Picture source: Visual China
Blue Whale Financial Reporter Xu Xiaochun
Cheng Wu had to save Huayi Tencent after saving the article.
html On April 24, Cheng Wu succeeded Yuan Haibo as the new CEO of Huayi Tencent Entertainment. After the Alibaba Group and Huayi Brothers "abandoned" Huayi Tencent Entertainment, Yuan Haibo led the company onto the road of medical health, but it was still difficult to reverse the decline in losses while supporting the company's revenue scale. html Within 20 years, Hony Capital became the fourth largest shareholder of Huayi Tencent Entertainment's "candidate". Jinyong Investment also expressed its intention to cooperate a week ago. Zhao Linghuan, the actual controller of both companies, also served as non-executive director and director together with Cheng Wu this time. Chairman of the Board. Huayi Tencent Entertainment may resume its film and television entertainment business.With Cheng Wu taking office and Hony entering the game, Huayi Tencent Entertainment may regain its film and television entertainment business.
Although it is known as an entertainment company, Huayi Tencent Entertainment makes up almost all of its revenue from its Internet medical business.
In 2023, Huayi Tencent Entertainment mainly consists of two core businesses, namely the medical industry digital operation service "Yizhinuo" and the smart health service platform "Mongoose Health". The film and television entertainment business has basically been completely suspended.
html On April 24, Huayi Tencent Entertainment announced changes in management positions. Cheng Wu, the company’s executive director and vice chairman of the board of directors, became CEO and no longer served as vice chairman of the board of directors. Zhao Linghuan served as the company’s non-executive director and chairman of the board of directors. Yuan Haibo, the original executive director and CEO of Huayi Tencent Entertainment, was transferred to president.Cheng Wu, who was born in 1975, is 49 years old this year. The highlights of Cheng Wu’s life so far have basically been achieved in Tencent companies. In November 2009, Cheng Wu joined Tencent Holdings and served successively as vice president of the group, chairman of Tencent Animation, chairman of Tencent Literature and CEO of Tencent Pictures. He was fully responsible for the strategic planning of Tencent Animation, Tencent Literature, Tencent Pictures and Tencent E-sports. and daily operations.
In 2015, Tencent Literature and Shanda Literature merged to form China Literature Group, and Cheng Wu joined the board of directors of China Literature Group. In 2020, Wu Wenhui, known as the "Father of Internet Literature", withdrew from the management of China Literature Group, and Cheng Wu took over as CEO of China Literature Group. With the launch of many excellent works such as "The World", "Celebrating More Than Years", "Sister-in-law" and concepts such as the IP ecological matrix, Cheng Wu led China Literature Group out of the haze.
In May last year, Cheng Wu resigned as executive director, CEO and other related positions of Yuewen Group. After leaving China Literature Group, Cheng Wu didn't do much. In September 2023, Cheng Wu once established Zhongtian Junhe Venture Capital, with a subscription ratio of 98%. Zhongtian Junhe Venture Capital has completed the registration of relevant private equity funds, but there are currently no new investment trends.
Since January this year, Cheng Wu has participated in the operation of Huayi Tencent Entertainment as a senior consultant in media and entertainment business. Now, Cheng Wu’s appointment may also be a signal for Huayi Tencent Entertainment to regain its entertainment film and television business.
and Cheng Wu also announced their appointment together with Zhao Linghuan. Zhao Linghuan is currently the current chairman of Hony Capital. He also serves as a non-executive director of Legend Holdings, Lenovo Group, China Glass, and the chairman and executive director of Jinyong Investment and Baifu Holdings.
One week before Zhao Linghuan took office, on April 19, Huayi Tencent Entertainment announced that it had signed a strategic cooperation framework agreement with Jinyong Investment. The two will jointly explore overseas investment and merger opportunities. The board of directors of Huayi Tencent Entertainment stated that the two hope to diversify the company's business and operations through cooperation. The cooperation between the two parties is likely to be promoted in the fields of medical health and film and television entertainment at the same time.
In March this year, Hony Capital, controlled by Zhao Linghuan, first subscribed for the convertible bonds issued by Huayi Tencent Entertainment for HK$120 million. As an established large-scale M&A fund, Hony Capital has invested in many companies in the cultural media field, including Hollywood film and television production company stx, the production company of "Happy Comedian" Qianqiu Sui, and Ningmeng Pictures and other film and television companies.
Although the funds raised by Huayi Tencent Entertainment’s convertible bonds at that time were mainly used to support the development of the medical and health business, in the 2023 annual report, when the company mentioned Hony Investment, it said that in the future, it may cooperate with it in health technology and There is cooperation in the cultural and entertainment sectors.
Assuming that all Hony Investments are converted at a preliminary exchange price of HK$0.1014 in the future, after the conversion, the shares held by Hony Investments will account for more than 8% of all shares in Huayi Tencent Entertainment. Currently, Yuan Haibo holds a total of 17.65% of Huayi Tencent Entertainment's shares, Tencent Holdings holds approximately 15.58%, and Hong Kong "Shell King" Gao Zhenshun holds 9.29% of the shares through the company he controls, Greater Harmony Limited. If all shares are transferred in the future, Hony Capital is likely to become the fourth largest shareholder of Huayi Tencent Entertainment.
