For more than four years, is there any hope that “Chang’an in the world” will be broadcast?
On May 19, when H&R Century Union Corporation(000892) replied to the inquiry of Shenzhen Stock Exchange, the producer and listed company of “Tianxia Chang’an” said that it actively coordinated and promoted the broadcasting of “Tianxia Chang’an”, and there was no situation that it could not be broadcast in substance and objective. But so far, “the broadcast time cannot be determined”.
The backlog of dramas has caused quite obvious damage to H&R Century Union Corporation(000892) performance. In the reply to the inquiry letter, H&R Century Union Corporation(000892) also announced the withdrawal of the recent popular ancient costume drama “mountain and river Moonlight”: under the total cost of 397 million yuan, 243 million yuan of falling price reserves were withdrawn. In this regard, H&R Century Union Corporation(000892) explained: the broadcast schedule of the play was determined late, and the broadcast environment changed.
From 2019 to 2021, H&R Century Union Corporation(000892) suffered huge losses for three consecutive years, and the net profit attributable to the parent company was -551 million yuan, – 785 million yuan and -334 million yuan respectively, with a total loss of 1.67 billion yuan in the three years. For H&R Century Union Corporation(000892) , the cold winter of the film and television industry is far from over.
“Chang’an in the world” is still “unable to determine the broadcast time”
In 2022, the audience will wait for “the moon shines on mountains and rivers”. Can they wait for “Chang’an in the world”?
As an epic costume drama under H&R Century Union Corporation(000892) banner, “Chang’an in the world” was launched and finished in 2017. The play combines the drama bones of Li Xuejian, Zhang Hanyu, Qin Junjie, Shuchang, Han Dong, Wang Jinsong and Du yuan. With the early Tang Dynasty as the historical background of the change of Xuanwu, it is not difficult to imagine its magnificent work.
However, Chang’an in the world, which was originally scheduled to be broadcast online in 2018, was suddenly withdrawn, which aroused many suspicions in the industry at that time. There are also different opinions on the reasons for file withdrawal, such as revision of the version, deletion, trial, channel dispute and so on. However, it is certain that the release of the play has not yet been reported.
On May 19, when H&R Century Union Corporation(000892) replied to the inquiry of Shenzhen Stock Exchange, the producer and listed company of “Tianxia Chang’an” said that it actively coordinated and promoted the broadcasting of “Tianxia Chang’an”, and there was no situation that it could not be broadcast in substance and objective. But so far, “the broadcast time cannot be determined”.
What is the impact of the delay in the release of TV dramas? In 2020, zhongtianyun certified public accountants even issued a “non-standard” report on H&R Century Union Corporation(000892) with reservations. The reason is that “Tianxia Chang’an” was not broadcast according to the schedule of satellite TV in 2018 and has not been broadcast by the audit report date in 2020, which makes it impossible to judge the impact of the recoverability of 506 million yuan of accounts receivable.
In order to eliminate this problem, H&R Century Union Corporation(000892) in 2021, the “strong man broke his wrist”: the impairment provision was made for the relevant contract assets and accounts receivable of the world Chang’an, and the book value was zero. After the full amount is withdrawn, the basis of reservations will naturally disappear.
or performance compensation
One wave just flattened and another wave rose. Similarly, due to the fact that “Chang’an in the world” cannot be released for a long time, shareholders may face performance compensation.
Looking back on the past, in 2016 H&R Century Union Corporation(000892) purchased 100% equity of huanrui film and television with 392 million shares by issuing shares to purchase assets. At that time, the original shareholders of huanrui film and television promised that the net profit attributable to the parent company of huanrui film and television in 20162018 would not be less than 241 million yuan, 290 million yuan and 368 million yuan respectively, and not less than 223 million yuan, 270 million yuan and 343 million yuan after deduction.
Shenzhen Stock Exchange pointed out that due to the fact that “Tianxia Chang’an” was not broadcast on schedule in 2018 and has not been broadcast yet, there may be differences between the realized profits of huanrui film and television in 2018, the accumulated realized profits from 2016 to 2018 and the performance commitment goals. Shenzhen stock exchange requires H&R Century Union Corporation(000892) to explain whether to discuss with the restructuring performance commitment party the specific arrangements to ensure the realization of performance compensation.
