The business of a super publisher.
Author | Liang Chunfu
Editor 丨 Cai Zhen
Source | Mustang Finance
"I'm a little superstitious about Han Han." Since Han Han filmed "After the End", this is the most common sentence said by publisher Lu Jinbo when evaluating Han Han.
On a winter night in January 2003, at the north gate of the Beijing Olympic Sports Center, Lu Jinbo blocked Han Han, used the 5,000 yuan in his pocket to buy the comic adaptation rights of Han Han's "Like a Teenager Driving", and left Han Han's phone number. One day two years later, by chance, Lu Jinbo officially signed Han Han for only 80,000 yuan, and the two began to cooperate for more than ten years.
In 2012, Lu Jinbo and Han Han's mother Zhou Qiaorong jointly funded the establishment of Guomai Limited (the predecessor of Guomai culture), with a registered capital of 3 million yuan, of which Lu Jinbo contributed 2.7 million yuan and Zhou Qiaorong contributed 300,000 yuan.
In addition to equity binding, Lu Jinbo has published at least 18 books for Han Han in recent years, and paid Han Hanchao 40 million yuan in royalties. And guomai culture has also turned Lu Jinbo from an online writer into a popular super publisher in the capital market.
On August 30, 2021, Guomai Culture (301052. SZ) was officially unveiled on the Growth Enterprise Market of the Shenzhen Stock Exchange. According to the prospectus, Lu Jinbo held a total of 32.62% of the shares of Guomai Culture before the IPO. Zhou Qiaorong, the second natural person shareholder besides Lu Jinbo, holds 4.53% of the shares of Guomai Culture.
As of the close of trading on August 30, the share price of Guomai Culture was reported at 39.55 yuan / share, compared with the issue price of 8.11 yuan / share, which has increased by 388%. According to the closing price, Han Han's mother is worth more than 100 million, and Lu Jinbo is nearly 1 billion.
<h1 class="pgc-h-arrow-right" data-track="111" > star shareholders, capital support</h1>
Today's much-anticipated fruit and wheat culture is actually a star company. Its chairman Lu Jinbo is the originator of the domestic network literature industry, and was called the "troika" of online literature under the name of "Li Xunhuan", together with Ning Caishen and Xin Yusen, and was the leader of China's first generation of online writers.
After writing the famous hall, Lu Jinbo joined "Under the Banyan Tree" as a content director, which is the earliest Internet gathering place for Wenqing in China. In 2002, the owner of "Under the Banyan Tree" packaged the website and sold it, which was taken over by a new German boss. Under this "acquisition storm", Lu Jinbo officially announced the closure of his farewell work "Powder Curtain", saying that his "interest is no longer in writing, and he hopes to turn to behind-the-scenes operations". Since then, there has been no writer Li Xunhuan in the world, only businessman Lu Jinbo.
Business - this thing that clearly says that it will break the bones of cultural people, Lu Jinbo, who "abandons his pen and follows the business", has been doing it for more than ten years, and the wind and water have risen, and Han Han, who has long cooperated with him, is one of the great beneficiaries.
Six years after he and his son Han Han founded Guomai, in February 2018, Zhou Qiaorong transferred a 1.5% stake to Zhejiang Media, making a profit of 25.5 million yuan.
In addition to the equity binding, Han Han planned books with more than one million sales such as "Life I Understand" through Guomai Culture, and directed and produced films with good reputation at the box office such as "After Forever", "Riding the Wind and Waves", and "Flying Life", and the investors behind them all have the figure of Guomai Culture.
In order to strengthen the connection with writers, Guomai Culture forms a strong binding relationship through the shareholding of star writers. In addition to Han Han, Guomai Culture has also established long-term and stable cooperative relations with Yi Zhongtian, Yang Hongying, Cai Chongda, Yang Lan, Jia Pingwa, Zhou Guoping, Luo Xiang, Frederick Buckman and many other leading writers and Internet celebrities.
Han Han's mother, Zhou Qiaorong, holds 4.53% of the shares, ranking the eighth largest shareholder; the rest of the well-known writers Yi Zhongtian and Huang Shan (Feng Tang's ex-wife) all hold shares indirectly through Guomai Partnership, about 0.2%.
