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Anhui Xinhua may raise 712m yuan from float

By Wang Ying (China Daily)
Updated: 2009-12-26 07:04

Publishing firm Anhui Xinhua Media Co (AXMC) may kickstart a new round of media public floats after it said it was planning to raise 712 million yuan ($ 104.27 million) through an initial public offering (IPO) to expand its sales network.

The State-owned firm based in central Anhui province plans to float 10 million shares, or as much as a 12.09 percent stake, to expand its book store network, logistics system, and an electronic advertisement media network, according to the prospectus filed to the Shanghai Stock Exchange.

AXMC, with 507 stores and outlets in central China, is authorized by the government to sell textbooks to primary and secondary schools. Sales of textbooks account for about half of the company's revenue, it said.

The company plans to price the issue on Jan 4 and also start institutional sales on the same day and to investors from Jan 5. Guoyuan Securities Co is helping arrange the share sale.

The company earned 112.7 million yuan in the first half of this year, while profit rose 19 percent to 252.3 million yuan in 2008 from a year earlier.

Geng Yun, an analyst with Northeast Securities, expects the company to get 1 billion yuan from the IPO.

"The company's earnings per share (EPS) was 0.28 yuan in 2008, and this year it will touch 0.3 yuan. If the share price is set at 30 times the EPS, the shares would be priced at around 10 yuan per share. That would also mean the company could raise about 1 billion yuan," Geng said.

According to Geng, Anhui may not be able to make waves like Liaoning Publishing & Media Company Ltd, which saw its shares soar nearly 300 percent on debut in 2007. He, however, feels that Anhui may not be affected that much as it has a limited number of floating shares.

Zhang Liangwei, an analyst with Xiangcai Securities, feels that AXMC's listing is a signal that China is encouraging more culture-related enterprises to go public.

"Currently, China has an ambitious plan to develop six or seven media groups whose assets and sales revenue may exceed 10 billion yuan over the next three to five years. So as such we may see more floats and integration in the sector," said Zhang.

The Chinese government said in September that it will continue to help more culture-related companies list either on the main board or smaller board for high growth companies.

With support from both central and provincial governments, nearly 10 publishing companies are awaiting approvals for their IPOs from the China Securities Regulatory Committee.

Anhui province has already helped another publishing house to list on the main board. The Anhui-based Time Publishing and Media Co Ltd went public in Shanghai last September.

There are currently 15 culture-related companies listed on the mainland stock markets.