brothers could not withstand the business in the end.
Author | Yu Yu
Editor | Wu Lijuan
Source | Yema Finance
spent 1.05 billion yuan from Feng Xiaogang and Dongyang Mera bought by film and television producer Lu Guoqiang, Huayi Brothers (300027.sz) finally couldn’t hold it anymore .
On the evening of July 23, Huayi Brothers announced that it planned to sign an agreement with Alibaba Pictures (1060.hk). would transfer 70% of its holding subsidiary Dongyang Meila to for a consideration of 350 million yuan. After the transfer is completed, Huayi Brothers Yi Brothers no longer holds equity interests in Dongyang Meila.
Regarding the reason for the move, Huayi Brothers stated in the announcement that this decision was made based on actual operating conditions. The purpose is to further optimize the company's resource allocation, optimize the company's industrial structure, improve the company's asset operation efficiency, and better support the company's owners. Promote and implement the business development strategy.
But in fact, Huayi Brothers borrowed 700 million yuan from Alibaba Pictures in 2019, and there is still a principal balance of 350 million yuan outstanding. After the transfer of is completed, Huayi Brothers can just clear the debt with Alibaba Pictures. After the announcement of
, Huayi Brothers fell 2.48% on July 24, and fell another 0.64% on July 25, closing at 1.56 yuan per share, with a total market value of 4.3 billion yuan.
However, some people are happy and some are worried. Although Huayi Brothers lost a lot of "small targets" in this transaction, Feng Xiaogang made a lot of money many years ago. Today, Feng Xiaogang still holds 30% of the shares of Dongyang Mera. After the transfer of is completed, Feng Xiaogang and Alibaba Pictures will hold 30% and 70% of Dongyang Mera respectively.
Source: Qichacha
Feng Xiaogang made a huge profit of 800 million from Huayi Brothers
"Hand in hand" Alibaba Pictures
Dongyang Meila was founded by Feng Xiaogang and film and television producer Lu Guoqiang on September 2, 2015, with a registered capital of 500 Ten thousand yuan, the main business includes production, reproduction and distribution: special topics, columns, variety shows, cartoons, radio dramas, TV series, etc.
was established just 2 months ago, but Huayi Brothers took a fancy to the company and announced on November 19, 2015, that it would acquire Dongyang Mei from Feng Xiaogang (99% of the shares) and Lu Guoqiang (1% of the shares) for 1.05 billion yuan. 70% of the shares.
After the acquisition is completed, Huayi Brothers holds 70% of the equity of Dongyang Mera, and Feng Xiaogang holds 30% of the equity of Dongyang Mera.
It is worth noting that Dongyang Mera had not yet made a profit at that time, with total assets of only 13,600 yuan, and liabilities of 19,100 yuan. The actual book net assets were -5,500 yuan, but Huayi Brothers gave 15 With a valuation of of 100 million yuan, the market was in an uproar.
Faced with doubts, Wang Zhongjun, chairman of Huayi Brothers, said at the investor exchange meeting that year: "I think this is a very valuable merger and acquisition, that is, I have had a relationship with Feng Xiaogang for more than ten years, and his future security I dared to buy this company (Dongyang Meila) because of its sex and growth potential.”
At that time, Feng Xiaogang won the Golden Horse Best Actor in one fell swoop with "Lao Pao Er", and he was in the limelight for a while.
Source: Can Gallery
Although they expressed trust, Huayi Brothers signed a five-year performance gambling agreement with Feng Xiaogang and Lu Guoqiang. According to the agreement, Dongyang Meila's audited after-tax net profit in 2016 will not be less than 100 million yuan. Starting from 2017, the performance target for each year is to increase by 15% based on the net profit target committed in the previous year.
In other words, Dongyang Meila's net profit from 2016 to 2020 should not be less than 100 million yuan, 115 million yuan, 132 million yuan, 152 million yuan, 175 million yuan respectively, and the total should be no less than 6.74 billion yuan. . If the performance agreement for the year cannot be fulfilled, Feng Xiaogang and Lu Guoqiang will need to make up the difference in cash.
