Friday, March 29, 2024
 
Columnist
Martin Hennecke
 
WISDOM GROUP
HKEx Stock Code : 01661 
 
Corporate Profile
The Group is a media investment management services provider, TV programs producer and distributor and sports competitions organizer in China. The Group's business of media investment management and branding and identity services contributed 68.7% and 79.8% of its total gross profit and total revenue in 2012, respectively. The Group believes the Group distinguishs itself from traditional advertising companies in China by providing not only conventional branding services, but also producing TV programs and organizing sports competitions. The Group's program production and sports competitions organization businesses enjoyed higher profit margins compared with its advertising business during the Track Record Period. The Group believes that its continued emphasis on program production and sports competitions organization businesses will enable the Group to leverage on the higher growth potential that these businesses can offer. The Group believes that its emphasis on program production and sports competitions organization businesses also reflects the development trend in the marketing communications industry in China. The Group's main clients include automobile companies and other high-end brand owners, as well as the advertising agencies that represent them. According to a report prepared by Ipsos, an international market research firm, the Group ranked first among automobile-related TV program production companies in China in terms of production hours of automobile-related TV programs in 2012.

The Group began its business in 2006 and currently offer its services through three business units, namely, Wisdom Program, Wisdom Sports and Wisdom Branding. Wisdom Program focuses on the production of video programs that are broadcasted on television and through the Internet to personal computers and mobile devices. The Group launched a new TV variety show entitled “Lucky Go (週末駕到╱天天駕到 )” in November 2012, which is currently broadcasted nationwide through Chongqing Satellite TV. The Group will continue to reallocate its attention and resources to focus on producing new TV programs which will better cater for the needs of TV audience. Wisdom Sports organizes, manages and promotes domestic and international sports competitions and other marketing events, particularly those that are automobile-related. The Group has cooperated with international sports organizations or government authorities and organized sports competitions in China, such as “FIM Freestyle Motocross World Championship (國際摩聯花式極限摩托世界錦標賽 )”, “China Classic Car Rally (老式汽車中國拉力賽 )” and “Guangzhou Marathon (廣州馬拉松 )”. Wisdom Branding offers media investment management and branding and identity services, in part by leveraging on its exclusive rights to advertising time slots for selected TV programs on nationally broadcast television channels of CCTV, China's largest television network. The Group received the “Integrated Marketing Communications Award of Automobile Industry in China (中國汽車行業整合傳播大獎 )” in 2012. The Group summarizes its vision and commitment with the slogan “ 傳播中國智慧”.

The Group estimates that the Group will receive net proceeds from the Global Offering of approximately HK$911.3 million, after deducting the underwriting fees and expenses payable by the Group in the Global Offering, and assuming the Over-allotment Option is not exercised and an Offer Price of HK$2.46 per Share, being the mid-point of the indicative range of the Offer Price of HK$2.11 to HK$2.81 per Share set forth on the cover page of the prospectus.

The Group intends to use the net proceeds from the Global Offering to expand its business of organization, management and promotion of sports competitions and events. Approximately 95% and 5% of the net proceeds will be used for its sports competitions business and its event marketing business, respectively. The Group intends to cooperate with relevant international sports organizations and introduce and organize six to eight new sports competitions in China or other Asian countries, such as those involving motorcars, motorboats and automobiles. In addition, the Group will also develop a series of sports events entitled “Sports in China (運動中國 )”, which include water sports, air sports and car racing integrated with the presentation of Chinese history, culture and social development. The Group will also explore related business opportunities to extend its involvement in the industry value chain for the sports competitions. The net proceeds to be used for its sports competitions and events business unit will be further allocated as: (a) 20% for the payment of license fees or registration fees to relevant sports organizations and government authorities for the new sports competitions that the Group plans to introduce or organize, (b) 20% for the expenses for the preliminary research, planning, organization, marketing and sales of sports competitions and events, (c) 10% for the costs and expenses for the training of contestants, (d) 40% for the costs and expenses for competition venues and competition facilities, and (e) 10% for the expenses for exchange and promotional activities for new sports competitions; to facilitate the development of its program production business, including the annual expected expenditures of approximately RMB7.0 million for the lease of production studios and recording studios according to its current production schedule of TV programs, and the expected expenditures of approximately RMB200.0 million for the building of production and recording studios with a total gross floor area of 2,200 square meters in Beijing and Zhejiang (including the estimated costs of up to RMB10.0 million for the lease of related land use right during the initial six to nine months for building of such studios), and purchase and installment of required production and post-production equipment; to expand its branding services with a focus on its media investment management business, by acquiring exclusive rights to more advertising time slots for certain popular TV programs broadcasted on CCTV channels, satellite and local TV channels in affluent areas in China as well as the exclusive right to all advertising time slots available on certain CCTV channels and satellite and local TV channels in affluent areas in China, including payment for deposits to media operators. Approximately 10%, 50% and 40% of the net proceeds will be used for acquisitions of advertising time slots from CCTV channels, satellite TV channels and local TV channels, respectively; to strengthen its initiatives to enhance its proprietary consumer information database and media information database, by improving its data collection methods and analysis tools, acquiring advanced third-party databases and statistics, and hiring additional staff for the collection, analysis, commercialization and marketing of databases; and to be used for its general corporate and working capital purposes.
Chairman Ren Guozun Issued Capital (shares) 1,609M
Par Value USD 0.00025 Market Capitalisation (HKD) 3,524M
 
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