After the industry’s cold winter and policy rectification is full of unknown background, it is a good choice for Huaxia to listen to it at this time.
Editor’s note: This article comes from the WeChat public account “IPO that thing” (ID :ipopress), author Puffson Sen.
Recently, Huaxia Audiovisual submitted a prospectus in Hong Kong. The prospectus shows that Huaxia Audiovisual includes not only film and television production and media business, but also its higher education business including Nanguang College of Communication University of China. If the IPO goes smoothly, Huaxia Audiovisual has created a precedent in the domestic capital market with the “common listing of industrial packaged higher education”.
In fact, in recent years, the film and television industry has undergone tremendous changes. It is an indisputable fact that the film and television industry has encountered “winter”. At the same time, although China’s private higher education business is stable, it faces challenges to some extent.
How is the growth of China Television Audiovisual Media + Higher Education? Can the mashup business model bring enough stable profit growth points for China Audiovisual? Will Huaxia’s development path depend on light assets or heavy assets? In this mashup mode, how should investors measure the intrinsic value of China’s audiovisual?
Video Production + Higher Education”
Huaxia Audiovisual Media Group was founded in 1998. Currently, it is the two main businesses of film and television production business and higher education in media and art.
In terms of film and television production, according to the public information, the founder of Huaxia Audiovisual, Pu Shulin, participated in the production of “Synchronization of Film and Television” in 1998. The program is the earliest TV program in China with film and television information and special reports.
In 2001, Huaxia Online was established. In 2003, the first TV series “The Legend of the Condor Heroes” was launched. In 2004, Nanguang College of Communication University of China was established. In 2005, Huaxia Audiovisual was established.. In 2012, he entered the film industry by investing in “One Night Surprise”.
Objectively, Huaxia’s audio-visual film and television production business has won many praises in the history, including the “Synchronization of Film and Television”, which was awarded the Starlight Award, one of the highest awards in the national TV program in 2000, 2002 and 2003. The “Tianlong Ba Bu”, which won the Top Ten TV Series Outstanding Works Awards on the China TV Golden Eagle Award, and the TV series “Eternal Dragon Slayer”, which won the Best Original Program Award in 2019.
At the same time, Huaxia has a certain cooperation with domestic and online broadcast channels. The Mango TV station broadcasted the “Fengshen” in 2018, and Huaxia Audiovisual invested 41%.
In another major business, higher education, Huaxia Audiovisual operates the China Communication University Nanguang College. According to Frost & Sullivan’s statistics, there are currently 12,697 students majoring in media and art related, and it is the second largest provider of private media and art higher education in China. In the 2018-2019 school year, more than 58,000 candidates applied to Nanguang College, and the final admission rate was only 4.6%.
It can be said that the success of Nanguang College in the success of its business does not open the “golden signboard” of the Communication University of China, but the current situation is quietly changing.
“Flourishing” film production business
1. Film and television production companies face dual constraints on policy risks and the number of works
Since 2016, the A-share market cultural media sector has fallen by as much as 67.79%, which is only better than the marketing communication sector (-69.80%) and other light industrial manufacturing sectors (-75.24%), which is the third last. According to the “2019 TV drama industry report for the first half of the year”, the total number of national TV dramas recorded in the first half of the year was 611, which was a general decline.
At the same time, the subdivided film and television production industry is undergoing tremendous changes. The accounts receivable period is lengthened, the problem of bad debts is outstanding, the project has a large backlog, and the stock prices of listed companies have fallen sharply. Domestic film and television production companies have shouted “the winter has arrived.”
In fact, the poor performance of the film and television industry in recent years has been partly due to the fact that the regulatory authorities have gradually paid attention to the regulation of the film and television industry since 2017, and this regulatory tightening has continued to this day. Especially on July 9 this year, the State Administration of Radio and Television emphasized the request to strengthen the publicity review and content review of the Gongdou drama, the anti-war drama, and the spy war drama, and to control the bad creation tendency of the “old drama remake”. After the storm of film and television supervision, the film and television industry has more performance as capacity shrinkage and industry ecology gradually standardized.