However, in the process of operation, Dongyang Meila still failed to meet the expectations of Huayi Brothers. Unfulfilled performance commitments in 2018 and 2020 need to make up the difference of 67 million yuan and 169 million yuan respectively. A total of 236 million yuan.
But even so, Feng Xiaogang still made a net profit of 800 million yuan..
Now, in order to pay off debts, Huayi Brothers sold all its shares in Dongyang Mera at a low price, with the valuation reduced by 66.7%, and sold it to Alibaba Pictures at a discount. However, Feng Xiaogang still holds 30% of Dongyang Mera's equity. After the transfer is completed, Feng Xiaogang will successfully "hold hands" with Alibaba Pictures through Dongyang Mera.
Huayi Brothers lost 8 billion in 6 years
Dongyang Meila also launched some excellent productions during its time under the leadership of Huayi, such as "I'm Not Pan Jinlian", "Youth" and "Only Yun Knows". Three films have Douban ratings They were 6.7, 7.7, and 6.3 respectively, and achieved box office of 482 million yuan, 1.422 billion yuan, and 159 million yuan.
However, in 2018, when Feng Xiaogang was filming the movie "Mobile Phone 2", the tax issue of the heroine Fan Bingbing was involved. The rising female star suddenly declined, and the filming of the movie also failed. Feng Xiaogang became restrained and low-key.
Dongyang Meila did not complete its performance bet that year, and Huayi Brothers also suffered its first loss since its listing.
With the arrival of the film and television winter, Huayi Brothers’ revenue dropped from 3.814 billion yuan to 666 million yuan from 2018 to 2023, and its net profit has been in the red. In the past six years, its net losses were 985 million yuan and 4.04 billion yuan respectively. , 1.075 billion yuan, 226 million yuan, 993 million yuan, 524 million yuan, html’s total net loss in 26 years was nearly 8 billion yuan.
Source: wind
Of course, Huayi Brothers' losses are inseparable from its own "torsions". On the one hand, Huayi Brothers seeks diversified development and proposes a "de-filming" strategy; on the other hand, Huayi Brothers develops "star capitalization" ", trying to be bound to the stars.
Wang Zhongjun once said bluntly in an interview with "Daily Economic News" that in the past few years, because Huayi Brothers had good cash flow, he was blindly optimistic and focused on investment. He felt that the company's growth depends on investment. However, as a non-professional investment company, the income from Huayi Brothers' investment business is not stable. For example, in 2019 and 2020, its investment income suffered losses of 256 million yuan and 333 million yuan respectively.
Diversified development has led to the stalling of Huayi Brothers’ main film business. In order to bind celebrities, Huayi Brothers paid high premiums when acquiring related companies, thus generating high goodwill.As of the end of 2014, the company's goodwill reached 1.486 billion yuan. By the end of 2016, this figure climbed to 3.57 billion yuan.
The high amount of goodwill was like the Sword of Damocles hanging over Huayi Brothers, and it finally fell quickly in 2018. That year, the company made a goodwill impairment provision of 973 million yuan, resulting in an annual loss after non-net profit of 1.181 billion yuan; in 2019, its goodwill impairment loss was still as high as 598 million yuan.
Under huge losses, at the end of 2023, Huayi Brothers’ asset-liability ratio was 79.06%, with short-term borrowings of 495 million yuan. However, Huayi Brothers’ monetary capital is only 232 million yuan, and the net cash flow generated from operating activities is only 82.828 million yuan. The equity interests of Wang Zhongjun and Wang Zhonglei, the actual controllers of
, have now all been pledged or frozen. The company's market value has also gone from nearly 100 billion yuan in 2015 to only 4.356 billion yuan today.
