China Movie Mogul Huayi Brothers plans to sell 2% stake

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Covid-19 has hit the movie industry hard, but even as the outlook brightens for the sector, the movie giant appears to be lagging behind

Chinese film producer Huayi Brothers Media (300027) (Chinese: 华谊兄弟传媒) announced on February 21 that majority shareholder Wang Zhongjun would sell up to 55.49 million shares, less than 2% of the stock total, by centralized tender. The money will be used to repay equity loans, to reduce the company’s financing risks.

It is not the first time that Wang, who is the real controller of the company, has reduced his stake. During the period between November 3, 2021 and January 7, 2022, Wang Zhonglei, another co-founder and brother of Wang Zhongjun, sold 27.58 million shares, representing 0.99% of the share capital of company through centralized auctions. Wang Zhongjun sold 18.81 million shares, or 0.67% of the company’s equity, through block trading from December 28 to 29, 2021.

The movie mogul, once China’s biggest film producer often compared to Warner Brothers, has fallen for three consecutive years, resulting in net profit attributable to shareholders of the listed company of CNY -1.169 billion, CNY -3.978 billion and -1.048 billion CNY. in 2018, 2019 and 2020 respectively.

As China’s film industry enters a “gloomy winter” due to the Covid-19 outbreak and deteriorating qualities of mostly domestic films, many film studios have suffered losses, but some have turned profitable. in 2021.

For example, Wanda Cinemas (002739) (Chinese: 万达电影) recorded a net profit attributable to shareholders of the listed company of CNY -6.669 billion in 2020 and this figure rebounded between CNY 90 million and CNY 130 million in 2021. .

Valued at CNY 80 billion at its peak, Huayi’s fortunes also improved in the past year, during which the net profit attributable to shareholders of the listed company was estimated at CNY 22.5209 million and CNY 33.7139 million CNY.

The company said the profit came from one-time items worth 961 million yuan, including the disposal of long-term equity investments and financial assets and changes in fair value due to market fluctuations. stock prices.

Specifically, Huayi removed six long-term investments, including its stakes in Location-based Entertainment (Chinese: 实景娱乐公司) and Huayi Tencent Entertainment (Chinese: 华谊腾讯娱乐). Besides, he also sold his shares of five public companies such as Tencent Music and Maoyan Entertainment in 2021.

The pandemic, which at its height kept cinemas across China closed for six months, has apparently hit some players harder than others.

Enlight Media (300251) (Chinese: 光线传媒), a filmmaker on par with Huayi Brothers, announced a net profit attributable to shareholders of the listed company of CNY 291.05 million in 2020. The figure fell somewhere between 170 million CNY and CNY 220 million in 2021.

Another filmmaker, Jinyi Cinemas (002905) (Chinese: 金逸影视), fared much worse, posting a net profit attributable to shareholders of the listed company of CNY -505.96 million in 2020. has shrunk between -280 million CNY and -360 million yuan in 2021.

As film producers rushed to show films during this year’s Spring Festival, a traditional golden period for the box office, Huayi had no plans for new screenings.

According to the company, two Huayi Brother stills, “The Mermaid 2,” starring Hong Kong comedian Stephen Chow and “749 Office,” directed by Chinese filmmaker Lu Chuan, are in the final editing stage, but it hasn’t been finalized. not revealed when they will arrive. the screen.

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