Wen Yongqin / tr. by Zhang Yongqin
Editor | Lu Jia
Recently, Huayi Brothers (300027.SZ), the first share of Chinese film and television entertainment, has frequently sold its assets.
On Sept. 24, Huayi Brothers announced that it planned to sell 215 million shares of Hero Mutual Entertainment, accounting for 15 per cent of the company's total share capital. It is understood that the receiving party is the senior game investor Chen Chen or his designated third party, all the transfer consideration is 870 million yuan.
Once spent 1.9 billion on the acquisition, now it loses 1.76 million
In fact, Huayi Brothers had a sweet time with heroes. In November 2015, Huayi Brothers spent 1.9 billion yuan to acquire a 20% stake in Hero Mutual, making it the company's second largest shareholder. At that time, the net worth of heroes entertaining each other was only 11.93 million yuan.
As a mobile e-sports upstart, Hero Mutual Entertainment is developing rapidly, even catching up with Tencent. According to the "China E-Sports Special report 2016" released by Analysys, Hero Mutual and its subsidiary Hero Sports respectively occupy the second place of China Mobile Limited e-sports product developer and China e-sports event operator, second only to Tencent.
After buying a stake in hero entertainment, Huayi Brothers did not stop there. In November 2016, Huayi Brothers, which had been suspended for nearly two months due to a major asset restructuring, said it planned to acquire a stake in Hero Mutual, a company listed on the new third board, but the acquisition ended in failure.
But in just five years, the popular ones of that year were sold. After the completion of the transaction, Huayi Brothers holds only 74 million shares, accounting for 5.17% of the total share capital of Hero Mutual. Huayi Brothers said the move was to gradually divest assets that were weakly linked to the core business and further focus on "film + reality". It is reported that Huayi Brothers lost 1.7677 million yuan in the equity sale.
Frequent sales of equity holdings
In recent years, Huayi Brothers has had a difficult time. According to the financial reports over the years, from 2018 to 2020, the net profits of listed companies were-1.169 billion yuan,-3.978 billion yuan and-1.048 billion yuan respectively, with a total cumulative loss of more than 6 billion yuan in three years.
In the first half of 2021, Huayi Brothers changed from profit to loss, with an operating income of 579 million yuan and a net profit of 106 million yuan belonging to shareholders of listed companies.
Although the net profit turns to surplus, the debt situation of listed companies is still not optimistic. By the end of June, Huayi Brothers had borrowed 1.585 billion yuan in short-term loans, 591 million yuan in non-mainstream liabilities due within one year, and 808 million yuan in long-term loans.
It is worth mentioning that Huayi Brothers disposed of a number of equity assets in the first half of this year. Among them, the investment income of listed companies reached 124 million yuan through the sale of part of Huayi Tencent Entertainment's stake.
In April, Huayi Brothers (Tianjin) Real scene Entertainment Co., Ltd. (hereinafter referred to as "Tianjin Real scene"), a subsidiary of Huayi Brothers, sold a 10% stake in Henan Jianye Huayi Brothers Culture and Tourism Industry Co., Ltd., resulting in an investment income of 50 million yuan.
In August, Huayi Brothers sold its plans again. Huayi Brothers plans to transfer 15 per cent of Tianjin Shijing for a transfer price of 225 million yuan, according to the announcement. After the completion of this transaction, Huayi Brothers will hand over the control of Tianjin Real scene, but the listed company is expected to earn about 454 million yuan.