Wang Zhongjun: Targeting a good mechanism for the entire entertainment group is the biggest guarantee

as the first film and television entertainment company in the capital market, Huayi Brothers has gathered in the limelight of the capital market since its listing. Never before has a listed company brought so many topics to the capital market and even the entertainment industry like Huayi. The actions of star shareholders, star gossip, the box office of movies, and the retention of artists have all become important information that affects the stock price.

China's film market has entered a golden period of development. Can Huayi set sail to achieve better results? How to resolve the performance fluctuations caused by the film and television cycle? At a time when more film and television entertainment companies are eager to go public, can Huayi continue to be an industry leader? How far is the company from the ideal of the integrated entertainment group? With these questions, the reporter interviewed Wang Zhongjun, chairman of Huayi Brothers.

< strong > New business smooth performance fluctuation troubles < / strong >

reporter: Huayi Brothers' interim results have been announced, showing a decline in the first half of the year compared with the same period last year, but it is expected to grow by more than 50% in the first three quarters. What are the reasons for performance fluctuations? How to deal with large fluctuations in performance in the future?

Wang Zhongjun: the company released its semi-annual report on August 19. its operating income exceeded 200 million yuan and its net profit was 28.27 million yuan, which is inferior to that of last year, but it is also within our expectations. This is the state of our annual film schedule, production and distribution plan.

the film industry has its own seasonal characteristics, and most of the more concentrated screenings of films such as summer, National Day and New year's holidays are in the second half of the year. As far as Huayi is concerned, the major films and TV dramas planned to be launched this year are scheduled for the third and fourth quarters, such as "Tangshan earthquake" and "Di Renjie". In addition, Huayi is more likely to devise strategies and layout in the first half of the year. expand the industrial chain by entering music, mobile online games, cinemas and other fields.

"Tangshan earthquake" has so far grossed more than 600 million yuan, exceeding the company's expectations, which is the main reason for the expected growth in the third quarter. In the second half of the year, Huayi will also debut a number of film and television works, which will contribute to the improvement of performance.

with regard to the problem of seasonal fluctuations in performance, Huayi has been working hard to overcome the problem. Our expansion of new businesses such as music, mobile online games and cinemas is to provide stable cash flow at the same time, so that the company's various businesses can be fully connected and linked, and then gradually smooth the trouble of seasonal fluctuations in performance. However, these businesses are still in the development stage and will not make a significant contribution this year.

< strong > New and old linkage aims at all Entertainment Group < / strong >

reporter: Huayi's traditional business includes movies, TV dramas and artist brokers, which is called the company's ldquo; troika & rdquo;, constitutes the main source of revenue of the company. how to get more growth space on the basis of ensuring the stable development of traditional business in the future?

Wang Zhongjun: film and television and artist agents, as the old business of Huayi, are developing relatively stably at present, and the three businesses basically account for 1/3 of the contribution to the performance.

the box office of Chinese films is expected to reach 10 billion yuan this year, an increase of 60% compared with 6.2 billion last year, and the rate of development in the future will also be considerable. For Huayi, the film business should at least keep up with the growth of the industry. At present, Huayi accounts for about 10%, 15% of the domestic film market, ranking in the top two. Our goal is to produce more excellent and high-quality works, consolidate and enhance Huayi's brand, rather than blindly producing.

the domestic TV drama industry has a low entry threshold and a large number of enterprises. in recent years, it has been in a situation that the overall supply exceeds demand, and the supply of high-quality dramas exceeds demand, which also brings more room for integration to Huayi. Recently, the company has newly absorbed and set up Shi Zhongshan Studio and Zhang Haidong Studio, which actually belong to another form of integration. If there are opportunities for mergers and acquisitions in line with Huayi's development strategy in the future, we will continue to pay attention to them.

at present, there are 100 contracted artists in Huayi, and the development of artist brokers is relatively stable. the focus in the future is to increase the number of contracted artists while training new people. People pay more attention to the mobility of artists. In fact, the turnover rate of Huayi artists is even lower than that of employees, and no individual artist will have an impact on the company's finances.

reporter: Huayi is heavily involved in online games, cinemas and other fields in the first half of this year. What are the company's plans for new business development in the future? What is the goal of new business development in the future?

