People's Daily Online Kicks Off IPO Roadshow
Oriental Morning Post, 4/11/12
Chinese government news portal People's Daily Online (people.com.cn) held its first IPO roadshow event in Shanghai on April 10. CITIC Securities, the chief underwriter for the IPO, has set a price target of RMB 16.50 to RMB 21.80 per share, for a total of RMB 1.14 bln to 1.507 bln at 69.1057 mln shares issued.
Mu Hong, president and chief editor of People's Daily Online, said that the company might consider acquisitions of suitable companies, depending on its future growth.
VP Chen Zhixia said that the company predicted net profits of RMB 183 mln for 2012, a YoY increase of 30%, or 50% if the RMB 20 mln the company received in government subsidies last year is not counted. Over the next three years, People's Daily Online predicts compound net profit growth rates of around 30%.
Chen said that People.com.cn charges higher advertising rates than commercial websites. The price of an ad on Chinese internet company Sina's (Nasdaq: SINA) portal, for instance, is roughly 75% of what it would be on People's Daily Online. Ad growth for People's Daily Online derives mainly from local ad growth: local advertising revenues totaled RMB 30 mln in 2011, up from RMB 8 mln in 2010, and are expected to reach RMB 65 mln this year.
70% or more of advertising revenues for Sina, Netease (Nasdaq: NTES), and other sites come from ad agents, Chen said, while ad agent business accounted for only 30% of the total for People's Daily Online last year. People's Daily Online will greatly increase investment in ad agent channels this year, with plans to increase the percentage of ad agent revenues to 50% over the next two years.
Chen added that People.com.cn adjusts ad rates twice per year - in April and October - and sees a yearly increase of about 20% in ad rates.
Public opinion survey services are one of People's Daily Online's fastest-growing information services, Chen said, bringing in revenues of RMB 140 mln last year and a predicted RMB 180 mln - of which RMB 60 mln will be profit - this year.
Chen predicted that revenues from mobile internet value-added services will grow to between RMB 100 and 200 mln this year, an increase of 100% to 125%. The company will capitalize on its advantage in owning a mobile television license to develop video services, which it predicts will account for 50% of 2012 revenues. Online reading services, on which People's Daily Online is partnered with mobile operators, will account for around 10% of revenues, while mobile newspaper services will account for around 20% of revenues and other services, including gaming platforms, will account for between 10% and 20% of revenues.
Editor's Note: For more information on this topic, please see "People.com.cn Files for IPO," MD 1/10/12 and "People.com.cn IPO Approved," MD 1/16/12 issues.
Keywords: online information service Mu Hong Chen Zhixia WVAS mobile gaming wireless Internet IPO profit People's Daily Online mobile paper mobile phone TV
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