Chairman of Hualu Baina: Making money by making movies is less profitable

Following Huayi Brothers and Huace Film and Television, another film and television production company, Hualu Baina, released it online today. During Hualu Baina's online roadshow yesterday, its price-to-earnings ratio of 82.46 times and its issue price of 45 yuan inevitably became the focus of investor controversy. In this regard, its chairman Chen Runsheng explained that 82.46 times is calculated based on the 2010 net profit. If calculated based on Wind's forecast of the company's 2011 net profit, the price-to-earnings ratio is 32 times, which is not higher than that of the same industry.

Make money from dramas and make less money from movies

Although investors are not familiar with the name of Hualubaina, they are still familiar with the TV series produced by this company, including the popular series "The Emperor of Hanwu","Double-sided Tape","The Beautiful Times of Daughter-in-Law","Wang Gui and Anna","The Indelible Title" and the controversial new version of "Dream of the Red Chamber". At the same time, in terms of films, Hualu Baina also participated in the investment and production of "Founding of the People","The Secret Agent Lingling Dog","Saling","Founding the Party", etc., but its profitability in films was poor. In 2009 and 2010, the gross profit was only 4.68 million yuan and 1.9 million yuan, and the vast majority of profits still relied on TV dramas.

In Hualu Baina's prospectus, the latest financial data was only disclosed to the first half of 2011. From 2008 to 2009, Hualu Baina achieved net profits of 15.9492 million yuan, 21.9533 million yuan and 35.7728 million yuan respectively. In the first half of 2011, the net profit reached 34.8377 million yuan, exceeding the whole of 2010. The issue P/E ratio of 82.46 times is based on 2010 net income. At present, investors are most worried about whether Hualu Baina's performance in the second half of 2011 can maintain the level of the first half of 2011. If it can really be achieved, then the issue P/E ratio will actually be equivalent to a halving reduction.

Is the issue P/E ratio high

During yesterday's online roadshow, some investors directly asked Chen Runsheng, chairman of Hualu Baina: Now the whole country is condemning the phenomenon of new shares with three highs, but you actually issue such a high P/E ratio at the forefront of the storm. Are you not afraid of risking the world's condemnation?" rdquo; In this regard, Chen Runsheng said that the price-to-earnings ratio of more than 80 times is calculated based on 2010 profits; if calculated based on Wind's forecast of the company's 2011 net profit, the price-to-earnings ratio is 32.14, which is not higher than the same industry.

However, what Chen Runsheng is talking about is the profit forecast made by Wind Information. This is only a unilateral estimate made by a third-party organization and does not directly represent the actual situation. Therefore, many investors still stare at Cheng Minmin of Huaxi Securities, its sponsor, and keep asking questions. It is already February 2012, and the company is even hiding its results in the third quarter of last year. How can we small retail investors have the confidence to use your hard-earned money to purchase?" rdquo; The new generation has once again experienced fears and worries when purchasing Sinovel Wind Power, and hopes to reassure the majority of subscribers about their 2011 results!" rdquo; In this regard, Cheng Minmin said that the 2011 annual report is being prepared, and the preliminary situation is that it is expected that the 2011 results will not disappoint investors. rdquo; In fact, when Hualubaina held a meeting on November 25 last year, it was accused of ugly financial statements, high asset-liability ratio, negative cash flow, high accounts receivable balance, and doubts about its continued profitability. Therefore, investors 'concerns are indeed reasonable.

Actors who are not signed are temporary workers”

Looking back at the beginning of Huayi Brothers 'listing, the shareholding of a group of stars and directors added a lot of halo to its share price. Although the currently popular actors Hai Qing, Huang Haibo and Wu Xiubo have starred intensively in dramas invested by Hualu Baina, they are not contracted artists like Huayi; although many of Hualu Baina's hot-selling dramas are produced by well-known screenwriters Liuliu, they are not like Huace Film and Television, which has contracts or equity relationships with some gold medal screenwriters; Hualu Baina's cooperation with directors, writers and actors is still relatively loose. Therefore, some investors asked if any artists owned the company's shares? rdquo; Hualu doesn't have an actor or director he has signed. Is this a big problem? rdquo; In this regard, its general manager Liu Dehong replied that the company has no artists holding shares, and there are indeed no actors or directors signed. However, he believes that compared with directors and screenwriters, actor resources are more sufficient, so adopting a temporary employment cooperation model with actors, and both parties choose independently, which will not adversely affect the company's stable operations.