Focus Media (002027.SZ): Positive Progress - Conditional Antitrust Approval for Xincheng Acquisition (Citi)
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Citi views the conditional antitrust approval granted by China's State Administration for Market Regulation (SAMR) to Focus Media's (002027.SZ) acquisition of Xincheng Media as a positive development, removing a key regulatory uncertainty. The conditions cap the merged entity's annual actual transaction prices in each city at levels from the 24 months before the deal's effective date, and Focus Media must give up exclusivity rights with existing elevator-media location owners and refrain from signing new exclusivity or auto-renewal clauses; the conditions run for at least five years, with annual compliance reports to SAMR. Citi considers these constraints manageable in a weak macro environment, as Focus Media's advertiser network and years of operating experience should preserve its leadership in elevator media.
Financially, Xincheng Media generated 2025 revenue of RMB1.73 billion, down 13.2% year over year, with a 37.1% gross margin and RMB54.1 million attributable net profit; Focus Media posted 2025 revenue of RMB12.8 billion, a 70.5% gross margin and RMB2.9 billion attributable net profit.
The transaction still requires Shenzhen Stock Exchange approval and CSRC registration. Citi maintains its Buy rating on Focus Media with a target price of RMB7.400.