Chinese Online Media and Game Stocks Take a Tumble


By Robert Cain for China Film Biz

The Cain China Media Index (CCMI) of U.S. and Chinese-listed publicly traded Chinese media stocks tumbled by 4 percent last week, giving up all the gains it had made in the prior week and then some.

This loss far exceeded the weekly declines in the Shanghai Composite (-0.5%) and the Hang Seng Index (-1.3%), and was downright gloomy compared with the U.S. S&P 500, which gained 1 percent, and the Dow Jones U.S. Media Index, which was up by more than 2 percent.

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Losers outnumbered gainers by a heavy 3 to 1 ratio, with Perfect World Games (PWRD; -14%) and Youku (YOKU; -10%) shedding the biggest percentages. Perfect World fell on a less than perfect earnings announcement, having missed analyst earnings estimates and also having lowered its revenue projections for the next quarter.  Youku’s drop was more a retracement of the past week’s gains, part of the stock’s very choppy price history.

Not everything was bleak in Chinese media, however. Movie companies and broadcasters saw average gains of 1.3 percent and 1.8 percent, respectively. Enlight Media (Shenzhen 300251) turned in the best performance among movie company stocks, gaining 4 percent, and Shaanxi Broadcast & TV (Shanghai 600831) led the broadcasters with a 3 percent gain.

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Many of the stocks in the CCMI are still in the black for the year, though with the rather sour mood of the global market weighing on these stocks, most have declined substantially from their peak prices. But with the sector continuing to grow at a much faster rate than China’s GDP, it’s likely that the stocks will rebound soon.

Robert Cain is a producer and entertainment industry consultant who has been doing business in China since 1987. He can be reached at rob@pacificbridgepics.com and at www.pacificbridgepics.com.

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Youku and Tudou Lead Chinese Media Stocks to 1.6% Weekly Gain


by Robert Cain for ChinaFilmBiz
May 28, 2012

The Cain China Media Index (CCMI) gained nearly 1.6 percent last week, outpacing the S&P 500, Shenzhen and Shanghai indices during a mixed week in the global equity markets.

CCMI vs. U.S. and Chinese Stock Market Indices (May 18, 2012 = 100)

China’s major Youtube lookalikes Youku (YOKU) and Tudou (TUDO) led the index with 20 percent and 18 percent respective gains on news of Tudou’s stellar first quarter results. The two companies are in the process of merging, and with Tudou’s scorching 77 percent Q1 revenue increase and narrowing losses, investors jumped in to drive the stock to its best weekly performance since early March.

5 of the 6 online media stocks in the CCMI gained ground last week. In addition to YOKU and TUDO, Phoenix New Media (FENG) also performed extremely well, posting a 9 percent gain as it beat analyst estimates with Q1 earnings of 7 cents per share.

Motion picture stocks fell by an average of 2.2 percent for the week, with only the small cap Taomee (TAOM) managing to eke out a gain. All 3 of the index’s broadcasting & cable stocks also fell, while advertising and game stocks managed modest gains.

In all, decliners outnumbered gainers 10 to 9 (with one stock, Shanda Games, flat for the week). However, stocks trading on the U.S. NYSE and NASDAQ exchanges were mostly gainers (8 to 3), while all but one of the index stocks trading on the Chinese Shanghai and Shenzhen exchanges declined.

Tudou and Youku may be good buys at this stage, with both stocks having broken above their 50 day moving averages with convincing volume. There had been skepticism in the market about the two companies’ ability to contain costs and turn profitable, but these concerns now look to have been laid to rest.

Robert Cain is a producer and entertainment industry consultant who has been doing business in China since 1987. He can be reached at rob@pacificbridgepics.com and at www.pacificbridgepics.com.

China’s Media Stocks Are Sizzling in 2012


by Robert Cain for China Film Biz

May 18, 2012

This week I’m inaugurating a new stock index to track the performance of equities in China’s entertainment and media industry. The new index is called the Cain China Media Index (CCMI), and it comprises the stocks of 20 companies in China’s advertising, broadcast & cable, games, motion pictures and online media industries. Most of the stocks are in the mid-cap range (with a few small cap exceptions), trading on the Shenzhen, Shanghai, NASDAQ and New York stock exchanges.

The CCMI will be set at 100 as of the close of today’s markets in the U.S., and it will track the movements of the aggregate market capitalization of the 20 stocks.

My reason for starting the CCMI is to fill what I see as a gaping hole in the universe. I’ve been combing the web lately looking for useful coverage of the growth stocks in China’s media sector and I haven’t been able to find anything interesting or reliable.  So I’ve decided to step into the breach

Here’s why I think this is important, and why you should pay attention: 

  1. China is fast becoming the world’s most important media and entertainment market. In contrast with the low single-digit growth in North America, Europe and Japan, China’s media sector has grown at a compound annual rate of better than 30 percent for more than a decade. By 2020 China’s movie, game and online media markets will be larger than their counterparts in the U.S.
  2. China’s media sector is still in its early growth stage, which means that there is plenty of opportunity ahead for well-positioned Chinese companies in film, TV, and mobile and online content businesses, and for the investors who back them. All of the stocks in the CCMI are actively traded and can be purchased on the above-mentioned exchanges.
  3. Now is the time to invest in Chinese media. According to a recent McKinsey & Company research report, between 2010 and 2020 China’s GDP will double and 170 million Chinese households, or some 500 million people, will move up into the “mainstream” middle class and affluent class. That’s 500 million new buyers of movie tickets, video games, premium TV services, , and other forms of entertainment. Put another way, the next 8 years will offer the biggest surge in entertainment and media consumption the world has ever seen.

Even if China’s economy slows down, the entertainment business will keep growing, because the Chinese market is still extremely under-saturated and under-served by entertainment businesses.

The CCMI stocks, their ticker symbols and market caps are listed in the table below.

CAIN CHINA MEDIA INDEX

 

Investors in the sector have had a very happy 2012 so far. The stocks in the CCMI have risen by an average of 21 percent so far this year, compared with an 8.8 percent gain in the Dow Jones U.S. Media Index, a 6 percent gain in the Shanghai Composite Index and a 3.8 percent gain in the S&P 500.

Investors in certain Chinese online media stocks have been particularly well rewarded, as digital online video company Tudou has gained 188 percent in the past 4-1/2 months, and social media site RenRen has gained 76 percent. Bona Film Group has also performed well, gaining 55 percent since the beginning of the year.

I plan to update the index each week and to keep a close eye on trends in China’s media stocks, so keep checking in.

Robert Cain is a producer and entertainment industry consultant who has been doing business in China since 1987. He can be reached at rob@pacificbridgepics.com and at www.pacificbridgepics.com.

China’s Movie Streaming Sites Are Going Legit


By Robert Cain

Slowly, steadily, China’s movie streaming sites are going legit. Small dollars/yuan now, but the potential business opportunity is exciting for filmmakers everywhere.

Youku, Tudou, and M1905, among other Chinese content sites, have begun paying for the right to stream movies to their users. It’s an encouraging trend that could signal the beginnings of a shift away from video piracy in China.

Rob Cain is a film producer and entertainment consultant who has been doing business in China since 1987. He can be contacted at rob@pacificbridgepics.com.

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