gradually squeezed out and the industry became more rational. The performance of many film and television companies has been affected, and Kaixin Mahua is no exception. In 2016, the box office revenue of "Donkey Deshui", which is controlled by Kaixin Mahua, was 173 million yuan. Although it was still profitable, its performance was obviously not as good as "Charlotte Worry".

Generally speaking, the explosion of movie box office requires many factors to promote it. The above-mentioned analyst said in an interview with reporters,"Movies are an industry that is difficult to quantify. This is different from traditional companies. Movies with good reputation may not have high box office. Currently, no film and television company can achieve departmental profits. Therefore, for film and television companies, risk awareness is particularly important. At present, A-share film and television companies, such as Huayi Brothers and Enlight Media, launch multiple films within a year to hedge risks. Kaixin Mahua is a novice in the film industry, so it will be a challenge to operate multiple movies at the same time. Therefore, if you make money solely from movies, it will still be a 'lucky job' in the short term."

In the risk warning of Kaixin Mahua's 2016 annual report, it also clearly stated that "in 2015, the box office revenue of the company's first film" Charlotte Worry "exceeded 1.4 billion yuan, prompting the company's performance level to increase significantly compared with 2014. In 2016, the company's black humorous film "Donkey Deshui" ranked first in the Douban score of the Chinese film in 2016. However, due to the influence of the film type and market environment, the box office revenue was approximately 170 million yuan, and the revenue contribution was relatively small, resulting in the company's 2016 performance level declined compared with 2015."

The road to IPO may be

blocked. For Kaixin Mahua, the biggest question is whether the collapse in performance will affect the smooth progress of the IPO. On January 9 this year, Kaixin Mahua issued an announcement stating that the company's board of directors reviewed and approved the proposal of "initial public offering of shares and listing on the GEM", and the company launched an IPO on the GEM. On March 13, Kaixin Mahua announced that the company would submit listing guidance materials to the Beijing Regulatory Bureau on January 16.

According to disclosure, Kaixin Mahua plans to issue 40 million shares at an issue price to be determined. At present, the total share capital of Kaixin Mahua is approximately 360 million shares, and the number of shares to be issued this time accounts for approximately 10% of the total after issuance.

Cui Zhijuan of the Beijing National Accounting Institute told reporters,"The decline in company performance when queuing for IPO must be viewed from two aspects. One is to measure whether the company still meets the listing criteria after the decline in performance; the other is that if the performance changes are very large, it will also attract the attention of the regulatory authorities and review the risks."

In fact, Kaixin Mahua has also caused controversy because of the "valuation myth". In January 2016, Kaixin Mahua issued 1.52182 million shares at a price of 2.40 yuan/share, which were subscribed by Zhang Chen, the company's chairman and one of the actual controllers, raising 3.65 million yuan; In less than two months, Kaixin Mahua issued another 2.841835 million shares at a price of 106 yuan/share, raising more than 300 million yuan, and introduced a total of 11 new investors, of which Orient Securities subscribed nearly 50.21 million yuan. The two extremely large stock issuance prices also increased the market value of Kaixin Mahua from more than 100 million yuan to 5 billion yuan.

It is foreseeable that once Kaixin Mahua successfully IPO, the company's market value will also rise, and getting rich overnight is no longer a dream.

Editor: Nancy