Bona Film Group Limited (NASDAQ:BONA) is the largest private distributor of films in China. Bona Film makes money by purchasing the distribution rights of movies, often from the state-owned China Film Group Corporation, and then sells resells the rights to theaters across all of China. In 2009, films that Bona either distributed or invested in accounted for 44.1% of total box office sales. Due to the nature of the film industry, a few of the company's top films generate the majority of the company's revenue. In particular, the company's largest 5 films produced 67.9%, 63.5%, and 50.6% of total revenue in 2009, 2008, and 2007 respectively.
The movie industry in China has grown substantially over the past few years. This growth is largely due to the rise of China's middle class as the general urbanization of the Chinese population. The rise in disposable income of the Chinese middle class as increased the sales of many luxury goods such as entertainment. In addition, the growth of the film industry has improved the quality of Chinese made movies which has driven demand for Chinese produced films both domestically and abroad. In 2005, the total box office sales in China were $313.9M, and increased to $926.7M in 2009.
The company's initial public offering of stock on the NASDAQ occurred on December 8, 2010. The company offered 11.74M ADSs each for $8.5 each. This was within the initial price range of $7-$9. The offering raised $100M. The lead underwriters of the deal were Bank of America (BAC) and J P Morgan Chase (JPM).
Bona Film's net revenues in 2009 were $38M which was a 65% increase over its 2008 figure of $23M. The company's net income was $5.4M in 2009. This was particularly high due to changes in fair value of warrants.