Liaoning firm's dual listing a market hit

On Dec 20, Liaoning Publishing & Media Company Ltd, one of the country's largest publishing groups, listed on the Shanghai Stock Exchange.

The company issued 140 million A shares at a price of 4.64 yuan. The float accounted for 25.41 percent of Liaoning's total capitalization.

Company shares surged 329.53 percent on the first day of trading and the share price had altogether made a fourfold jump by Dec 10, becoming one of the most bullish stocks of 2007.

Liaoning is the first publishing company to simultaneously list its editorial and commercial operations, said analyst Tan Xiaoyu of Guotai Jun'an Securities.

"The listing model that combines editorial units and commercial units greatly increased the company's competition and risk control capability," Tan said.

Liu Binjie, head of the General Administration of Press and Publication (GAPP), noted in October that considerable risk would be created if business and publishing departments were to be separated.

Publishers and newspapers were originally only allowed to list non-core commercial units.

These include Shanghai-listed Chengdu B-Bay Media Co Ltd, Shanghai Xinhua Media Co Ltd, Shenzhen-listed Beijing CCID Media Investment Co Ltd, Hong Kong-listed Beijing Media Corporation Ltd and Sichuan Xinhua Winshare Chainstore Ltd.

Liaoning, a pilot of innovation and reform in China's publishing and media industry, is the first to issue shares in all their operations.

The company's popularity on the stock market proves that full media company listings are more attractive to investors than restricting IPOs to their non-editorial arms.

It also reflects an innovative step by the government to attract private and foreign investment in the media industry.

Liu of the GAPP said that China will allow local newspapers, publishing groups and even government news websites to list on domestic and overseas exchanges.

Founded in 2004, Liaoning is the first Chinese publishing company to commercialize its operations. The company's listed units include publishing, distribution and printing as well as a venture that cooperates with Guinness World Records.

Among the company's business units, the publication service is the main source of profit, accounting for about 50 percent of total gross profit and above 70 percent of total sales revenue.

The company consists of five publishing houses: Liaohai Publishing House, Liaoning Science & Technology Publishing House, Electronic Publishing House, Liaoning Arts Publishing House and Wanjuan Publishing House.

China's publishing market has been outperforming the global publishing market. China's book publishing market experienced a net turnover of 37.69 billion yuan in 2000 to 49.32 billion yuan in 2005, up 5 percent year-on-year.

According to a forecast from market research engine ReportLinker, the global publishing market's annual growth rate was 3 percent between 2006 and 2011.

And the global publishing market scale will reach $444.64 billion by 2011, the report said.

Liaoning Publishing & Media Co said that capital raised from the IPO will be mainly used to finance subsidiaries including Liaoning Publishing and Planning Ltd and Liaoning Northern Publication Delivery Ltd.

The capital will also be used to build Northern Book Town stores and to supplement liquid capital in publishing teaching materials for primary and middle schools.

However, Yang Peilong, an analyst from Guoyuan Securities, pointed out that with the development of digital circulation media, the traditional book circulation industry is facing new challenges.

"The company should know how to absorb and implement advanced digital technology rapidly, and to develop new media with digital content, digital production and network broadcasts," he said.

Yang pointed out that the piracy phenomenon also harms the publishing and circulation industry's development.

(China Daily 01/16/2008 page15)