Duzhe seeks $81m in Shanghai listing

A reader checks the latest edition of Readers at a newspaper stand in Beijing on Wednesday. The popular magazine sells more than 200,000 copies of each edition. [Photo/China Daily]

Duzhe Publishing & Media Co Ltd, the publisher of China's most popular magazine The Duzhe (Readers), is to be listed on the Shanghai Stock Exchange.

According to an updated prospectus released on May 18, Duzhe will be listed on the Shanghai bourse to raise 504 million yuan ($81 million) to develop its magazine titles, digital publishing projects and book publishing operations.

The lead underwriter is China Dragon Securities Co Ltd, which like Duzhe is based in Lanzhou, the capital of Gansu province.

Duzhe will hold a controlling 80 percent stake in the company. Other major shareholders include Everbright Capital Investment Co Ltd, Jiuquan Iron and Steel (Group) Co Ltd and Gansu Provincial State-owned Asset Investment Group Co Ltd.

Its signature magazine The Duzhe, which publishes bimonthly and is known as the Chinese version of Reader's Digest, sells more than 200,000 copies. Its cover price rose at the start of the year from 4 yuan to 6 yuan.

Excluding the production cost of 1.38 yuan per copy, gross profit for each edition is as much as 924,000 yuan, the prospectus revealed.

Duzhe has been actively exploring new directions such as TV and digital products. Together with Zhejiang Talent International Film Co Ltd, it invested in the TV series The Empress of China, which earned the latter 268 million yuan in revenue.

Duzhe's US counterpart－Reader's Digest Association－filed for bankruptcy in 2009 and 2013. Its Chinese operation started in 2008 but was discontinued four years later.

The Chinese company has also had a tougher time in recent years.

According to the prospectus, Duzhe's sales revenue declined between 2012 and 2014, from 191 million yuan to 173 million yuan.

Despite the dropping sales, analysts are upbeat on its flotation prospects.

According to the first-quarter results of 68 cultural and communications companies listed in Shanghai and Shenzhen, 44 saw their net profit increase, of which 11 had doubled their net surplus.

The State Administration of Press, Publication, Radio, Film and Television, together with the Ministry of Finance, announced a guideline in early April to promote both the traditional and emerging publishing industries.

In line with the government's "Internet Plus" action plan, spelled out in this year's Government Work Report by Premier Li Keqiang during the National People's Congress annual session in March, the guideline said new businesses such as mobile reading and online education should be developing at a faster pace.