Content production company Linmon Media has filed a listing application to Hong Kong's bourse to raise US$300 million (HK$2.34 billion) after an unsuccessful attempt in July to go public in the mainland.
Technology giant Tencent (0700) is the second-largest shareholder of Linmon with 19.78 percent of the stake through Tencent Mobilit while Hony Capital, the private-equity firm backed by Legend Holdings (3396), owns 16.15 percent, according to the prospectus.
Founded in 2014, Linmon creates premium drama series based on its abundant reserve of original intellectual properties, across the full chain of operations. Its five drama series on air from 2018 to 2020 garnered more than 19.3 billion view counts on online video platforms during the first-run broadcast period and an annual viewership rate of over 1 percent on TV channels during the same period.
Linmon's day-to-day life drama series such as A Love for Separation, A Little Reunion, A Little Dilemma, Nothing but Thirty and Twenty Your Life On focus on popular contemporary topics such as family life, education and female empowerment.
The company currently has 28 drama series projects under script development and pre-production, five under filming or post-production and 11 under broadcasting.
Among them, it has pre-sold four of the projects under filming or post-production and eight of the projects under script development.
Linmon ranked fourth among all Chinese drama series companies in terms of revenue in 2020, according to a commissioned report of Frost & Sullivan.
Although there were more than 22,500 drama series production companies in 2020, only limited number of players possess the ability to produce premium drama series, the report said.
China's video-based content market experienced rapid growth at a compound annual growth rate of 20.9 percent from 173.9 billion yuan (HK$211.7 billion) in 2016 to 371.9 billion yuan in 2020, the report said, and the market is expected to be worth 841.4 billion yuan by 2025, or a CAGR of 17.7 percent for the five-year period.
However, Linmon warns that the production and distribution of drama series are extensively regulated in the mainland, saying that its failure to comply with evolving laws, rules and regulations could materially and adversely affect the business, financial condition and results of operations.
Linmon's net profit slid 61.2 percent to 82.95 million yuan year-on-year in 2019 and then further dropped nearly 40 percent to 50.13 million yuan in 2020, as it recorded higher other expenses and loss in fair value of convertible redeemable preferred shares in 2020.
Excluding the non-cash and one-off items, the annual adjusted profit was reduced by 33.33 percent to 150.94 million yuan year-on-year in 2019.
The figure then rose 61 percent to 243.02 million yuan a year later.
Its first-half profit skyrocketed 33 times to 83.49 million yuan in 2021.
Revenue grew by 11.71 percent to 1.79 billion yuan year-on-year in 2019 before dropping by 20.51 percent to 1.43 billion yuan in 2020. It posted a 26.58 percent growth in the first half of 2021 year-on-year.
Its current ratio was 0.6 as of end-June, 2021.
