Chinese studio Bona Film, maker of Battle at Lake Changjin, set for Shenzhen IPO after Nasdaq departure

Bona Film Group, backed by Alibaba and Tencent, is set for a listing in Shenzhen later this month after its Nasdaq privatisation in 2015
The company is offering about 275 million shares at a price to be decided later this week, according to its listing prospectus

China’s film industry

Yaling Jiangin Shanghai

Published: 3:03pm, 1 Aug, 2022

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Bona Film Group, China’s top-grossing movie producer and distributor, is about to list its yuan-denominated shares after a five-year wait, following a nod for its initial public offering (IPO) from the Shenzhen Stock Exchange.

The Beijing-based group, which counts Alibaba Group Holding and Tencent Holdings among its investors, will start taking orders from investors for about 275 million new shares on August 9, according to its prospectus released on Monday.

The IPO price will be decided on August 5, and the stock will debut under the 1330 ticker, according to the timetable. The listing date has not been disclosed for now. China Dragon Securities is the IPO sponsor and the joint underwriter with Citic Securities.

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The IPO comes at a time when the entertainment industry is struggling to cope with the crippling blow dealt by China’s zero-Covid strategy. Box-office takings in the most-recent two public holidays – the Dragon Boat Festival and Ching Ming or tomb-sweeping day – fell to a 10-year low amid curbs on mobility to prevent fresh outbreaks.

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Shenzhen-listed Wanda Film warned of losses of up to 600 million yuan (US$88.9 million) for the first half of this year, according to its exchange filing, citing severe impact from Covid-19 outbreaks and subsequent restrictions that forced half of the group’s 800-odd cinemas nationwide to temporarily shut down.

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About half of China’s publicly traded filmmakers and television companies, including Huayi Brothers Media and Beijing Enlight Media, suffered a combined loss of 1.3 billion yuan last year, according to local consultancy SWS Research.

“Under requirements of Covid-19 prevention, part of the company’s cinemas may stop their operations temporarily, which will have certain negative impact on the profit-making capability of the company’s cinema business,” Bona Film noted among the risk factors in its business.

Actors Jackson Yee (left) and Wu Jing in a still from The Battle at Lake Changjin. Photo: Handout

Still, Bona Film is counting on its track record to win over investors. It produced The Battle at Lake Changjin featuring actors Jackson Yee and Wu Jing, last year’s highest-grossing film, as titles stoking nationalism won over audiences and swelled the filmmakers’ coffers amid US-China geopolitical tensions.

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The sequel The Battle at Lake Changjin II generated 4 billion yuan at the box office. Its other notable 2021 hits included Chinese Doctors, a film portraying the Covid-19 outbreak in the epicentre of Wuhan in early 2020.

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Bona Film’s revenue surged 82 per cent to 1.47 billion yuan in the first half from the same period a year earlier. Earnings jumped 517 per cent to 309.8 million yuan.

Yu Dong, the chairman and founder, controls a 28.09 per cent stake. Alibaba and Tencent, through their movie and investment units, are listed among its top 10 shareholders in the prospectus. Alibaba is the owner of the South China Morning Post.

Bona Film was the first Chinese filmmaker to be listed on the Nasdaq in New York back in 2010. Yu offered to take the company private in a deal that valued it at US$1 billion in June 2015, after the stock sank by about one-fifth below its IPO price.

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