Listing rings in media changes
The response was overwhelming for the Chinese mainland's first media company to list on an international stock exchange.
The IPO of the Beijing Media Corp Ltd was covered 422 times after its flotation yesterday on the Hong Kong stock exchange, rising to 50 per cent from its original 10 per cent issue.
And it opens the doors to international investors seeking to gain a foothold in the country's huge advertising and media sectors.
The stocks made their expected opening 10-15 per cent gain, and analyst predict a 30 per cent surge in the medium term.
International placing was about 16 times covered, and according to Hong Kong-based financial specialists, Beijing Media "can be a major investment proxy to China's vast advertising and media market."
The advertising and sales arm of the group's flagship Beijing Youth Daily, China's second largest newspaper in terms of advertising revenue, is the first state-owned media firm to join China's H-share companies listed in Hong Kong.
The South Africa-listed media firm Naspers, which owns 35.84 per cent of Tencent, China's instant message service operator, has agreed to buy a 9.9 per cent stake in the company, or 39.6 per cent of the offering, with a six-month lock-up period.
"Beijing Media's listing is a milestone for the progress in which Chinese media are building themselves into a modern industry, and will serve as a leading example for other Chinese media organizations," said Cao Yuanzheng, deputy executive president and Chief Economist of the BOC International, an investment banking operating under Bank of China.
Beijing Media's offer includes 47.74 million shares, or 25 per cent of its enlarged equity.
It has raised HK$904.67 million (US$116 million) after pricing its IPO at HK$18.95, the top end of its HK$14.95-HK$18.95 offer price range.
The newspaper Beijing Youth Daily, which is not included in the overseas list company, has a circulation of 600,000.
The paper's advertising revenue reached 900 million yuan in 2003, making it the country's second biggest.
Assuming the net proceeds from the listing at about HK$667 million (US$85.5 million), Beijing Media plans to use HK$100 million for developing its weekend newspaper, about HK$80 million for developing a number of weekly magazines, HK$250 million for investing in the TV industry in Beijing, and about HK$200 million for acquiring other media businesses, and the remaining as general working capital.
Ben Kwong, Hong Kong-based associate director of KGI Asia, told China Daily: "Considering the market's continued strong liquidity, Beijing Media is a trading buy which can be managed easily and reap profits quickly."
He added that Beijing's host of the 2008 Olympic Games might boost overall ad spend in the capital city, and underpin the company's long term business prospect. He said he expected the stock would made a solid debut today, when IPO trading started.
According to Marco Mak, head of research at Taifook Securities, a second-tier broker that has received more than HK$800 million subscription from retail investors in Hong Kong, Beijing Media "is a good buy" as the stock has its fresh and unique selling point as the first mainland-based newspaper group to list overseas.