Wang Zhongjun: Huayi's new business includes music, games, cinemas, as well as new media partners such as online video, which accounts for a small proportion compared with traditional business, and will not contribute much to this year's revenue. After all, it has just started. However, after cultivation next year and the year after next, it will support the company's performance in the future.

the company's goal is to ensure the growth of the company by contributing 1/3 of the performance of new business in the next three years, coupled with the stable development of traditional business.

Huayi does not just expand blindly when laying out new business, but will fully consider the linkage between new business and existing business, and is doing multiplication rather than simple addition. Take "Tangshan earthquake" as an example, the TV version of the film started a year ago, singer Shang Wenjie released its theme song at the same time, mobile games will be launched in September, and film meetings in Beijing and Chongqing are also held in their own cinemas. The linkage of various businesses will be able to produce better results.

the company has recently partnered with Ku6 in the field of online video. Huayi, as a content provider, has also caught up with the development opportunity of ldquo; triple play-rdquo;, which is equivalent to adding a digital distribution channel without increasing the cost, and the rising trend of network video copyright is very obvious.

in terms of cinemas, two cinemas have been built and put into operation, and three more cinemas are planned to open this year. Huayi Cinema is positioned at the high end, but this does not mean high ticket prices, but to provide better service and viewing environment.

in the future, the company also has plans to build film and television bases and theme parks like Disney, but there is no exact timetable yet. The company's goal is to carry out a comprehensive layout towards the goal of the Integrated Entertainment Media Group. # p# subtitle # eBay incentive nbspitternbspablenbsptablenbsptablenbsptablenbsptablenbspsubheadingnbspsubtitle # subtitle # strong > waiting time for equity incentive < / strong > < / p

Reporter: as the first entertainment stock, Huayi is also highly expected in the secondary market. The absolute valuation of the company's stock price is not low. What does the company think?

Wang Zhongjun: since Huayi was listed at the end of October 2009, investors have been paying more attention to it, which is both encouragement, expectation and pressure on the company.

listing provides Huayi Brothers with a very good capital platform to form a positive interaction with the company's business development and brand image, which is self-evident to the promotion of the company. However, the company will not think too much about the stock price and valuation, but will focus on the operation, and do a good job in the fundamentals in order to give investors a better return.

We have been calling on the public to give gem companies more time and space to grow, not to be too harsh, and now companies are often blamed for problems beyond their control, such as stock price fluctuations. Of course, a company that has been listed for less than a year cannot be called a great enterprise, but Huayi has this dream and is working hard every day.

reporter: a large number of restricted shares will be lifted in the second half of the year, including some artists' shareholdings. Is there any pressure to reduce their holdings? Is there an equity incentive plan in the future to give some incentives to artists and managers who do not have shares in the company?

Wang Zhongjun: on October 30 this year, the ban on the company's initial public offering of restricted shares will be lifted. However, as the actual controllers, our brothers have promised not to transfer the shares within three years from listing, and other board supervisors have also promised the proportion that can be transferred each year during their tenure.

in fact, the lifting of the ban is something that any company has to face, whether it is star shareholders or management, the company is regarded as an ordinary investor, and its increase or reduction is a matter of its personal configuration, and the company will not interfere and cannot predict. The only thing we can do is to run the business well and make the return on investment more attractive.

in terms of equity incentive, the company is also learning, discussing and considering, but the technology of equity incentive is more complicated. for the company, the choice of incentive object, incentive range and the impact on performance all need to be carefully considered. will wait for the time to be more ripe to deal with.

reporter: the company's performance is actually faced with some uncertainties, such as the departure or retention of artists, the success of film and television works, whether it can maintain a dominant position in the industry, and so on. How to eliminate these uncertainties?

Wang Zhongjun: Huayi mainly relies on brands, platforms and culture to retain artists, not just contracts. The stable relationship between artists in recent years also shows that Huayi's brand is valued by everyone.

at present, the success rate of Huayi film and television works is getting higher and higher, which is the professional advantage of large companies. Good film and television works must rely on a good mechanism. We have a whole set of mechanisms to ensure good works from evaluation, supervision, production, production to production and distribution. Advantages such as scale and team value of large companies will be brought into full play.

At the same time, Huayi has enough experience in film and television, and has a more reasonable division of labor and a team of producers with different professional styles. the management of the company is simple and smooth. At present, many domestic film and television entertainment companies are copying or imitating Huayi's studio model, including director, producer studio, big agent system, etc., which shows that Huayi's innovation is successful.