China Securities Regulatory Commission says its issuance appraisal committee will deliberate the initial public offering application of Bona Film Group Ltd. on Thursday.

The company said, in a distinction from the trend of other film-making companies going for initial public offering, it aims to raise funds for its "cinema projects."

Regroup To Recoup 

The group plans to issue no fewer than 122 million shares to raise 1.424 billion yuan ($209 million) via an A-share initial public offering. While 819 million yuan will be invested on cinema upgrades and maintenance, the rest will be invested in film and TV projects, according to the company's prospectus.

Bona initially filed the application materials for its domestic float in September 2017, one year after it was delisted from Nasdaq and underwent complete privatization.

Like many Chinese movie companies, however, Bona's finance was affected when China implemented a tax crackdown in the entertainment industry from 2018 through 2019. In August 2019, Bona's initial public offering case was suspended when Ruihua Certified Public Accountants, the firm Bona hired for the project, was investigated for involvement in P2P lending scandals.

With the loss over cinema shutdown and production project suspension due to the coronavirus pandemic this year, the company's initial public offering application approval was in question, said analysts. 

As of the first half of 2020, Bona saw 755 million yuan in revenues, a decline of 22.61% year-on-year. It expects to make 2.127 billion yuan in revenues by the end of this year with 176 million yuan in net profits, a decline of 44.03% compared to one year earlier.

Initial Public Offering Sponsor As Supporting Cast 

Bona's biggest shareholder, CITIC Securities, holds a 13.28% stake, through four other companies of which it has private equity investments, according to public information. 

Analysts said since it is "deeply bound" with Bona, CITIC avoided controversy of performing the combined role of underwriting and sponsoring the initial public offering at this time.

Instead, Bona hired a lesser known securities company, China Dragon Securities (CDS), to be in charge of its initial public offering plan. 

CDS was established in 2001 and listed on the National Equities Exchange and Quotations (NEEQ) in 2016, holding a BBB rating by China top securities regulators. NEEQ is also known as the New Third Board, the third national trading venue after Shanghai and Shenzhen Stock Exchanges.

CITIC Securities was warned in May by the China bond market regulator against charging bond underwriting fees way below normal levels, which it admonished as "improper competitive behavior" within the market.

All Star Cast

Analysts said valuations for media and entertainment companies in Chinese stock markets are significantly higher than in North America.

Bona rang the Nasdaq opening bell in December 2011 and raised $99 million through selling American depositary shares at $8.5 each.

But in Mar, 2016, shareholders overwhelmingly voted by 97.3% to remove the company from the Nasdaq exchange. In order to finance the deal, the CEO Yu Dong brought in internet conglomerates at that time, including Alibaba and Tencent.

Bona's current shareholders, according to the company's prospectus, include Zhejiang Dongyang Alibaba Pictures Company Limited, Linzhi Tencent Technology Company, Zhongzhi Enterprise Group Co., Ltd., and Wanda Film, China Development Bank, Industrial and Commercial Bank of China, CMB International Capital and Macrolink Culturaltainment Development Co., Ltd. 

Celebrity Zhang Ziyi and other domestic famous actors and directors are also on the shareholder list.

Among the total 250 movies Bona has presented over the past 18 years, 10 films each received box office exceeding 1 billion yuan. The company's cumulative box office is around 35 billion yuan.