In 2016, the market value of Wanda, Huayi, and Light evaporated by 127 billion yuan. The film industry professionalism has not been established

as of December 31, 2016, film and television leading stocks Wanda Cinema, Huayi Brothers and Light Media fell by 55%, 47% and 35% respectively. The editor-in-chief of "making a Film together" estimated on this basis that the market capitalization of the three companies had lost 78 billion yuan, 29.5 billion yuan and 19.5 billion yuan respectively compared with a year ago, totaling 127 billion yuan.

original title: wake up, don't be confused by capital

what is the development of domestic film and television in the past year? perhaps the data and the performance of the capital market can be used as a valuable reference standard. Entertainment data monitoring agency Vlinkage has released the stock market performance of listed media and entertainment companies (based on the Tongxin sector) in 2016. On the whole, 2016 has not been a smooth road for domestic film and television practitioners.

the TV series market is not optimistic, there are big dramas but no fine works, and the blessing of big IP, big producers and big stars has also failed to reverse the popularity of word-of-mouth that left in a huff. The peak of ratings and word-of-mouth in 2016 focused on "Legend of Miyue" and "Ode to Joy" in the first half of the year. Since then, word-of-mouth has never appeared again. As for domestic films, they stopped the rapid growth rate since 2015 and reached the peak of the annual growth rate in the first quarter, then declined all the way, and the situation took a sharp turn for the worse.

strong > Market estimate surreal value / strong >

according to data released by Vlinkage, in the past year, of the 48 listed companies included in the media and entertainment sector (excluding IPO in 2016), only 5 share prices have risen (of which Perfect World resumed trading in January), while the remaining 43 have shown a downward trend. Among the ups and downs of various sectors, the share price of the media and entertainment sector fell by 30.3%. Overall, the decline of film and television companies is greater than that of publishing companies. As of December 31, 2016, film and television leading stocks Wanda Cinema, Huayi Brothers and Light Media fell by 55%, 47% and 35% respectively. The editor-in-chief of "making a Film together" estimated on this basis that the market capitalization of the three companies had lost 78 billion yuan, 29.5 billion yuan and 19.5 billion yuan respectively compared with a year ago, totaling 127 billion yuan.

"everyone has made a clear judgment on the downturn in the film market this year, but behind the downturn in the box office, many people have not noticed that the inflection point of Chinese films has risen from the downturn at the box office to the capital market." Yu Huadong pointed out that the almost uniform signs of a slowdown in the growth rate of listed film and television companies intuitively show the overall downward trend of the market this year.

in his view, this decline in stock prices is largely directly related to the previous market expectations of the film and television sector is too high, a large number of hot money into the film and television market, resulting in higher valuations. "many film and television companies have benefited from the great development of the industry and have been sought after by investment institutions and investors. Since listing, the growth rate of market value has been far ahead of earnings." He takes Light Media as an example. In the five years since its listing, the company's market capitalization has reached about 51.7 billion yuan at its peak, with a market capitalization growth rate of about 52.8%. However, the growth rate of the company's net assets, income and profit is far behind the growth rate of market capitalization. this means that relative to the actual development of the company, the market's pre-valuation far exceeds its actual value, which is almost a common problem in film and television entertainment stocks in previous years.

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the sharp decline in film and television mergers and acquisitions also shows that the market is not as expected, and the hot money keen to make quick profits in the film and television market is beginning to retreat.

Wind data show that from 2013 to 2015, there were 29, 46 and 88 mergers and acquisitions in the film and entertainment industries respectively, with mergers and acquisitions worth 21.8 billion yuan, 35.9 billion yuan and 43.5 billion yuan respectively. Mergers and acquisitions continued to be hot from the fourth quarter of 2015 to the first and second quarters of 2016, peaking at 44.6 billion yuan in the second quarter. However, in the third quarter of 2016, regulation became tighter, restructuring of several listed companies failed, mergers and acquisitions of film and television targets entered a cooling-off period, and growth slowed for the first time in four years in the third and fourth quarters of 2016.

so far, only a few companies, including God Entertainment and Huanrui Century, have passed mergers and acquisitions of film and television assets. Recently, Zhao Wei plans to settle in Wanjia Culture with 3 billion yuan to become the largest shareholder. Once again, she is questioned by the Shanghai Stock Exchange. It is still unknown whether she can succeed.

Jiang Yong, an expert in the film industry, believes that China's film market, which uses capital to play with "guaranteed issuance" at the box office, was hit hard in 2016, which also led to a reduction in the valuation of the film and television sector. Films such as "Mermaid", "Love in Love" and "lost in Hong Kong" have made guaranteed distribution popular in the industry. Distributors are willing to gamble on projects, and studios are happy to recoup costs in advance, but the capital of both sides is based on the expectation of the expansion of China's film market. When the box office of the film goes down in 2016, it will really lose money. " According to the 2016 white paper released by Tencent Entertainment, 70% of the film industry failed in 2016, such as "Taiping" with a guaranteed box office of 800 million yuan, with an actual box office of 246 million yuan, and "the Legend of God" with a box office of 1 billion yuan. the actual box office grossed only 284 million yuan.

strong > professionalism in the industry has not been established / strong >

"the market is not as expected. Once hot money loses money, it will run away quickly and never dare to enter again." Yu Huadong said that capital is extremely sensitive to the market, which will directly lead to the future film and television sector may be difficult to find investment situation. He also pointed out that over the past year, film companies have made frequent moves, such as ray layoffs of 20%, Leeco "optimized" layoffs, and light media and Huayi Brothers' practice of cashing out by reducing their shareholdings, all hoping to remain stable when the spring tide falls.

however, this is an opportunity. "after the share price and market value of film companies have greatly shrunk, they have returned to a relatively rational state. In the future, film companies will certainly not have a price-to-earnings ratio of dozens or even hundreds of times, and some film and television companies that rely on play concepts and play capital will no longer be able to play." From the point of view of East China, the probability of blood transfusion from the capital market to the film and television industry becomes smaller, which is bound to burst most of the bubbles in the film and television industry. "the next step is to work hard and do business in a down-to-earth manner."

Jiang Yong agrees with this view: "the film and television sector, as a content industry, should return to a state of slow development." In his view, whether it was a guaranteed issue or mergers and acquisitions, financial means emphasized the commodity attributes of film and television products rather than quality attributes, and hot money and investors were doing business in the way of gambling. "although on the surface, the investment in film and television projects has increased as a whole, the investment in content production has not increased, and the typed creation of film and television is also declining. The only change is that it has pushed up the pay of actors. "

Jiang Yong believes that the real professionalism of the domestic film and television industry has not yet been established, and the film and television companies are confused by capital and ignore the real craftsmanship. However, under the current situation that the domestic audience tends to be rational, the domestic film and television industry has failed to fish in troubled waters in the past. "maybe this kind of crisis can force them to return to the content itself and enhance their professionalism."

Edit: nancy