The gathering of stars has also attracted a large number of investment institutions. Before the listing, Guomai Culture went through a total of 4 rounds of financing, with a cumulative financing amount of nearly 400 million yuan. In the earliest round of A financing in 2012, Matrix Partners China invested tens of millions of dollars and is currently the second largest shareholder of Guomai Culture; B round of financing of 85 million yuan, Xiaocun Capital and Huagai Capital entered the market; in the 2018 C round of 297 million yuan of financing, Matrix Partners China followed the investment, Bona Film and Television, IDG Capital successively invested; at the end of the same year, Zhejiang Version Media invested in shares.
Nowadays, Guomai culture has successfully landed on the ChiNext board, soaring by nearly 400% on the first day, and the investment institutions and star writers behind it have also ushered in a wealth feast brought by "spiritual food".
<h1 class="pgc-h-arrow-right" data-track="110" > bind large IP</h1>
At present, the main business of Guomai Culture covers three major sections: book planning and distribution, digital content business, IP derivative and operation. Book planning and distribution is the core business of traditional publishing companies, and Guomai Culture is no exception, accounting for about 95% of the total revenue during the period.
According to the different copyright attributes, book planning and distribution can be divided into two categories: public classic books and copyright books. In the field of public edition classics, Guomai Culture is developing or has developed nearly a thousand kinds of books, of which "The Little Prince" and "Six Notes of Floating Life" and other book products have sold more than one million copies.
In the field of copyright books, Guomai Culture is deeply bound to a number of well-known writers, and its books such as the "Yi Zhongtian Chinese History" series, Han Han's "Life I Understand", Cai Chongda's "Skin Bag", and Zhang Haochen's "I Am Only One You Away from the World" have sold more than one million copies.
According to the prospectus, the proportion of Guomai cultural copyright book revenue in book planning and distribution revenue increased from 55.1% in 2017 to 61.81% in mid-2020.
In other words, Guomai culture is currently extremely dependent on high-quality copyright. But Lu Jinbo has no intention of changing, and he has repeatedly said that doing a good job in books is the most important business of Guomai culture. The fundraising of the listing of Guomai Culture is also for the expansion of copyright. The Prospectus discloses that through this IPO, Guomai Culture is expected to raise 350 million yuan, all of which will be used to invest in the copyright library construction project.
In order to obtain high-quality copyrights, Guomai Culture needs to prepay a certain amount of royalties to writers, which will not only put some pressure on the company's cash flow, but also in the future, if the sales of books that have paid royalties are not good, there may also be a risk of prepaid royalty impairment, which will adversely affect the company's operating performance. According to the financial report, from 2018 to 2020, the company's net advance payments were 78.45 million yuan, 90.25 million yuan and 103 million yuan, accounting for more than 20% of the current assets in each period, and the prepayments were mainly prepaid royalties.
In addition, newly published books will also face problems such as rising paper prices, higher publishing costs, rampant piracy, and low prices in e-commerce channels, resulting in sales that do not meet expectations and resulting in inventory overstock. According to the data of the Prospectus, from 2017 to June 2020, the proportion of the company's inventory balance to operating income was 28.01%, 33.57%, 31.24% and 83.45%, respectively, exceeding the industry average by 22.65%, 24.45%, 20.47% and 62.16%. Among them, the epidemic "black swan" in 2020 has obviously had a great impact on the culture of fruit and wheat.
Inventory overstock will not only incur more book disposal and management costs, but also the books will not be sold and will not be able to generate cash flow for the company, which in turn will put pressure on the company's cash flow.
However, as the epidemic situation improves, the resumption of offline bookstores may bring a wave of book market resurgence. At the same time, Guomai culture is also gradually increasing the number of online sales channels, and the compound growth rate of online channel book sales in the past five years is 26.42%. According to its prospectus, the Q1 revenue of Guomai Culture may double in 2021.
Based on the core business book planning and distribution, Guomai Culture has also gradually extended to the copyright industry chain, new media format operations, etc., developed digital content businesses such as e-books and audiobooks, and also launched emerging products such as paper-electric synchronization and AR books to the market.
At the same time, with the help of star writer IP, Guomai Culture has created a new media matrix. According to the Prospectus, Guomai Culture currently owns or operates new media platform accounts such as "Zhishu Teenager Guomai", "Guomai Culture", "Good Book Museum", "Good Book Radio", "Xiaojia Storytelling", "Yang Hongying", "2040BOOKSTORE" and other company new media platform accounts, as well as author accounts such as "Yi Zhongtian", "Dai Jianye", "Zhang Haochen", "Qingshan", "Rong Rong Sister Reading Children's Books", etc., with more than 20 million fans on the whole network. Lu Jinbo once stressed that he hopes to establish in-depth links with readers through the self-media matrix, thereby improving the repurchase rate of books.
