The Chinese yuan, also known as the renminbi, is already convertible under the current account - the broadest measure of trade in goods and services. However, the capital account, which covers portfolio investment and borrowing, is still closely managed by Beijing because of worries about abrupt capital flows.
Jishi Media opens order book for public offering
Undaunted by a sluggish stock market, mainland cable TV operator Jishi Media will begin book building today for its 2.2 billion yuan (HK$2.7 billion) initial public offering in Shanghai, according to the company.
Jishi Media, a cable TV operator in the northeastern province of Jilin, will hold roadshows in Shanghai tomorrow, in Shenzhen on Friday and in Beijing on Monday. The IPO's final pricing will be set on February 13.
A number of large companies have been forced to either price their IPOs at the bottom of the indicative ranges or downsize the offerings due to poor investor interest for new shares amid a bearish stock market.
However, Jishi Media may fare better than others, because investors tend to opt for media stocks, betting that Beijing will maintain favourable policies to beef up the sector. Jiangsu Phoenix Publishing and Media fixed its debut price at 8.8 yuan, the top of its indicative range in November. The stock closed at 8.2 yuan yesterday.
Jishi Media has a monopoly in Jilin on installing, maintaining and managing cable TV networks. It is following a path to an A-share listing blazed by other regional monopolistic cable TV operators, like Beijing Gehua CATV Network and Shenzhen Topway Video Communication.
The company, 51.25 per cent held by Jilin Television Station, is looking to sell up to 280 million shares, or 20 per cent of its capital, to raise about 2.2 billion yuan to fund two cable network projects involving 2.74 billion yuan in total investment.
The cable TV operator's annual profit growth averaged 208 per cent during the 2008-2010 period, much higher than its counterparts in Beijing and Shenzhen.
The high growth was mostly driven by a government-led campaign to shift from analogue to digital television in the province, and was also driven by a price rise imposed on customers after the network's upgrade.
Urban households pay 25 yuan per month for the service while rural ones pay 20 yuan, up on the pre-reform price of 12 yuan to 16 yuan.
Jishi Media already covers 98 per cent of city users so the gains in viewers may slow, and the scope for fee hikes in the near term is small. The company serves nearly 4 million customers and has warned that the benefits of the reform could wane.
Cable TV viewers in Beijing pay 18 yuan per month; Shanghai cable viewers pay 23 yuan.
Jishi Media's first-half profit last year in yuan
- It reported 272 million yuan in net profit in 2010