Tencent has recently sold its shares of Huayi Brothers Media Co. Ltd. (Huayi Brothers). It reduced more than 80 million shares in three days, and the average selling price was only $0.33 per share. The loss was heavy compared with the share price when Huayi Brothers were acquired.
On the evening of August 5th local time, Huayi Brothers confirmed that from August 2nd to 4th, Tencent, the company’s second-largest shareholder, reduced its holdings of Huayi Brothers shares by 53.89 million at an average price of $0.33 per share. In addition, Tencent lent 27.745 million shares by participating in refinancing securities. Thus Tencent’s reduction in Huayi Brothers shares reached 81.638 million, accounting for 2.94% of Huayi Brothers’ total share capital.
After the sell-off, Tencent still held 138.725 million shares of Huayi Brothers, although their shareholding in Huayi Brothers has fallen from the original 7.9% to the current 4.9%. It’s the second time Tencent has reduced its holdings in listed companies on a large scale since it first reduced its shareholding in Hailan House, Jingdong, and Backgammon stocks.
Tencent’s investment in Huayi Brothers began in May 2011. At that time, Alibaba founder Jack Ma and many others sold part of their shares in Huayi Brothers through bulk transactions, selling a total of 27.8 million shares at $2.37 per share, accounting for 4.6% of the company’s total share capital.
All of the shares mentioned above were included in Tencent’s bag, and Tencent thus became the fourth largest shareholder of Huayi Brothers. The more significant shareholders are Wang Zhongjun, Wang Zhonglei, and Ma Yun. Since then, Tencent has repeatedly increased its capital in Huayi Brothers, and by 2015, its shareholding was about 7.94%.
Data show that Huayi Brothers is currently an entertainment media company in China. The company integrates the three major business sectors and industrial investment of film and television entertainment, brand licensing, real-world, and Internet entertainment. As a result, it was a company with a complete industrial chain and rich entertainment resources in China’s film and television industry.
However, from 2015 to the present, Huayi Brothers’ operations have steadily deteriorated, its performance has suffered losses for four consecutive years, and its stock price has continued to fall. Judging from the price of this reduction, Tencent’s investment in Huayi Brothers has suffered heavy losses.
Huayi Brothers’ 2021 annual financial report, released on April 28th this year, shows that the company’s total revenue in 2021 is about $210 million. That was a year-on-year decrease of 6.73%. The net loss attributable to shareholders of the listed company was $36.4 million, a year-on-year reduction of 76.5%.
Huayi Brothers have suffered a fourth consecutive year of losses. Previously, Huayi Brothers lost $1.169 billion, $3.978 billion, and $1.048 billion, respectively, from 2018 to 2020.
The report said that Huayi Brothers is just a microcosm of China’s entire film and television industry. Currently, this colossal industry is more or less facing difficulties. According to Choice data, as of July 15th this year, 14 film and television listed companies in China have released mid-year performance forecasts, of which 10 are forecast to lose money, and only four should make a profit.