The supervision department attaches great importance to industry norms. For the benign development of the industry, the benefits will outweigh the disadvantages. However, for listed companies such as China Audiovisual, the policy risks will put pressure on the company’s performance.
Moreover, from a business model perspective, the film and television production business is not only subject to policy constraints, but is also affected by the number of works. After all, the film industryThe success of the business depends on the success of a few new films released each year. Taking Huaxia audio-visual as an example, the revenue of film and television production in 2016 was only 1.349 million yuan, and in 2017 it suddenly increased to 300 million yuan, which was affected by the policy and fell back to 91.396 million yuan in 2018. In the first six months of 2019, the revenue of the film and television production business exceeded 430 million yuan.
At the same time, in the first half of 2019, the A-share film and television media sector almost suffered a decline in the profit of the whole industry. According to the three quarterly reports released by more than ten listed companies, the listed companies with optical films and Beijing culture have reported in the report. The performance recovery during the period was obvious, but the performance of most film and television listed companies remained poor.
Source: Bone Flower Media
The “floating” performance of media-listed companies has brought many uncertainties to investors. Previously, when Happy Twist wanted to “transfer” the A-share market from the New Third Board, it had also been similarly questioned. Then, under the current situation that the entire sector is still clouded, Huaxia audiovisual can only follow the trend of the industry, and what other breakthroughs?
2, maintaining high quality content or “breaking the way”, but “the road to remake” is not good to go
The film and television production industry has been the industry consensus, but it is undeniable that the Chinese media industry has developed rapidly in recent years. The data shows that the total industry revenue increased from 1,235.9 billion yuan in 2014 to 2,158.9 billion yuan in 2018, with a compound annual growth rate of 15.0%. At the same time, it is expected that the total revenue of the media industry will grow to 3,799.6 million yuan by 2023, and the compound annual growth rate will be 12.0% from 2018.
According to other statistics, in 2017, 2018 and the first half of 2019, there were 37 TV series, 22 and 16 TV programs that met this standard and were regarded as the best-selling series by the market. From the January 1st, 2018 to June 30th, 20th, a total of 38 best-selling TV series, Huaxia Audiovisual Media has a total of 3 best-selling TV series, a total of 169 TV episodes, ranking fourth in the top five TV production companies.
For film and television production companies such as Huaxia Audiovisual, excellent scripts, production and teams are important components of their core competitiveness.
As a veritable “specialist of Jin Yong drama”, Huaxia Audiovisual should say that there is no shortage of good scripts. In 2001, Huaxia Audiovisual began to get involved in the production of TV dramas. At that time, Huaxia Online produced Jin Yong’s “The Legend of the Condor Heroes” and won the most popular TV drama award from the domestic leading portal Sina. Afterwards, the Chinese audio-visual media who tasted the sweetness constantly remake the works of Jin Yong, including “Dragons and Eight”, “Deer Ding Ji”, “The Condor Heroes”, “Swordsman” and “Eternal Dragon Sword”.
But in fact, well-known scripts and so-called “selling” can’t be equal to good word-of-mouth. Huaxia’s “reverse path” has not won the audience’s favor. The new version of “Eternal Dragon and Dragon Slayer” was spit out of no soul. The Douban score eventually slipped to 5.7. The Huaxia Audiovisual Media released the “God of the Condor Heroes” in 2014. The score of the Douban score was only 4.4, and 41.1% of the audience gave a star rating; The Swordsman’s Douban score was only 5.3%, and 43.5% of the audience gave a rating of 3 stars or less.
In addition to remake Jin Yong’s works, Huaxia Audiovisual has also tried to produce other works such as “Feng Qiu Huang”, “Feng Shen”, “Beauty without tears and mountains and rivers” in recent years, but still can’t escape low scores and spit. “Feng Qiu Huang” Douban score was only 3.6 points, 61.8% of the audience gave a star rating; “Feng Shen” Douban score was only 3.3 points, 65.8% of the audience gave a star rating; “beauty without tears mountain love” Douban score only 4.8 Points, 52.6%