Hualu Baina's financial statements are "ugly" and its performance trend is hard to say

      On November 25, Beijing Hualu Baina Film and Television Co., Ltd.(hereinafter referred to as Hualu Baina) will pass the GEM. If Hualu Baina is successful, new members will be added to the film and television concept stock. However, after reviewing the prospectus (application draft) of Hualu Baina, the reporter found that during the reporting period, Hualu Baina's main financial data fluctuated greatly and the asset-liability ratio was high. At the same time, competition in the film, television and drama industry is fierce, and there are too many uncertainties about Hualu Baina's future continued profitability, making it difficult to explain the direction of its performance.

Continued profitability is in doubt

At present, in order to increase ratings and market influence, film and television production companies are adopting large-scale production strategies in the fierce market competition, causing the cost of TV series production to continue to rise. In the trading market of TV dramas, TV stations have a greater say. Except for a few popular works, it is difficult for most TV dramas to obtain ideal release prices. At the same time, there is certain uncertainty in online new media, audio-visual and other derivative income.

Under fierce industry competition, once the production cost of Hualu Baina TV series continues to rise and the release price cannot increase year-on-year, the profit margin will inevitably be compressed. Hualu Baina itself admitted that the proportion of films that can achieve profit in the current film market environment is very low, and the company's participation in film investment and production business risks unstable income gains or even losses.

After more than 20 years of development, there are currently 4,057 institutions holding "Production Licenses" in my country, including many powerful film and television production companies. In order to maintain and expand their market share and control more industry resources, each production organization has fierce market competition, great market competition risks, and performance often fluctuates greatly. This can be seen from Hualu Baina's financial statements.

Among them, Huayi Brothers, the leader of film and television concept stocks, cannot survive the fierce industry competition. Huayi Brothers 'third quarterly report showed that the company achieved operating income of 481 million yuan in the first three quarters, a year-on-year decrease of 10.74%. During the reporting period, high-box-office film and television dramas such as "If You Are the One II" and "Founding the Party" boosted their performance.

What is even more striking is that in October this year, after Huayi Brothers 'original shares were lifted, major star shareholders encountered reductions in their holdings. Feng Xiaogang, Ma Yun, Zhang Jizhong, Jiang Nanchun, etc. all significantly reduced their holdings in the third quarter and withdrew from the top ten tradable shares.

Reporters do not know the reasons for Huayi Brothers 'star shareholders to reduce their holdings. However, if the company's future performance is improving, how could it be reduced by so many shareholders? This is the case for industry leaders. If Hualu Baina passes the meeting, it is hard to say that shareholders will not reduce their holdings in the future.

Unsightly financial statements”

1. High asset-liability ratio

According to the prospectus, Hualu Baina's total liabilities in 2008, 2009, 2010 and the first half of 2011 were 89.0095 million yuan, 187.1872 million yuan, 165.3773 million yuan and 169.5371 million yuan respectively. The asset-liability ratio of the parent company was as high as 71.12%, 78.73%, 68.47% and 61.47% respectively.

Generally speaking, the more reasonable level of asset-liability ratio of listed companies is 40%-60%. During the reporting period, Hualu Baina's asset-liability ratio was significantly higher than this range. Even in the first half of 2011, when the debt ratio was the lowest, it was still as high as 61.74%. Therefore, Hualu Baina is facing huge pressure on debt repayment.

After reviewing Huayi Brothers 'prospectus, the reporter found that Huayi Brothers' asset-liability ratios in 2006, 2007, 2008 and the first half of 2009 were 74.48%, 52.28%, 30.58% and 44.31% respectively, which were far lower than Hualu Baina's asset-liability ratio.

In addition, Hualu Baina's accounts receivable turnover rates in 2008, 2009, 2010 and the first half of 2011 were 1.85, 1.59, 2.57 and 1.07 respectively. The accounts receivable turnover rate was relatively low, and it took a long time for film and television drama products to recover money and turn it into cash.

2. Negative cash flow

During the reporting period, Hualu Baina's cash flow fluctuated greatly, and the net cash flow was mostly negative. The net cash flow generated by Hualu Baina's operating activities in 2008, 2009, 2010 and the first half of 2011 was-9.5282 million yuan, -25.5433 million yuan, 44.6408 million yuan and-7.2789 million yuan respectively.

In this regard, Hualu Baina's explanation is that the characteristics of the film and television production industry and the company's production model determine that the cash flow of the company's operating activities shows the time difference between shooting investment and capital withdrawal, and the unevenness of capital inflows and outflows: Capital investment is characterized by continuity, while capital withdrawals are often concentrated in certain time periods.

The fluctuations in cash flow are so large and are directly linked to the income and ratio of film and television drama products. If Hualubaina happens to have an unexpected situation in the future when the funds have not yet been withdrawn, how should it deal with it? In this regard, the prospectus did not provide a detailed explanation.

3. High balance of accounts receivable

According to the prospectus, the balances of Hualu Baina's accounts receivable in 2008, 2009, 2010 and the first half of 2011 were 58.3083 million yuan, 81.8759 million yuan, 89.4829 million yuan and 114.202 million yuan respectively, accounting for 37.94%, 29.23%, 30.52% and 34.95% of current assets respectively, accounting for 37.54% of total assets, respectively. 29.10%, 30.15%, and 34.54%. Among them, the balance of accounts receivable in 2008, 2009 and 2010 accounted for 69.48%, 73.49% and 40.63% of current operating income respectively.

Although Hualu Baina believes that its customers are mainly major TV stations and have good credit, it has to admit that the balance of accounts receivable is still large. If it cannot be recovered on time or cannot be recovered, it will affect the company's performance and production and operation. Adverse impact.