If you think the publishing industry is going irreversibly downhill in this Internet age, think again. It is fast becoming one of the hottest sectors in the Chinese stock market, thanks to government support, in a big way.

Take Shanghai-listed Time Publishing & Media Co. Ltd., a unit of the state-owned Anhui Publishing Group in Anhui province, one of the less developed regions in China. The company's shares have surged nearly 35.53 percent, despite occasional faltering after its shares resumed trading on September 18, 2008 after a long restructuring process. Time Publishing shares closed at 22.66 yuan yesterday. The shares have significantly outperformed the benchmark stock index, which rose 17.35 percent in the same period to 2224.71 points.

"In these uncertain times, investors are looking for shares that have demonstrated their earnings potential even in difficult market conditions," said He Yan, research and development director, Quadrel Investment, an investment consultancy firm. Time Publishing is apparently one of these shares, he said.

State-owned Anhui Publishing Group, which specializes in the publication of technology-related books and periodicals, obtained a back-door listing in January 2008, by injecting 1.68 billion yuan of its publication and printing assets into a listed shell company USTC (University of Science and Technology of China) Chuangxin and renamed the new company as Time Publishing & Media Co. Ltd..

The new company, engaged in both publication and hi-tech media, announced on Jan 20 that its profit for 2008 was estimated to have reached 20.26 million yuan with per share earnings of 1.04 yuan. The company has predicted continuous healthy profit growth this year in spite of the economic downturn.

Before the makeover, USTC Chuangxin had forecast a profit of 5.55 million yuan and per share earnings of 0.07 yuan for 2008.

"As the shell company was comparatively small and the new assets are rather huge and robust, the drastic profit and earning surges are reasonable," said He of Quadrel.

He and other stock analysts have also attributed Time Publishing & Media's expected performance to the favorable policy of the Anhui provincial government to promote the publication of educational materials with high tax rebates and other incentives.

But such government subsidies to the publishing industry are not limited to Anhui alone.

Tan Xiaoyu, a media industry analyst of Guotai Jun'an Securities, said that she is not only eyeing Time Publishing & Media, but also the publication and media sector in general, given the government's initiative to support market-oriented reform of giant publication groups.

The Chinese government has been encouraging state-owned publishing and media groups to tap the capital market. In 2008, a total of 11 press and publication enterprises have gone public, albeit with considerably less fanfare than Time Publishing & Media Co. Ltd. and Liaoning Publishing and Media Co. Ltd..

The prices of Liaoning Publishing & Media's shares had jumped nearly 50 percent in the past four months to more than 7 yuan a piece, surpassing the performance of Time Publishing and Media shares in the same period.

Liu Binjie, the director of General Administration of Press and Publication, noted last year that at least two giant publication corporations each with assets and annual sales exceeding 10 billion yuan would be established in China within two years.

A group of publishing and media groups, involving China Publishing Group, Hunan Publishing Investment Holding Group, Higher Education Press and Huazhong Science and Technology Press, have expressed their willingness to go public. Several of these companies are known to have completed the preparation of their IPOs.

The State Council issued a new provision last year to support development of the culture industry. "That policy has underscored the future profits and development of publishing companies such as Time and Liaoning," said Tan.

(China Daily February 11, 2009)