Chinavision Media announces 2012 interim results

23 August 2012 9 h 43 min Comments Off

ChinaVision Media Group Limited (HKSE: 1060) is pleased to announce its interim results for the six months ended 30 June 2012.

- Turnover amounted to HK$523,163,000 in the first half of 2012 (2011 1H: HK$97,012,000), mainly attributable to promising income and profit contribution from the television drama business and satisfactory growth in mobile TV business

- The Group executed a successful turnaround with net profit amounting to HK$102,261,000 (2011 1H: loss of HK$64,092,000)

- Basic earnings per share was HK 1.40 cents (2011 1H: loss per share HK1.27 cents)

- NAV per share increased to HK$0.16 (2011 1H: HK$0.03) During the period under review, the Group reported substantial growth in turnover and executed a successful business turnaround. This was mainly attributable to the greater synergies among all its businesses after the merger with China Entertainment Media Group Limited (“CEMG”). In particular, the television drama business recorded a promising sales revenue and profit contribution.

The Group’s turnover rose to approximately HK$523,163,000 (2011 1H: HK$97,012,000). Gross profit increased to HK$202,841,000 over the last corresponding period (2011 1H: Gross loss HK$5,967,000). Net profit attributable to owners of the Company was HK$102,261,000 (2011 1H: loss of HK$64,092,000). Basic earnings per share (basic and diluted) was HK1.40 cents (2011 1H: loss per share was HK1.27 cents).

The Group completed the acquisition of the entire issued share capital of CEMG on 31 January 2012 and the integration of the two groups has proceeded smoothly. CEMG is a fast-growing media entertainment company principally engaged in the business of movies, television drama series and television advertising. Subsequent to the completion of the transaction, the two media groups had collaboratively produced and distributed television drama series. The enlarged group then promoted these dramas through diversified delivery platforms such as print media and mobile new media where the Group has competitive advantages, and this business recorded a satisfactory revenue.

During the period under review, the revenue contribution from production and distribution of television dramas substantially jumped to HK$252,685,000, equivalent to over 48% of the Group’s total turnover, with a satisfactory segmental profit of HK$93,164,000 recorded.

Mr. Dong Ping, Chairman of ChinaVision, said, “We are very pleased to see that the Group’s business recorded substantial improvement during the period under review. This was mainly attributable to the Group’s efforts in implementing changes in different business and actively enhancing its core business in the first half of 2012. We have also completed the acquisition of the entire issued share capital in CEMG in late January this year expanding the Group’s scale of operations and opening a new chapter in our development history. The merger with CEMG has enabled us to optimise our business chain and become one of the few large media groups with both the ability to produce and develop quality content and promote and operate various media channels. Looking ahead, we will enhance the synergies among our different businesses and seize the immense opportunities brought about by the Central Government’s policy to expand the cultural industry and make it a pillar industry. We aim to become a pioneer in the cultural industry within the People’s Republic of China.”

- Business Review -

Television and Film Business

The Group’s television and film business has been further strengthened after the merger with CEMG. During the period under review, a number of well-known television drama series were broadcasted. Of which “Liang Jian – Tie Xue Jun Hun” started broadcasting on Zhejiang satellite TV channels since December 2011 and rated the highest within its time slot on the first day of broadcast and for several months since then. The program was then available for viewing via video websites and generated a click-rate of over 200 million within one week. On the other hand, “Zheng Zhe Wu Di” of “The Heroic Trilogy” has already led to broadcasting contracts with certain major satellite TV stations since it started shooting, and it also secured contracts with the most popular online video platforms which will provide coverage as well. Based on sales contracts already obtained, income from the program series has already exceeded production costs by more than twofold, and has also generated record high income based on a single-episode basis.

The Group plans to continue the “Heroic Trilogy” series of which “Yi Zhe Wu Di” will complete shooting in October 2012. Initial sales have been performing well, and the program is expected to generate good returns for the Group after it commences broadcast next year. In light of the upcoming 18th Central Committee of the Communist Party of China conference, the Group will launch a large-scale production about the defense and military industry, namely “Qiang Shen Chuan Qi” in the second half year. The TV series has finished filming and is now in post-production. Sales have so far been satisfactory and recorded higher margin than that of a similar production.

Apart from the top-quality TV drama series and documentaries which the Group has been known for, after its merger with CEMG, it is proactively putting more efforts toward producing new TV drama series, including romance and trendy social commercial drams which enjoy a larger audience base. Among them, “Ya Dian Na Nu Shen” and “Nu Ren Bang” has completed filming. To date, sales of these two drama series have been good and they are expected to generate continuous sales contributions to the Group. On the other hand, “Cheng Shi Lian Ren”, which is predominantly invested, produced and filmed by the Group, will complete shooting in September with post-production already underway. It features famous Korean star Choi Ji Woo, who will appear on the Chinese idol drama again, nine years after the previous production, making it one of the most highly anticipated dramas in 2012. This appealing TV series will be broadcasted on various satellite TV channels in the PRC in the second half year.

In the future, the Group will continue to explore opportunities to produce or invest in TV dramas or movies that promise high investment returns. The Group will adhere to its motto of “Building a Strong Brand; Producing Outstanding Dramas” to secure better income and profits.

