Alibaba Movie Unit Soars as Parent Says It May Inject Assets

Alibaba Pictures Group Ltd. climbed to a 14-year high, adding $2.8 billion to its market value, after parent Alibaba Group Holding Ltd. said it was considering “injecting” some of its entertainment assets into the unit.

Alibaba Pictures surged 37 percent to HK$3.91 at the close in Hong Kong, the highest since 2001. Alibaba Group may fold its online movie ticketing business and a movie crowd-funding platform into Alibaba Pictures, the parent said in a filing Wednesday. There is no certainty a deal will go ahead, it said. Alibaba Group shares rose 3.9 percent to close at $85.39 in New York.

Alibaba Group is considering bringing the assets together after buying an $800 million stake in the Chinese film company last year. Chairman Jack Ma visited Hollywood in October and said at the time he was seeking partners to acquire more content because China’s film industry needs cultural products.

“It makes sense for Alibaba to combine all its movie-related assets into one unit,” said You Na, an analyst at ICBC International Research Ltd. in Hong Kong. Na said last month that Alibaba would “most likely” make such a move.

China’s online video market is expected to more than double to 90 billion yuan in 2018 from an estimated 36 billion yuan this year, according to Shanghai-based IResearch.

Last month, Alibaba Group’s investment subsidiary purchased a 2.4 billion yuan ($387 million) stake in Chinese film company Beijing Enlight Media Co. Enlight is known for the film “Lost in Thailand,” and for producing local television shows including “Top Chinese Music” and “Chinese Entertainment Reports,” according to its earnings report.

Accounting Delay

Alibaba Pictures reported a loss last year and has yet to report for the first quarter this year or project earnings.

The company has delayed reporting its earnings after saying in August that management uncovered possible accounting flaws. The company has blamed misstated tax payments and other accounting on lax internal controls by the previous management team.

Before it's here, it's on the Bloomberg Terminal.