Xinhuanet’s tortuous listing road is another microcosm of the ＂restructuring＂ of the media national team.

Xinhuanet’s road of "learning from the scriptures" has gone for six years, and after six years of difficulties and frustrations, it has finally achieved the "true scriptures" — — Listing.

Whether or not Xinhuanet can lead the official media listing tide, as a content publisher, the content is a "flaming mountain" that can’t be skipped. How to realize the realization after going through it is a difficult problem that has been puzzling content entrepreneurs.

According to the evening announcement on the website of China Securities Regulatory Commission, on September 23rd, the CSRC approved the initial application of Xinhuanet Co., Ltd., which will be listed on the Shanghai Stock Exchange in the near future. As the "vanguard" of the central news website, the listing of Xinhuanet means that the cultural media sector will add a "national team".

As "one of the most credible and influential central news websites in China", the shareholders of Xinhuanet are strong, but its listing is not smooth, even quite tortuous.

1. With a strong shareholder background, ask who else?

Xinhuanet is a central key news website directly deployed by the CPC Central Committee and sponsored by Xinhua, the state news agency. It is a veritable "national team".

Xinhuanet mainly takes "spreading China and reporting the world" as its duty and takes "authoritative voice and cordial expression" as its concept. It publishes global news 24 hours a day in Chinese, English, French, Spanish, Russian, Arabic, Japanese, Tibetan and Uygur languages, ranking first in the central key news websites.

The background of the "national team" is also doomed to the strong shareholder background behind Xinhuanet. According to the prospectus, the controlling shareholder and actual controller of Xinhuanet Co., Ltd., which was founded in November 1997, are Xinhua News Agency.

Xinhua News Agency directly holds 82.46% of the shares of Xinhuanet, and indirectly holds 3.00% and 2.54% of the shares of Xinhuanet through China News Development Shenzhen Company and China Economic Information Agency respectively, holding a total of 88.00% of the shares of the company. After the IPO is completed and the obligation to transfer state-owned shares is fulfilled, it is expected that Xinhua News Agency will directly or indirectly hold 63.81% of the shares of the Company, and still have an absolute controlling stake.

In addition to Xinhua News Agency, the cultural industry fund, China Unicom, Southern Newspaper, China Telecom, Jiangsu Radio and Television, CITIC Trust, Wanxin Media and other shareholders with shareholding ratios ranging from 4.40% to 0.99% are all state-owned.

Xinhuanet’s equity structure chart

2. The listing process is difficult, and it has been prepared for this moment for six years.

Since 2010, according to the requirements of the central authorities and the deployment of the party group of Xinhua News Agency, Xinhuanet has been transformed from a cultural institution to an Internet cultural enterprise, and it has been operated as an enterprise. It was not until April 2011 that Xinhuanet was jointly recognized as a transformed cultural enterprise by the Ministry of Finance, the State Administration of Taxation and Publicity Department of the Communist Party of China, thus taking an important step in listing.

Following People’s Daily Online’s landing on the Shanghai Stock Exchange on April 27th, 2012, in January, 2013, Xinhuanet first appeared on the list of enterprises awaiting trial by the CSRC. At that time, it showed that its IPO application had been accepted by the CSRC. However, due to the blank of the new stock market in 2013, the IPO of A shares was suspended.

Since October 10th, 2012, when the audit committee of China Securities Regulatory Commission examined the initial application of Chongqing Gas and Chongda Circuit, there was no initial application for new shares for more than one year. Under this circumstance, the listing plan of Xinhuanet can only be stranded.

It was not until June 27, 2014 that the name of Xinhuanet appeared again in the list of IPO pre-disclosure enterprises. On April 20, 2016, the Audit Committee of the China Securities Regulatory Commission held a main board audit meeting to review the initial application of Xinhuanet. On the evening of September 23rd, the CSRC approved the initial application of Xinhuanet. So far, the listing of Xinhuanet finally settled.

3. Xinhuanet is the money-making machine of Xinhua News Agency.

In the days of waiting for listing, Xinhuanet has also participated in capital operation many times, especially in the Internet field.

In March 2015, Silver Orange Media, an Internet advertising service provider, issued 5.42 million shares to Xinhuanet, and received more than 70 million yuan in financing. Silver Orange Media announced that it will promote the complementary advantages of both parties in advertising, data analysis and media resources.

In June 2015, Xinhuanet announced that it had invested 130 million yuan to jointly establish Kangmei Health Think Tank with Kangmei Pharmaceutical to develop application products and business lines such as health data mining, health industry search engine and health precision marketing.

The above large-scale investment shows that Xinhuanet is not "poor money". Judging from the financial data, Xinhuanet can also be regarded as a money-making machine of Xinhua News Agency.

