Covid-19 has hit the movie industry hard, but even as prospects brighten for this sector, the movie giant seems to lag behind
Chinese film producer Huayi Brothers Media (300027) (Chinese: 华谊兄弟传媒) announced on February 21 that controlling shareholder Wang Zhongjun will sell up to 55.49 million shares, less than 2% of the total stock, through centralized bidding. The money will be used to pay back stock-pledged loans, so as to lower the company’s financing risks.
This is not the first time for Wang, who’s the actual controller of the company, to whittle down his stake. During the period between November 3, 2021 and January 7, 2022, Wang Zhonglei, another co-founder and Wang Zhongjun’s sibling, sold 27.58 million shares, accounting for 0.99% of the firm's capital stock via centralized bidding. 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 largest film producer often compared to Warner Brothers, has slumped for three consecutive years, resulting in a net profit attributable to shareholders of the list company of CNY -1.169 billion, CNY -3.978 billion, and CNY -1.048 billion in 2018, 2019, and 2020, respectively.
As the Chinese film industry enters a “bleak winter” due to the Covid-19 epidemic and deteriorating qualities of mostly domestic movies, many film studios have suffered losses, but some turned profitable in 2021.
For example, Wanda Cinemas (002739) (Chinese: 万达电影) posted a net profit attributable to shareholders of the listed company of CNY -6.669 billion in 2020 and the figure bounced back to somewhere between CNY 90 million and CNY 130 million in 2021.
Valued at CNY 80 billion at its heyday, Huayi’s fortunes also improved last 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.
The company said that the profits came from non-recurring items worth CNY 961 million, including the disposal of long-term equity investment and financial assets and fair value changes due to stock price fluctuations.
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, it also offloaded the shares it held of five public companies such as Tencent Music and Maoyan Entertainment in 2021.
The pandemic, which at its height kept cinemas across China shuttered for as long as half a year, 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 to somewhere between CNY 170 million and CNY 220 million in 2021.
Another movie maker, Jinyi Cinemas (002905) (Chinese: 金逸影视) , fared a lot worse, posting a net profit attributable to shareholders of the listed company of CNY -505.96 million in 2020. It narrowed to between CNY -280 million and CNY -360 million in 2021.
As film producers hurried to present movies during this year's Spring Festival, a traditional golden period for the box office, Huayi had no plan for new screenings.
According to the company, two Huayi Brother pictures, “The Mermaid 2,” starring Hong Kong comedian Stephen Chow and “749 Bureau,” directed by Chinese filmmaker Lu Chuan, are in the final editing stage but it did not disclose when they will hit the screen.