Although Jessica's CEO Jessica Ng declined to offer a second half figure, she insists "there is definite growth year to year". By listing on GEM, Jessica is not bound by the stringent requirements for main board firms, which must show an operational record of at least three years, a profit of $20 million in the most recent financial year and an aggregate profit of $30 million in the two preceding financial years.
To date, Jessica is the first publisher to turn to GEM for funding. Twenty other listed media operators, including TV companies and newspaper publishers Oriental Press, Next Media and SCMP Group are all listed on the main board.
Analysts believe concept rather than performance fuelled the enthusiastic response for Jessica's shares despite lacklustre conditions. And they are under no illusion that the honeymoon will not last long. HSBC analyst, Anne Ling, says: "We are very careful when buying GEM stocks due to the short operating history."
The greater concern is the adspend slump facing media firms.Media agencies have forecast a rough ride for publishers, particularly those in the women's category. In competing for scarce ad dollars, Jessica often finds itself in a face-off against as many as 13 titles, including international brands such as SCMP Hearst's Cosmopolitan and Hachette Filippachi's Elle. It's likely that the size and resources of its main competitors encouraged Jessica to seek funds to improve its two titles - Jessica and Lisa. Against such a backdrop, product quality and circulation numbers will be crucial in growing revenue. Notes MindShare Hong Kong managing director K. K. Tsang. "Jessica still has to face tough competition as there are too many women's magazines. I think there is room for Lisa (a title with dining out and cooking content) to develop - its position is quite unique."
Ng says the funds will be used to upgrade both titles and relook plans to launch Jessica Girl for a teen audience. But the more ambitious target is a push into China, where adspend is still growing by double-digits and white collar Chinese female workers are willing to shell out Rmb 50 on magazines. "Although the women's magazine market faces fierce competition, there is room to grow because the market is less tapped,
says Zoe Tan, Zenith China's strategic research director.
And that may account for the enthusiastic reception despite the reality of slumping adspend.