Xinhuanet income statement

According to the prospectus, from 2012 to 2014, Xinhuanet achieved operating income of 330 million yuan, 460 million yuan and 630 million yuan respectively, and net profit of 130 million yuan, 160 million yuan and 188 million yuan. Among them, the income from related party transactions from Xinhua News Agency and its subordinate units was 84.76 million yuan, 58.31 million yuan and 58.82 million yuan respectively.

Xinhuanet’s income structure

From the perspective of income structure, online advertising business and information service business account for more than 70% of Xinhua’s operating income.

However, compared with 2013, the revenue growth rate of online advertising business in 2014 was declining, from 58.67% to 20.06%.

However, in 2014, the operating income of information service business increased significantly, with an increase of 81.49% compared with 2013. Among them, the income of big data intelligent analysis service increased greatly in 2014, and the target customers were mainly concentrated in central state organs, news authorities, provinces, autonomous regions, municipalities directly under the Central Government and party and government departments at or above the prefecture level.

According to public information, the IPO of Xinhuanet plans to raise 1,497.33 million yuan and invest in five major directions, including the all-media information and application service cloud platform. With the growth of its online advertising business slowing down, it is both an opportunity and a challenge for Xinhuanet to lay out all-media and Internet services.

1. The success of People’s Daily IPO is difficult to replicate.

People’s Daily, which is also the media section "National Team", took the lead in listing as early as 2012, and was called "the first share in official website".

People’s Daily Online was immediately popular in the market. On the first day of listing, the closing price rose by 73.6% compared with the issue price (20 yuan), and it was even "specially stopped" by the exchange twice in intraday trading. On the third day of listing, the stock price doubled compared with the issue price, killing the new york Times, a century-old newspaper.

The highest share price of People’s Daily Online so far is 99.39 yuan set on September 23, 2013. Whether the share price of Xinhuanet, which is also the "national prefix", can break through 100 after listing in the future has become a major attraction in the A-share market.

There are different opinions in the industry about whether Xinhuanet can be as popular as People’s Daily Online. With the continuous improvement of the status of cultural industry in the national economy and the prosperity of cultural media, it is inevitable that Xinhuanet will be recognized by investors, but we must also consider the current market environment. After the stock market crash last year, the market tends to be cautious, and it is still difficult to replicate the listing performance of People’s Daily Online.

Xinhuanet and People’s Daily have many similarities: strong shareholder background, unique resource advantages, authority, timeliness, originality and multilingualism are all its advantages. In addition, according to the information in the prospectus, the gross profit margin of Xinhuanet is higher than that of People’s Daily Online.

However, the comparison between Xinhuanet and People’s Daily is of little significance, and the competitive relationship between them is not obvious. The attitude of the state towards the two major media is basically the same, and the prospect of listing financing is generally optimistic in the market.

2. Xinhuanet will lead a wave of official media listing?

With the approval of the IPO of Xinhuanet, whether the official media can be listed centrally has once again attracted attention.

As early as 2007, the decision-making department proposed to "actively promote the pilot reform of the news website system".

In September, 2009, the State Council issued the "Work Plan for the Pilot Project of Key News Websites", in which 10 national key news websites, including People’s Daily Online and Xinhuanet, were deployed, and it was proposed that one or two pilot websites should be successfully listed in China in 2010.

In May of the same year, the "Symposium on the Transformation of National Key News Websites into Enterprises" once again put official website’s listing on the agenda.

Until 2012, People’s Daily finally listed successfully as "the first share in official website".

In recent years, it has become an important task to comprehensively promote the transformation of official news into enterprises and form market-oriented management. In 2013, the "Decision of the Central Committee of the Communist Party of China on Several Major Issues of Comprehensively Deepening Reform" once again proposed to actively promote the transformation of key news websites into enterprises and learn from the business methods of commercial websites; Then deepening the reform of the cultural system has become an urgent task at present.

Since 2015, cultural media companies such as Longyun, Jiangsu Cable, Gravitational Media, Reader Media and Southern Media have been listed one after another. With the help of the country to build a new mainstream media group, the cultural media industry has also become the most active field of mergers and acquisitions.

With the continuous release of policy dividends, the cultural media industry will also be one of the industries that are expected to continue to maintain high growth and high prosperity in the capital market.

Some insiders admit that the restructuring and listing of official media involves very complicated coordination among all parties, not just simple business logic. It is unlikely that the official media will form a wave of listing in the future. First of all, the official media should be restructured to adapt to marketization and also need to find profit points. At present, the listing cycle is still relatively long.

The official media has been sheltered by administrative resources for a long time, taking advantage of policies and funds, and is largely out of the market.

Nowadays, to carry out market-oriented operation, it is necessary to win with a clear profit model and flexible mechanism. If the official media want to have a place in the market after listing, they can only speak by strength, and their performance may affect the future direction of official website, and even the development mode of China’s cultural industry.

(Source: Investment Tide, Caijing.com, Author: Qian Congzhen)