In this regard, H&R Century Union Corporation(000892) said that it had repeatedly reminded the performance compensation obligor of the possible risks since 2019. At present, it is actively coordinating and communicating and taking relevant countermeasures. If the promised performance fails to be completed, the relevant commitment parties will be urged to guarantee the performance compensation in the way agreed in the restructuring report.
On May 10, H&R Century Union Corporation(000892) disclosed and announced that the shareholders holding more than 5% of the shares had the risk of passive reduction. Due to the dispute over pledge type repurchase, Citic Securities Company Limited(600030) through the application and ruling of Beijing Arbitration Commission, H&R Century Union Corporation(000892) gives priority to the repayment of a total of 116 million shares pledged by Zhong Junyan, Chen Yuan and Zhejiang huanrui.
Based on this, in case of shares being auctioned, Zhong Junyan, Chen Yuan and Zhejiang huanrui who acted in concert shall ensure that the requirements for shares to be used for performance compensation will not be affected. In the case of disputes with securities companies due to pledge type repurchase, the compensation ability of the above shareholders is worrying.
“mountain, river and moon” made a large-scale withdrawal of 243 million yuan
According to the annual report, the balance of H&R Century Union Corporation(000892) inventory at the end of the reporting period was 1.367 billion yuan, accounting for 44.75% of the total assets, and the inventory falling price reserve was 252 million yuan, accounting for 75.37% of the net profit; The balance of falling price reserves is 303 million yuan, of which 252 million yuan is withdrawn in 2021.
In this regard, the Shenzhen Stock Exchange asked H&R Century Union Corporation(000892) in the inquiry letter to list in detail the specific situation of the inventory of “goods in stock” and “products in process”, and to specify whether the basis for withdrawing the inventory falling price reserve during the reporting period is sufficient and whether there is profit adjustment.
Where does the huge amount of provision in inventory come from? The answer is the “Moonlight on mountains and rivers” which was broadcast a few days ago.
Compared with a large number of ancient costume dramas that cannot be “unpacked” (overstocked dramas) and are difficult to “go to the stars”, although the phase of “mountain, river and moon” has also been overstocked for nearly four years, it is still relatively lucky. Cool cloud live data show that on the night of the play’s premiere, it won the first ratings in csm34 city at the same time. In the performance ranking of the lighthouse professional version of April TV series, Shanhe Yueming ranked third.
However, due to a large number of cuts, editing confusion and other problems, the reputation of “mountain, river and moon” fell shortly after its release, and it is common to brush the screen with one star and two stars.
Turning to the issue of provision for inventory falling price, in the reply to the inquiry letter, H&R Century Union Corporation(000892) listed 19 film and television works included in inventory goods and products in process. Among them, provision for falling price has been made for “mountain, river and Moonlight” as high as 243 million yuan, 448818 million yuan for “seize the time love”, and there is no large amount of provision for other film and television products.
H&R Century Union Corporation(000892) introduction, “mountain and river Moonlight” was launched in March 2018 and finished in August 2018, with a total cost of about 397 million. The play obtained the distribution license on April 2, 2022, with a total of 45 episodes. It was broadcast simultaneously on Beijing TV and Youku video on April 6, 2022.
Similar to the situation of Chang’an in the world, “mountain, river and Moonlight” has also experienced a backlog for nearly four years H&R Century Union Corporation(000892) said that the drama is a major historical theme drama, and the later stage of the drama and evidence collection take a long time. In the post production of the drama in 2019 and 2020, there is no sign of asset impairment.
In 2021, H&R Century Union Corporation(000892) promoted the evidence collection and distribution of the play, and also obtained an offer from the platform. In November 2021, the number of project sets was adjusted H&R Century Union Corporation(000892) based on the latest issuance quotation and the number of episodes obtained, it is estimated that the impairment of “mountain, river and moon” is about 58 million yuan.
