Duzhe seeks $81m in Shang­hai list­ing

China Daily (Canada) - - FRONT PAGE - By SHI JING in Shang­hai shi­jing@chi­nadaily.com.cn

Duzhe Pub­lish­ing & Me­dia Co Ltd, the pub­lisher of China’s most popular mag­a­zine The Duzhe (Read­ers), is to be listed on the Shang­hai Stock Ex­change.

Ac­cord­ing to an up­dated prospec­tus re­leased on May 18, Duzhe will be listed on the Shang­hai bourse to raise 504 mil­lion yuan ($81 mil­lion) to de­velop its mag­a­zine ti­tles, dig­i­tal pub­lish­ing projects and book pub­lish­ing op­er­a­tions.

The lead un­der­writer is China Dragon Se­cu­ri­ties Co Ltd, which like Duzhe is based in Lanzhou, the cap­i­tal of Gansu prov­ince.

Duzhe will hold a con­trol­ling 80 per­cent stake in the com­pany. Other ma­jor share­hold­ers in­clude Ever­bright Cap­i­tal In­vest­ment Co Ltd, Ji­uquan Iron and Steel (Group) Co Ltd and Gansu Pro­vin­cial State-owned As­set In­vest­ment Group Co Ltd.

Its sig­na­ture mag­a­zine The Duzhe, which pub­lishes bi­monthly and isknow­nas the Chi­nese ver­sion of Reader’s Di­gest, sells more than 200,000 copies. Its cover price rose at the start of the year from 4 yuan to 6 yuan.

Ex­clud­ing the pro­duc­tion cost of 1.38 yuan per copy, gross profit for each edi­tion is as much as 924,000 yuan, the prospec­tus re­vealed.

Duzhe has been ac­tively ex­plor­ing new di­rec­tions such as TV and dig­i­tal prod­ucts. To­gether with Zhe­jiang Tal­ent In­ter­na­tional Film Co Ltd, it in­vested in the TV se­ries The Em­press of China, which earned the lat­ter 268 mil­lion yuan in rev­enue.

Duzhe’s US coun­ter­part — Reader’s Di­gest As­so­ci­a­tion — filed for bank­ruptcy in 2009 and 2013. Its Chi­nese op­er­a­tion started in 2008 but was dis­con­tin­ued four years later.

The Chi­nese com­pany has also had a tougher time in re­cent years.

Ac­cord­ing to the prospec­tus, Duzhe’s sales rev­enue de­clined be­tween 2012 and 2014, from 191 mil­lion yuan to 173 mil­lion yuan.

De­spite the drop­ping sales, an­a­lysts are up­beat on its flota­tion prospects.

Ac­cord­ing to the first-quar­ter re­sults of 68 cul­tural and com­mu­ni­ca­tions com­pa­nies listed in Shang­hai and Shen­zhen, 44 saw their net profit in­crease, of which 11 had dou­bled their net sur­plus.

The State Ad­min­is­tra­tion of Press, Pub­li­ca­tion, Ra­dio, Film and Tele­vi­sion, to­gether with the Min­istry of Fi­nance, an­nounced a guide­line in early April to pro­mote both the tra­di­tional and emerg­ing pub­lish­ing in­dus­tries.

In line with the gov­ern­ment’s “In­ter­net Plus” ac­tion plan, spelled out in this year’s Gov­ern­ment Work Re­port by Pre­mier LiKe­qiang dur­ing the Na­tional Peo­ple’s Congress an­nual ses­sion in March, the guide­line said new busi­nesses such as mo­bile read­ing and on­line ed­u­ca­tion should be de­vel­op­ing at a faster pace.

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