Two mainland firms go to market for $1bn

Business | Avery Chen 21 Feb 2020

Two mainland companies are planning to launch their Hong Kong initial public offerings next week to raise up to HK$1 billion.

Variety programs producer China Bright Culture, which passed a listing hearing earlier this month, is seeking to kick off the public float as soon as February 28 to raise as much as US$150 million (HK$1.17 billion).

Founded in 2014, the Beijing-based company has produced TV variety programs "Hello Food", "Hello! Interviewer", and "Hey! Let's Sing".

Its revenue fell 14.11 percent to 222.71 million yuan (HK$246.77 million) for the first eight months last year, and net profit dropped 30.55 percent to 48.92 million yuan due to a decrease in advertising revenue.

China Bright also warned that the novel coronavirus outbreak could require its employees to be quarantined and its offices to be disinfected, potentially resulting in reduced demand for its services and delays in the production and broadcasting of pipeline programs.

Meanwhile, Beijing-based property management service provider Ye Xing Group began gauging investor demand and plans to launch IPO next week.

Its revenue rose 10.92 percent to 175.36 million yuan for the first eight months last year, but net profit dropped 21.52 percent to 20.63 million yuan during the period.

The two companies are set to start trading on the mainboard in March.

Meanwhile, PricewaterhouseCoopers said COVID-19 has created many short-term uncertainties on China's mergers and acquisitions activities, making it difficult to predict 2020 market performance.

David Brown, deals leader for Asia-Pacific at PwC, said the M&A activities may recover in the second half if the virus outbreak is brought under control.

The value of China M&A in 2019 fell 14 percent to US$559 billion, which is the lowest since 2014, driven by steep falls in domestic and outbound sectors, data from PwC showed. Deal volumes also fell 13 percent compared to the previous year.

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