In April 2022, due to certain changes in the broadcasting environment and the late determination of the broadcasting schedule of the play, the actual sales price of the play and the latest quotation obtained on the balance sheet date changed greatly. After the impairment test, H&R Century Union Corporation(000892) estimated the total estimated sales revenue (including tax) of all channels of Shanhe Yueming to be 163 million yuan.
In H&R Century Union Corporation(000892) previous annual reports, the forced backlog and huge cost of “mountain and river Moonlight”, “Chang’an in the world” and another ancient costume drama “Apocalypse of gods” are the main reasons for H&R Century Union Corporation(000892) falling into financial crisis. Now, the official launch of “mountain, river and moon” is naturally a good thing, but from the huge provision of H&R Century Union Corporation(000892) it is not difficult to find that the “applauding and not winning” of the drama did not bring excess returns to the company, but caused a drag.
three year net loss of 1.67 billion
In addition to replying to the long-term release of “Chang’an in the world” and the huge provision of “mountain, river and moon”, H&R Century Union Corporation(000892) in the reply to the inquiry letter, it also reveals how sad it is to live in the cold winter of film and television.
In terms of gross profit margin, the overall gross profit margin of film and television companies basically showed an upward trend year-on-year in 2021. Due to changes in the industry, some inventory dramas lost money, resulting in the overall gross profit margin of huanrui film and television drama and derivatives business lower than that of comparable companies in the industry.
During the reporting period, H&R Century Union Corporation(000892) mainly realized the sales of four projects (accounting for 99.30% of the revenue of film and television drama and derivatives business), and the gross margins of single projects were 26.19%, 25.77%, – 64.82% and – 39.90% respectively. The projects below the industry gross margin level were inventory dramas started in 2018.
In terms of bad debt provision, in 2021, the book balance of H&R Century Union Corporation(000892) accounts receivable was 674 million yuan and the book balance of bad debt provision was 432 million yuan; The book balance of other receivables is 159 million yuan, and the book balance of bad debt reserves is 900225 million yuan. Among them, the amount of accounts receivable over 3 years is 386 million yuan.
In this regard, H&R Century Union Corporation(000892) explained that its accounts receivable for more than three years accounted for a large proportion, mainly due to the delay in broadcasting after the sale of some drama projects, which affected the collection. Accounts receivable of more than 10 million yuan, of which bad debt reserves are withdrawn for two days.
The gross profit margin of business is lower than that of peers, and the amount of bad debts remains high, H&R Century Union Corporation(000892) “a little difficult”.
Looking back on 2015, costume dramas have sprung up like mushrooms, and popular costume dramas such as “flower thousand bones”, “Langya list”, “promotion of Crown Princess” emerge one after another. However, since then, the State Administration of radio, film and television has successively launched “ancient restriction order”, “palace restriction and bucket” and other restriction policies, which has a significant impact on the film and television sector.
In terms of employment performance, from 2019 to 2021, H&R Century Union Corporation(000892) suffered huge losses for three consecutive years, and the net profit attributable to the parent company was -551 million yuan, – 785 million yuan and -334 million yuan respectively, with a total loss of 1.67 billion yuan in three years. By the end of 2021, H&R Century Union Corporation(000892) the undistributed profit was -609 million yuan.
In addition to the film and television drama and derivatives business, H&R Century Union Corporation(000892) is also exploring new business growth points and actively layout in AI virtual artists, new media, e-commerce, variety shows, cultural tourism and other business directions.
In June 2021, huanrui star selection international store officially launched JD international to integrate star film and television resources as well as JD International’s commodity and supply chain resources. In the same month, huanrui planet was established in Hangzhou to operate internet live broadcasting services. In August 2021, the holding Sun company huanrui garment factory was established to deeply cultivate the antique and fan market, sign a brand designer, promote the development of clothing precision vertical category business, and extend to other cross-border IP joint operations and other businesses.
According to the 2021 annual report, the revenue from e-commerce and live broadcasting in H&R Century Union Corporation(000892) current period is 133038 million yuan, with a gross profit margin of 16.71%, which is still just a drop in the bucket.
