Looking back on 2023, there are frequent good news in China's film market, but Huayi Brothers, the former "number one film and television stock" and a listed company in Jinhua, has now suffered the first heavy blow of the new year.
On the New Year's Day that just passed, "If You Are the One 3" was released with great anticipation. This is the most classic comedy IP in the Chinese film market. The first part released in 2008 and the second part released in 2010 respectively won the top prize of the year. Box office winner and runner-up.
However, the box office hit was unexpected. "If You Are the One 3" grossed more than 24 million yuan at the box office on its first day. As of January 7, it had only made 77 million yuan. Maoyan Professional Edition predicts a total box office of 100 million yuan, which is far from the investment cost of 350 million yuan, and a huge loss is a foregone conclusion.
At the same time, Huayi Brothers’ stock price suffered five consecutive declines, with a cumulative loss of 9.3%.
In recent years, Huayi Brothers has been in deep trouble, losing money for five consecutive years and shrinking its market value by 90%. It once publicly announced layoffs in 2022. For this "China's No. 1 film and television company" that once pioneered Lunar New Year stalls and almost monopolized half of the industry, the film and television winter is still going on.
Advertising cross-border movies, the Wang brothers created the "originators of Lunar New Year stalls"
In 1998, Wang Zhongjun made his first pot of gold from the advertising business and made a cross-border movie with his younger brother Wang Zhonglei. At that time, Feng Xiaogang became famous with the movie "Party A and Party B", and the two parties started cooperation, ushering in a new era of commercial films.
For a long time after that, "Feng's Comedy" dominated the "Lunar New Year", "Cell Phone", "A World Without Thieves", "The Night Banquet", "Tangshan Earthquake", "1942", "Private Customization"... The films that have been well-received and box office hits are impressive. With Feng Xiaogang's support, Huayi Brothers has created multiple box office miracles.
Huayi Brothers went public in 2009 and became the first stock in China's film and television entertainment industry. Its market value once approached 90 billion yuan.
Subsequently, Huayi Brothers started capital expansion in the pan-entertainment industry. It first invested 100 million yuan in the game manufacturer Palm Qu Technology. Palm Qu went public and made a profit of 15 times. After tasting the sweetness, Huayi Brothers increased their investment in Yinhan Technology, and kept moving all the way. When the game market was down in 2017, they continued to reduce their holdings and cash out, and ran out of the market. The cumulative cash out exceeded 2.4 billion yuan. They transferred Yinhan Technology shares and made another 6 billion.
However, Huayi Brothers invested heavily in pan-entertainment fields such as games, which greatly dispersed resources and caused the main film and television business to stagnate in the face of competition.
cannot understand young people. Feng Xiaogang cannot save Huayi Brothers.
Success or failure is also Xiao He. Over-reliance on Feng Xiaogang for film investment and production has become another reason for Huayi Brothers' current performance troubles.
In 2015, the wealthy Huayi Brothers tied themselves up with Feng Xiaogang through a money-losing transaction - acquiring 70% of the equity of Feng Xiaogang's company, Dongyang Mera, for 1.05 billion yuan. At that time, Dongyang Meila had only been established for 2 months, with total assets of 13,600 yuan and negative net assets. The acquisition was at a premium of 100,000 times.
In the next five years, the only films directed and released by Feng Xiaogang were "I'm Not Pan Jinlian", "Youth" and "Only Yun Knows". The box office performance of these three films was not satisfactory, and Feng Xiaogang's Dongyang Mera also failed twice. To complete the figures agreed in the gambling agreement, Huayi Brothers needs to make up a total of 235 million yuan. Subtracting 235 million yuan, Feng Xiaogang still gained about 800 million yuan from the acquisition of Dongyang Mera, which also means that Huayi Brothers lost about 800 million yuan in this transaction.
Whether it is "If You Are the One 3", which bombed the box office, or the TV series "North and South" and "Echo", which have Douban ratings of 5.0 and 5.9, for today's young people, the Feng Xiaogang era has long become a thing of the past.
2018 is a critical year. With the release of masterpieces such as "Wolf Warrior 2", "I'm Not the God of Medicine", "The Wandering Earth", "The Devil Boy of Nezha", and "Operation Red Sea", Beijing Culture, With the rise of companies such as Enlight Media and Bona Pictures, and a group of new directors emerging, the Chinese film landscape has undergone a major reshuffle. On the other hand, Huayi Brothers only has the "Predecessor" series.
Being out of touch with young people is a dilemma faced by Huayi Brothers. Obviously the company has also noticed this problem. Just last month, Wang Zhonglei mentioned in an interview with the media that Huayi not only wants to embrace young audiences, but also wants to absorb them. Young creators support new forces in the film industry.
Since this year, Huayi Brothers has suffered successive losses, with a cumulative loss of more than 7.4 billion yuan in five years, and a loss of 281.8 million yuan in the first three quarters of 2023. In terms of solvency, the company's asset-liability ratio at the end of the third quarter of 2023 was 75.57%, an increase of 3.20 percentage points from the end of the previous year; the interest-bearing asset-liability ratio was 30.61%, an increase of 1.02 percentage points from the end of the previous year.
The side effects of lackluster main business and over-expansion emerged in 2019. Huayi Brothers fell into financial difficulties. In order to repay debts, the actual controllers, the Wang brothers, cashed out or pledged their equity many times and sold off their personal collections of famous paintings and luxury homes. According to statistics, since 2013, the Wang brothers have reduced their holdings and cashed out a total of 1.78 billion yuan through the secondary market.
Film investment is a high-investment, high-return industry that requires a large amount of capital investment. Huayi Brothers, which is trapped in a financial quagmire, may not be able to save itself for a while.
(Source: Chengshi Interactive)
