China’s top movie ticketing app Maoyan postpones Hong Kong IPO, names Xiaomi as cornerstone investor

Maoyan Entertainment, China’s largest movie ticketing app backed by Tencent and Meituan, has delayed its Hong Kong IPO and put off its listing date to February 4. It also named three new cornerstone investors, including a US$2.6 million investment by Xiaomi.

The Beijing-based company, with Tencent Holdings as its second-biggest shareholder, will put off the Hong Kong IPO period to between January 23 and January 28, according to a renewed term sheet obtained by the South China Morning Post. Previously, the retail sale was expected to hit the market between January 21 to January 24.

Meanwhile, it will extend its IPO book close date to “on or about January 25” from the original date of January 24, after which it will stop taking orders from international institutional investors. The book opened on Friday.

Maoyan tentatively expects the share to begin trading on February 4, versus its original plan to debut on the Hong Kong stock exchange on January 31.

The company has introduced three new cornerstone investors, which will bring the total to five, lining up a total of US$30 million, the document showed.

Xiaomi unit Green Better has agreed to buy US$2.6 million worth of shares. Hylink Investment, a subsidiary of Shanghai-listed Hylink Digital Solutions, has committed US$5 million. Prestige of the Sun will also invest around US$4.4 million.

A previous document showed IMAX Hong Kong has already agreed to buy US$15 million worth of shares, while Welight Capital has pledged US$3 million.

The Hong Kong stock market will be closed for three days from February 5 for the Lunar New Year holiday and reopen on February 8.

Maoyan plans to sell 132.377 million shares, raising up to HK$2.7 billion (US$350 million). The shares are being offered at an indicated range of HK$14.8 to HK$20.4 per share.

Tencent owns 16.3 per cent of Maoyan, according to a prospectus released in September. Beijing Enlight Media is the largest stakeholder with a 48.8 per cent holding. Meituan Dianping owns 8.6 per cent.

Maoyan’s fundraising plan comes after a 14 per cent decline in Hong Kong’s benchmark stock index last year. The company was in talks with investment bankers to raise as much as US$1 billion in capital, according to a January 2018 Bloomberg report that cited unnamed people with knowledge of the matter.

The latest fundraising attempt features Bank of America-Merrill Lynch and Morgan Stanley as joint sponsors.

China’s movie industry boasts the world’s largest box office, where 80 per cent of movie tickets were sold online in 2018, according to an estimation by iResearch Consulting Group. The country’s ticket receipts may more than double in combined takings to 121.7 billion yuan (US$18 billion) by 2022, from 55.9 billion yuan in 2017, Maoyan said.

Maoyan had 130 million monthly active users in the first half of 2018, according to its prospectus. Theatres in more than 600 Chinese cities, or 95 per cent of the total pool, used Maoyan to sell tickets online in the first half of 2018, giving the company 60 per cent of the market, while Taopiaopiao, a unit of this newspaper’s owner Alibaba Group Holding, took up another 30 per cent. Alibaba Pictures CEO Fan Luyuan said last year that Taopiaopiao would increase investments and aims to become the largest ticketing app in China.

Despite its market dominance, Maoyan has not been profitable for three years, with its 2017 loss more than doubling to 1.3 billion yuan, from 508 million yuan in 2016. Losses amounted to 144 million yuan in the first nine months of 2018, according to Maoyan.

Established in 2012 as a business unit of Meituan, the company was spun off in 2016 and acquired smaller rival Beijing Weiying Technology in September to form a partnership with Tencent to become the exclusive entertainment ticketing channel on Tencent’s social network platform.

The company said it plans to use 30 per cent of the IPO proceeds to integrate and improve platform capabilities and 30 per cent for research and development and technology infrastructure. About 30 per cent of the proceeds will go to potential investments and acquisitions for expansion, and the rest for working capital and general corporate purposes, the company said.