Three old-guard filmmakers from Hong Kong and China have given themselves a new stock market-listed vehicle with which they plan to ride the bubble in Chinese entertainment investment.

China’s Shi Jianxiang has teamed with Hong Kong’s Ng See Yuen and Tsui Siuming (aka Hsu Hsiao-ming) to take control of money-losing shell company ShiFang Holding.

The Hong Kong-listed company is planning to reverse itself into Shanghai Hehe Film, a company which owns 55% of the net theatrical revenues in mainland Chinese from martial arts sequel “Ip Man 3.” The film starring Donnie Yen and Mike Tyson was released in Hong Kong shortly before Christmas and scored a stellar HK$60.5 million (US$7.84 million).

The old ShiFang was a bombed-out newspaper and magazine publisher that had struggled to shift to an online business model. In the first half of 2015 the company lost HK$55 million (US$7.10 million) on revenues of HK$41.7 million (US$5.38 million).

Despite a Jan. 8 profits warning and ahead of the release of “Ip Man 3” in China – the film hits mainland screens this week (March 4, 2016) — the trio have been quick to give themselves handsome pay packets and substantial paper profits.

Tsui, a director, producer and former TV executive, joined ShiFang in December 2015 and became CEO on Jan. 26 with a HK$3 million (US$387,000) salary. Shi, producer of the upcoming Bruce Willis-starring “The Bombing,” and chairman of the Shanghai Kualiu Investment Group, has become chairman and executive director of the company. His three-year contract gives him HK$4.8 million (US$620,000) annually. Ng, a veteran producer and exhibitor, whose other business interests have straddled Hong Kong and Cantonese-speaking parts of Southern China, is designated as a non-executive director with a stipend of HK$360,000 (US$46,400).

The company has announced two share subscriptions, one of which sees Shi pay HK$128 million (US$16.5 million) for 160 million shares (15.9%) of the company at HK$0.8 per share. That is a very substantial discount to the HK$3.71 at which the shares stood at the close of business on Tuesday.

In a press statement the company Tuesday boasted: “The performance in the stock market demonstrates the faith of investors in the new business model and their upbeat prognosis for the company’s future.” The company has a market capitalization of HK$3.83 billion (US$494 million), and Shi’s entire stake (187 million shares) is now worth HK$693 million (US$89.4 million).

ShiFang says it has a new film business model that will see it involved in investment and distribution – yet already it is planning a diversification that is at first glance tangential to its stated business plan.

“The company plans to combine filmmaking with online and appropriate financial backing in a move to open up more opportunities in mainland China, now the second largest market worldwide in terms box office revenues. … the company will invest in excellent screenplays as they are regarded as the most productive force in the film market. Lastly, the company intends to add financial support to the traditional distribution of films and leverage online big data as a strategy to enhance the precision in terms of the targeting of film distribution with the expectation of doubling the box office receipts of the films it produces.”

On Feb. 23 it announced plans to buy a 15% stake in a privately owned securities company with 20 branch offices in Southern China offering “customized and integrated financial consulting services.” ShiFang says the company, which has no English name, now has a valuation of HK$2 billion (US$258 million), implying a HK$300 million (US$38.7 million) cost to ShiFang.

ShiFang says the businesses are complimentary. “The target company proposes the idea of ‘Internet + film and television + finance,’ which turns some of its financial products into a form of consumer product for film distribution by incorporating the function of film ticket redemption with investment,” ShiFang said in a regulatory filing.

Shell companies have been a popular route for mainland and Chinese entertainment companies to list on the stock market at a time when the mainland IPO market has been crimped by regulatory rulings and massive equity market turbulence.

Others that have chosen this route include Alibaba Pictures Group, which was created from ChinaVision, and Jiuhao, a shell that recently enjoyed investments from Tencent, Alibaba and Huayi Brothers.

The incentive to list is huge given the stratospheric valuations still applied to entertainment stocks in China, even after last year’s China share market crash. Earlier this week exhibition chain Wanda Cinema Line unveiled profits of RMB1.18 billion ($180 million), and is valued at RMB94.3 (US$14.5 billion) — a historical price to earnings ratio of 80 times.

And with 2015 theatrical grosses up by 48% at the mainland Chinese box office and growth still happening this year, the flow of investors – large and small – is unlikely to dry up soon.

The risk factors are clear. “3D epic war blockbuster movie ‘The Bombing’ calls for RMB700 million (US$107 million) in funding, RMB500 million (US$76.3 million) of which is already in place, representing the biggest investment to date in a Chinese-language 3D film. Given the huge investment and the impossibility in predicting the resulting income, all eyes will be on Shi’s efforts to apply the financial management model behind ‘Ip Man 3’ into ‘The Bombing,’ ” ShiFang said in a statement.

“The Bombing,” which stars Bruce Willis, Adrien Brody, Liu Ye, Fan Bingbing, Song Seung Heon, William Chan, Nicholas Tse, Chen Daoming and Liu Xiaoqing, is currently in post-production ahead of a late 2016 release. South Korea-based Macrograph is delivering the special effects, Technicolor USA is handling sound effects and dubbing, and U.S.-based post-production firm Company 3 is handling post lighting design.