In the field of IP derivatives, based on important IP such as "Six Notes of Floating Life" and "Skin Bag", Guomai Culture has developed IP derivative products such as "McGee Seminar" and sound dramas, and realized the authorization of film and television copyright adaptation. However, in the Prospectus, the IP derivative and operating income of Guomai Culture in the first half of 2020 was only 968,100 yuan, accounting for 0.68% of the main business.
In addition to the direct development and operation of IP, through the relationship with Han Han and Bona Pictures, Guomai Culture has invested in 6 movies, including "Flying Life" and "Riding the Wind and Waves", the latter two films invested 28 million yuan and 17.2 million yuan respectively.
The "Prospectus" disclosed that between 2017 and 2019, the company's film investment income was 886,700 yuan, 13,947,200 yuan and 8,178,700 yuan, accounting for 2.59%, 22.89% and 11.95% of the total profit in the same period, respectively.
Film investment is faster than selling books to make money, but it has not lasted, in 2018-2020, digital content business and IP derivatives and operating revenue accounted for no more than 5%, and by 2020, revenue is only 1.5 million yuan, accounting for only 0.44%.
However, in December 2020, after Luo Yonghao became popular again on the talk show, Lu Jinbo and Luo Yonghao announced through Weibo that the two sides had finished talking about the script of "True Return", and the former also revealed that it would be a commercial comedy.
<h1 class="pgc-h-arrow-right" data-track="89" > "sunset industry" regain spring ? </h1>
On the first day of its listing, Guomai Culture was greatly recognized by the capital market, which is of great significance to the publishing industry, which is often ridiculed as a "sunset industry".
Among the private publishing companies, in addition to the fruit and wheat culture that has successfully landed, the reader culture (301025. SZ), a mill iron culture company that has published works such as "Those Things of the Ming Dynasty" and "Notes on the Tomb Robber", is also sprinting for an IPO, and the latter two are also popular with capital, and have capital blessings all the way in the listing process.
Reader Culture received a Series A financing of 128 million yuan before the listing, and the investors were Legend Capital, Zhihe Capital, Fuhui Capital, etc., and the post-investment valuation reached 2 billion yuan. In July this year, although the issue price of Reader Culture was only 1.55 yuan / share, it soared 19 times on the first day of listing, refreshing the record for the highest increase on the first day of the ChiNext board, with a closing price of 31.66 yuan / share, and the market value once exceeded 120 yuan.
Motie Culture has had 6 rounds of financing, and investors include BOC Yuecai, Fangyuan Capital, CDH Investment, Junchuang Fund, etc., with the highest financing amount reaching 300 million yuan. Shen Haobo, the boss of the grinding iron culture, is also a poet. According to public information, Shen Haobo was born in 1976, graduated from the department of Chinese of Beijing Normal University, and began to write poetry in 1996.
Why are these three book publishing companies frequently optimistic about the capital market?
First, policy orientation, this year's government work report pointed out, "promote the integration of urban and rural public cultural service system construction, innovative implementation of cultural projects to benefit the people, and advocate reading for the whole people." This is the eighth consecutive time since 2014 that "reading for all" has been written into the government work report.
The second is that reading is very important and needed by all people. China Youth Daily pointed out that advocating reading for all people not only connects the tradition of chongwen re-teaching and persuasion, but also guides the future of promoting "human modernization" from the cultural dimension. Whether it is based on the needs of a knowledge society, the righteousness of a learning society, or an effort to improve the quality of the people and provide intellectual support for the modernization construction, it is necessary to focus on building a book-scented China, planting the soil for learning, and cultivating a reading atmosphere. For individuals, the history of spiritual development is the history of their reading; for the nation, the water level of spiritual civilization also depends on the level of reading.
Yu Yitu, a senior publisher and book planner, said in an interview with the Science and Technology Innovation Board Daily that book publishing is indeed not a good business in terms of profitability alone, but from the perspective of cultural inheritance and knowledge education popularization, it is an area of great significance and long-term social value. "Now book companies not only publish paper books, but also the operation and development of copyrights such as audio, e-books, film and television, cultural creation, etc., which are also worth exploring."
The success of the IPO of Guomai Culture may only be a small boat in China's 100 billion book market, but "there is a golden house in the book, and there is a beautiful jade in the book", reading is beneficial, and the book publishing industry should not "set the sun" in any way.
What are your views on the listing of Guomai Culture? Feel free to leave a comment below.