Chanson Capital Director Shen Meng believes that after being frozen, it may be difficult for the actual controller to unfreeze on his own, so the risk of a change in control cannot be ruled out. Although there is still room to reach the early warning line, it is not safe in the current market environment. If the company's performance does not improve better or even improves expectations, it may lead to changes in control.
In order to relieve the pressure, Huayi Brothers began to frequently sell assets to pay off debts, including the sale of Dongyang Meila this time.
Huayi Brothers stated in its reply to investors that the company will continue to concentrate high-quality resources to implement the asset-light business model of "film and television production + IP operations" to accelerate the company's return to the fast lane of healthy development.
Feng Xiaogang embraces "good wood" again?
Today’s Dongyang Meila has lost its glory. In 2023 and the first five months of 2024, its operating income was 124 million yuan and 675,500 yuan respectively, and its net profits were only 37,604,200 yuan and 1,627,300 yuan respectively.
But the takeover party is still optimistic about this asset. html On the evening of July 23, Alibaba Pictures stated in an announcement that Dongyang Mera is mainly engaged in the production and investment of movies, TV series and online dramas, which is similar to the group's main business.
In addition, Alibaba Pictures stated in the announcement that Feng Xiaogang, a well-known Chinese film director, is also a shareholder of Dongyang Mera. As part of the acquisition, the Group will also enter into a cooperation agreement with Feng Xiaogang to stipulate future cooperation plans and strategic cooperation rights related to film production. Therefore, this acquisition is in line with the Group’s strategy and business interests and is expected to further expand Alibaba Pictures’ core business content segments and expand Alibaba Pictures’ territory in China’s entertainment industry.
Source: Can Gallery
Unlike Huayi Brothers, which is still struggling, Alibaba Pictures achieved strong performance growth in fiscal year 2024.
On May 29, Alibaba Pictures released its financial report for fiscal year 2024. During the reporting period, the company achieved revenue of approximately 5.036 billion yuan, a year-on-year increase of 44%, and net profit attributable to the parent company of 285 million yuan , compared with a loss of 291 million yuan in the same period last year.
It is reported that this growth is not only affected by the market recovery, but also benefits from the diversified layout of the company's business structure. Alibaba Pictures adheres to the two-wheel drive strategy of "content + technology" and has achieved steady development in multiple business sectors. In particular, the profitability of the film sector has steadily improved and has entered a high-quality growth track. Film investment, production and promotion income, movie ticketing and technology platform income, IP derivatives and innovative business income all achieved significant growth.
In addition to the company's performance far surpassing Huayi Brothers, Alibaba Pictures' film and television production advantages are also very eye-catching. It can make full use of Alibaba Group's rich resources and technologies to achieve resource sharing, complementary advantages and collaborative development. At the same time, Alibaba Pictures has also established extensive cooperative relationships with many well-known companies and institutions at home and abroad.
In fiscal year 2024, Alibaba Pictures participated in the production and distribution of more than 60 movies, accounting for more than 60% of the total box office, and 15 of them entered the top 20 box office in the same period. Among the top 10 films at the box office during the same period, Alibaba Pictures won 6 places, including "All or Nothing", "The Lost Girl", "Hot and Spicy", and "Flying Life 2", which had a box office of over 3 billion yuan. a movie.
As of July 25, Alibaba Pictures closed at HK$0.39 per share, with a total market value of HK$11.6 billion (approximately RMB 11.747 billion).
However, although the box office performance of Alibaba Pictures' participating films in fiscal year 2024 is good, the company has no independent self-produced projects, and the production methods it participates in are all co-productions, joint productions or leading promotions. This also sets the stage for Alibaba Pictures' future in the film industry. Developments are clouded by a layer of uncertainty.
Feng Xiaogang can "hand in hand" with Alibaba Pictures, which may also be able to better assist its future development.
What do you think of Huayi Brothers selling assets at a low price to pay off debts? Let’s chat in the comment section.