According to the agreement, Hony Capital can send a non-executive director to Huayi Tencent Entertainment within 30 days, and now it seems that he is Zhao Linghuan. The emergence of Cheng Wu and the entry of Hony Capital also further demonstrate the transformation of Huayi Tencent Entertainment in regaining its film and television entertainment business.
has suffered losses for 7 of the 8 years since its listing, and the film and television entertainment business has been completely suspended.
In 2023, Huayi Tencent Entertainment's revenue from continuing operations will be approximately HK$1.344 billion, a 15% decrease from 2022. At the same time, the company's net profit loss will be approximately HK$120 million, with a loss range of A decrease of approximately 62% from the previous year. Among them, medical industry digital operation services and medical health service platforms contributed HK$944 million and HK$399 million in revenue respectively, accounting for 70% and 29.7% respectively.
In recent years, Huayi Tencent Entertainment has focused entirely on the medical and health industry. Its original film and television entertainment business has almost stopped. The company has stated more than once that it will no longer invest in new film and television projects and concentrate on revitalizing the remaining film and television projects and investments. For the whole year of 2023, the company’s entertainment and media business revenue was only HK$680,000.
Obviously, this is far from the original intention of establishing Huayi Tencent Entertainment. In 2016, Huayi Brothers and Tencent Holdings, as controlling shareholders, jointly established Huayi Tencent Entertainment and completed its listing on the Hong Kong stock market by subscribing for shares issued by "China No. 9 Health". The purpose of establishing Huayi Tencent Entertainment by multi-party capital is to lay out the overseas film and television entertainment market, and to seek project investment, mergers and acquisitions and other opportunities in Hollywood and South Korea.
At that time, Huayi Brothers and Tencent Holdings held 18.17% and 15.68% of the shares respectively, and Alibaba affiliates such as Jack Ma and Yunfeng Fund held 5.13%. Yuan Haibo, who has just stepped down as CEO, holds approximately 15.67% of the shares.
In 2016, "Rock Tibetan Mastiff" invested by Huayi Tencent Entertainment was released in China and released in North America at the end of February 2017. In the same year, Huayi Tencent Entertainment acquired 22% of the shares of hb Entertainment, the Korean brokerage company behind "My Love from the Star" through subscription, and expanded its shareholding ratio to 30% in early 2018, and has still held the shares to this day.
However, the performance of Huayi Tencent Entertainment is not as expected by capital. In the eight years since 2016, Huayi Tencent Entertainment has suffered losses in seven of the eight years. Moreover, the entertainment and media businesses have been unable to support the performance of Huayi Tencent Entertainment.
2020 is the last year before Huayi Tencent Entertainment turns around. The company's revenue is approximately HK$111 million, of which HK$97.275 million comes from health and wellness services, and entertainment and media business accounts for only about 12%. The so-called health and wellness services mainly refer to the operation of Beihu No. 9 Club, including an 18-hole standard golf course, golf course lakeside pavilion, spa facilities, etc. After
's Alibaba capital exited first, in 2021, it encountered a cash flow crisis. Huayi Brothers, who themselves were also mud bodhisattvas crossing the river, withdrew and reduced their shareholding ratio from 18.17% to 5%. At the same time, Yuan Haibo became the actual controller with a shareholding ratio of 17.76%, and has since led Huayi Tencent Entertainment onto the path of medical health.
In mid-2021, Huayi Tencent Entertainment acquired "Yizhinuo", a new retail platform for online drug prescription, circulation and marketing, and jointly established a joint venture "Mongoose Health" in October, initially forming the company's current medical and health sector structure . These two acquisitions have greatly expanded the revenue scale of Huayi Tencent Entertainment. By 2023, the company's operating revenue will expand to 12 times that of 2020.
The gross profit margin of Huayi Tencent Entertainment's big health business is about 31%, and the company's gross profit in 2023 will be about HK$413 million. However, in order to achieve this gross profit of HK$413 million, Huayi Tencent Entertainment needs to invest 420 million yuan in marketing and sales expenses. In addition, financial expenses and administrative expenses further increase the difficulty of Huayi Tencent Entertainment's profitability.2022 is the year of Huayi Tencent Entertainment's largest loss. The company's net profit loss reached HK$317 million, and the company's operating cash flow has been a net outflow for five consecutive years.
In recent years, Huayi Tencent Entertainment, which has been unable to obtain capital inflows, has borrowed money to support daily operations. In 2020, the company's debt ratio was less than 12%, and by 2023 it had increased to 57.67%. As of December 31, 2023, Huayi Tencent Entertainment's book cash and cash equivalents were approximately HK$27.037 million, and its total assets shrank by approximately 11%. At the same time, the balance of bank loans increased from HK$32.74 million in the previous year to HK$72.231 million, an increase of more than 120%, and the total liabilities increased by nearly 27%.
Faced with the precarious building, Yuan Haibo significantly cut expenses and lowered costs in 2023. On the one hand, it stopped the operation of Beihu No. 9 Club and stopped leasing related venues. On the other hand, Mongo Health has successively divested its vaccine and physical examination businesses with high business costs and uncertain development prospects. In early 2024, Mongo Health once again reduced its business scale, terminated its private e-commerce business, and laid off all relevant personnel. In 2023, Huayi Tencent Entertainment has indeed narrowed its losses, but it is still far from profitability.
Now, Hony Capital has entered the game. After Cheng Wu takes over as CEO, can he lead Huayi Tencent Entertainment into the spring?
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