Shares of Chinese movie producer and distributor Bona Film Group soared by the maximum 44% on August 18, its first day of trading following an initial public offering on the Shenzhen Stock Exchange.
Bona Film is responsible for producing many popular commercial films but has had a very winding road to IPO. It has been 5 years since the company first filed its prospectus in the A-share market.
In fact, as early as 2010, Bona Film was listed on the Nasdaq, but has since seen its market value remain below those of its rivals Huayi Brothers Media Corporation and Beijing Enlight Media. Six years after its listing in the US, Bona Film announced privatization and delisting.
In the second year after the delisting from US, Bona Film prepared for an IPO in China’s A-share market, but it did not complete the process. In August 2020, the company worked on listing on the A-share market again. In November of that same year, it obtained preliminary approval from the China Securities Regulatory Commission, but only was seeing progress on its applications. Finally, at the end of July this year, it finally received the approval to IPO.
Bona Film has a strong shareholder lineup, including Alibaba, Tencent, Sequoia Capital, CITIC Securities and other institutions, as well as many celebrities such as Mark Huang, Zhang Ziyi, Zhang Hanyu and Han Han.
However, these shareholders are facing huge losses. Many celebrity shareholders subscribed at a price of 14.55 yuan ($2.13)/share. Calculated by the subscription price of 14.55 yuan and the closing price on August 19, both Mark Huang and Zhang Hanyu have lost a total of 22.6452 million yuan respectively, and Zhang Ziyi has lost 13.5873 million yuan.
According to prospectus, the revenues of Bona Film in the three years from 2019 to 2021 were 3.116 billion yuan, 1.61 billion yuan and 3.124 billion yuan respectively, and the net profit attributed to parent company in the same period were 315 million yuan, 191 million yuan and 363 million yuan respectively.
Its revenue is derived from three sources, namely investment, distribution and the cinema business. Last year, these three businesses contributed 46.53%, 32.55% and 27.49% to the total revenue respectively. However, the gross profit margin of the company’s cinema business last year was only 1.71%.
Against repeated outbreaks of the pandemic, which has severely affected the cinema business, Bona Film has not stopped its expansion of its cinema network. By the end of 2021, Bona Film had 101 cinemas and 841 screens.
The films the company has produced and distributed share two features: patriotic themes and the participation of Hong Kong filmmakers. At present, three of the top ten Chinese films were produced by Bona Film, all of them hosting patriotic themes. The company is planning to continue its efforts in this genre.