Television Advertising Business

After the acquisition of CEMG, the Group signed a 10-year strategic cooperative agreement with Gansu Provincial Film and TV Broadcast Group to exclusively operate television advertising and content programming segments of the Gansu satellite TV network. Gansu satellite TV is one of 32 satellite TV stations in the PRC that can access nationwide audiences with over 400 million viewers across the country. During the period under review, the Group sought to optimize the Gansu satellite TV network through such measures as better securing advertising time slots and enhancing program content.

The Group will also launch a new first-of-its-kind TV program in the PRC to broadcast short films from mobile media to television.

Mobile New Media Business

With the burgeoning 3G era underway in the PRC, the Group is actively seeking opportunities to fortify its mobile new media business and expand its outreach in this segment. During the period under review, total revenue from this segment increased by more than 190% compared to the same period last year. The number of users jumped to 10.13 million with the mobile TV business delivering the most impressive growth, up by over 90% year-on-year in sales revenue, and generating handsome returns for the Group. The key programs covered, included news stories, social and legal program, entertainment, film and television and recorded broadcasts of English Premier League (“EPL”) matches. In the second half year, the Group will continue to strengthen cooperation with three major operators, namely China Mobile, China Unicom and China Telecom, to develop the mobile TV business, aiming to sustain rapid growth.

Print Media Business

The Group’s Beijing Times has grown to become a diversified media group, covering Jinghua Books, Jinghua Artistic Services, Jinghua TV, Jinghua Advertising, Jinghua Logistics, Jinghua website, e-business services and various electronic terminal products under the Jinghua brand.

As at 30 June 2012, Beijing Times’ share of the morning post market exceeded 70%, far outperforming other daily newspapers in Beijing.

Although rising costs in the PRC, particularly in terms of paper and labor, have applied pressure on the Group’s overhead, Beijing Times continued to deliver stable income leveraging the paper’s extensive readership and strong brand as well as the Group’s dedicated efforts to explore other marketing channels for broadening the revenue streams of this segment. Having established a chic business division in early 2011, placement of high-end product advertisements in Beijing Times has since maintained steady growth. The growth of advertisements placed by the financial sector and high-end consumer goods brands was especially strong. Such momentum is expected to continue in the second half year.

On the other hand, the Grou’s upscale women’s magazine, FIGARO, has been included in a list of the country’s premier magazines, and is widely recognized by renowned international brands in less than a year since its launch back in August 2011. It is expected that FIGARO will contribute more stable income to the Group in the future.

Other business

In order to streamline operations and bolster its financial strength, the Group decided to sell 30% equity interest in its associated company, Super Sports Media Inc. as well as the rights to the mobile live, delayed and recorded broadcasts of EPL matches to an independent third party. The transaction was completed in late May 2012 and generated strong cash in-flow for the Group, which further enhanced its financial strength and enabled resources to be directed towards expanding the new media, television and film business where there is immense potential.

Separately, the strategic partnership established between the Group and Tencent Holdings Limited (“Tencent”; HKSE: 0700) has allowed the Group to reinforce its capital foundation and generate greater synergies with other operations. The partnership now enables the Group to use Tencent’s promotion-related resources and sales channels, including Instant Messaging QQ, web portal QQ.com, Tencent video platform, QQ game platform, social network Qzone and mobile wireless portal to promote and launch the Group’s films, television drama series, artists, new media content and mobile entertainment content.

Mr. Dong concluded, “The first half of 2012 represents an important milestone in our Group’s development history. The Group has not only achieved a turnaround in its business, the completed acquisition of CEMG and strategic partnership with Tencent have created greater synergies and helped enhance our core competitive strengths. Such moves have also strengthened the Group’s position in the PRC cultural industry, as well as the operation of its television and film business and the production and operation of its mobile TV business. Looking ahead, we will continue to enhance production and distribution of film and television drama series. As well, we aim to promote the Group’s content and products, explore more potential market opportunities across various sales networks, improve operational efficiency and generate greater synergies among different businesses through content creation, broadcast platform expansion and tapping various channels. We are committed to becoming one of the leading diversified culture and media corporations in the PRC. We will continue to consolidate the three major businesses of television and film, mobile new media and traditional print media through organic growth and by exploring cooperation and investment opportunities. We will also actively develop the new television advertising business, integrate internal resources, capitalize on economies of scale and further unite the Group’s core competitive strengths with an aim to generate long-term and high returns for our shareholders.”

About ChinaVision Media Group Limited

ChinaVision (SEHK: 1060) is an integrated media entertainment company and is principally engaged in the film, television, print media, and mobile new media businesses in China. Its television and film business produces, distributes and licenses film and television programs, and has had an interest in the production and distribution of several box office hits and top rated TV dramas such as “Let the Bullets Fly” and “The Invincible Agent” etc. Its print media business is involved in newspaper advertising and the distribution of the Beijing Times, a leader in the Beijing morning post retail market, as well as publishing and distribution of madame FIGARO, a premium fashion magazine for women. Under its mobile new media business, the Company develops and distributes mobile television, mobile games and other mobile value-added services.

Source: ChinaVision Media Group Limited (22/08/2012)

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