China's Biggest Movie Ticketing App Maoyan to Raise $345M in IPO

Beijing Culture
Maoyan also occasionally invests directly in films, such as last summer's local blockbuster, 'Dying to Survive'

The Tencent-backed service, which competes head-to-head with Alibaba's ticketing app, is estimated to have a 60 percent market share in China, where nearly all movie tickets are sold online.

Maoyan Entertainment, China’s largest movie ticketing app, is seeking to raise as much as $345 million in a Hong Kong initial public offering.

The Beijing-based company, which counts internet giant Tencent as its second-biggest shareholder, is offering 132.4 million shares at $1.89 (HK$14.80) to $2.60 (HK$20.40) apiece, according to terms for the deal obtained by the South China Morning Post and Bloomberg on Friday.

Imax China, the Hong Kong-based regional subsidiary of the Canadian giant-screen exhibitor, has already agreed to step in as a cornerstone investor with the purchase of $15 million in stock.

Maoyan's IPO plans come amid a rough patch in the Hong Kong market, with the city's benchmark stock index falling 17 percent last year. U.S. mini-studio STX Entertainment, for example, announced plans to list in Hong Kong last April, only to later let the plans lapse amid unfavorable market conditions. 

Tencent-backed Maoyan competes head-to-head with Alibaba's ticketing service Taopiaopiao in China, where more than 90 percent of all movie tickets are sold online, mostly over mobile devices. After several years of consolidation, the two companies effectively operate as a duopoly, commanding a 90 percent share of all online movie ticket sales.

Maoyan had 130 million monthly active users in the first half of 2018, according to its IPO prospectus filed in Hong Kong. Movie theaters in more than 600 Chinese cities, comprising 95 percent of the country's total cinemas, used Maoyan to sell tickets online in the first six months of last year.

Maoyan says it leads the ticketing space with a 60 percent share of the market, followed by Taopiaopiao's 30 percent share. The game remains fiercely competitive, however: Executives at Alibaba Pictures regularly have vowed to boost investments with the aim of claiming dominance over the long term.

Despite their enormous users bases, both companies remain unprofitable though. Maoyan's losses more than doubled in 2017 to 1.3 billion yuan, up from 508 million yuan in 2016. In the first nine months of 2018, losses totaled 144 million yuan, the prospectus shows. At Alibaba Pictures, marketing spending on Taopiaopiao has consistently pushed the company's overall earnings reports into the red. 

Chinese film studio Beijing Enlight Media is the largest shareholder in Maoyan with a 48.8 percent stake, ahead of Tencent's 16.3 percent piece and group-buying company Meituan Dianping's 8.6 percent piece.

In addition to simply selling tickets, Maoyan occasionally markets and invests in films, both local and international, such as Paramount's Transformers: The Last Knight. Weiying, the late ticketing giant that merged with Maoyan in 2017, also invested in Paramount's Ghost in the Shell and xXx: The Return of Xander Cage. On the domestic front, Maoyan has participated as an investor in blockbusters like Dying to Survive and Monster Hunt 2.