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China plans media division IPO

Stock float back in future for Hengdian

Chinese conglom Hengdian Group has dusted off plans for a stock market flotation of its media division, which includes the country’s largest studio operation.

Chairman Xu Yongan, speaking in Shanghai, indicated the shares likely would be listed abroad, rather than in mainland China, with the IPO set in Hong Kong or New York. Indicated value of the entertainment division is about $100 million.

However, he declined to set a timetable for the IPO, saying: “This part of the company may go public, but we can’t say if it will be by year end.”

This week’s announcement is a reworking of February’s plan, when the entire group was put on course for a $300 million share listing. Hengdian also has large pharmaceutical and electronics interests, but these are slower-growing.

Xu is reported to have said the entertainment wing, which last year had revenues of $36 million, is set to record growth of 30%-40% in 2005.

Alongside state body China Film, Hengdian last year became Warner Bros.’ partner in Warner China Film HG Corp. The joint venture is the first, and so far only, Sino-foreign joint venture production and distribution firm formed since the State Administration of Radio, Film & Television (Sarft) permitted the mixed marriages.

Movies in the works

Xu said Warner China Film has registered capital of some $8 million and is set to shoot two or three movies this year with budgets under $2 million. Hengdian’s entertainment division, which until now has largely been a facilities and services provider, also intends to move into film production.

Hengdian World Studios, in Zhejiang province, which recently housed Zhang Yimou’s martial arts fantasy actioner “Hero,” last week saw the start of production on “Dead or Alive.” A vidgame adaptation for Germany’s Constantin Film and subsid Impact Pictures (“Resident Evil”), “DOA” is helmed by Hong Kong’s Corey Yuen and stars Holly Valance, Jaime Presley and Devon Aoki.

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