People’s Daily website becomes top stock pick as it ratchets up censorship to new level, fuelling revenue expectations
- People.cn shares have surged 325 per cent in 2019 as traders cash in on increasing government censorship
- ‘Content risk control’ becomes new growth engine for party mouthpiece
People.cn, the cheerleading website of the official newspaper of China’s Communist Party, suddenly has a new claim to fame: hot stock pick.
Investors have been piling into the stock, sensing the website of the People’s Daily has incredible profit potential at a time when president Xi Jinping has tightened his grip over news and commentary.
Shares of the Shanghai-listed website soared 10 per cent to 31.5 yuan (US$4.70) a few minutes after trading started on Tuesday. It was the 12th time in the past 15 trading days that the stock has hit the 10 per cent limit. (Chinese stocks are capped at a 10 per cent limit of either gains or losses.)
The website’s share price has rallied by 325 per cent since the start of the year, from about 7.4 yuan. That makes it one of the best performers on China’s A-share market.
A key reason for the eye-popping gains is a thriving new business called “content risk control”, according to a research report issued by Dongxing Securities in late February. The report did not elaborate what exactly the business is.
However, sources within People’s Daily and Xinhua, another party-controlled news agency, said it essentially means that the official mouthpiece organisations have been dispatching experienced censor officials to review stories and online streaming videos of other media platforms - including China’s emerging internet giants Tencent and ByteDance’s Toutiao - to make sure content is in line with party doctrine.
It is not known how much money these companies are paying for service providers like People’s Daily each month. Such a fee would be on top of hiring censors themselves to go through postings on their platforms to make sure the content will not draw the ire of government censors over violence, sex and political views.
Revenue generated by content review for third parties has become the fastest growth engine for People.cn. Its earning’s alert shows revenue of this sector increased by 166 per cent year on year in 2018.
People.cn’s net profit could surge to 21.5 million yuan in 2018, up by as much as 140 per cent from that in 2017, according to its latest earnings alert in late January.
During a conference meeting with investors on February 27, People.cn said “content risk control is an emerging business that at this point cannot be estimated for its market size”.
“People.cn will do a couple of things in content risk control in the future,” a review of the meeting published on the Shanghai bourse said.
“First, we will define it as a new occupation. Secondly, we will classify the occupation into different layers. Third, we will form a ‘risk control brain’, meaning we will not only provide risk control services, but also use big data and technology to output capabilities and standards.”
Growing censorship is creating booming business opportunities, analysts point out.
“President Xi is leading a moral pollution crackdown now,” said Shaun Rein, managing director at China Market Research Group (CMR).
“Every day we hear the government cracking down on something, from online dramas, to gaming, music … Online news is not a big money maker like gaming or advertisement for Tencent or ByteDance. But it is opportunity for People’s Daily,” he said.
On the other hand, although online news does not make big money directly, it helps companies like ByteDance to quickly attract users.
Any government objection to the content, however, will cause big headaches for the billion-dollar business of emerging private internet tycoons.
In early 2018, Bytedance was ordered by China’s cyber authorities to take down its eponymous news app Jinri Toutiao from app stores for three weeks, as it was spreading unhealthy content.