525 million debt overdue! Huayi Brothers' "dilemma" is not unsolvable

The predicament of Huayi Brothers is not over yet.

In the industry's downturn cycle, the company is still struggling.

On the evening of December 10, Huayi Brothers announced that due to some repayment funds not being received as scheduled, the company is facing temporary liquidity shortages, resulting in some debts not being repaid on time.

The announcement shows that as of December 10, the company's overdue debts to banks and other financial institutions totaled 52.5 million yuan, exceeding 10% of the company's audited net assets for 2024.

Additionally, more than 10 of the company's bank accounts are frozen.

Huayi Brothers also stated that it is actively negotiating loan extensions with the aforementioned financial institutions and will gradually exit and dispose of assets with low integration with its core business and weak synergy with its industry chain to improve asset allocation efficiency.

At the same time, the company disclosed a share auction announcement for its actual controller, Wang Zhongjun. The announcement shows that approximately 154 million shares held by Wang Zhongjun, the controlling shareholder and actual controller, are set for a second judicial auction, accounting for 48.54% of his total holdings and 5.55% of the company's total shares.

Huayi Brothers said the court will announce the judicial auction on JD.com's judicial auction platform on December 12, 2025. The auction results remain uncertain, and the company will closely monitor subsequent developments.

Earlier, 2.259 million shares held by Wang Zhongjun and 157,000 shares held by Wang Zhonglei were publicly auctioned in October this year. As of now, the share transfers for these auctions have been completed.

In fact, Huayi Brothers' financial difficulties began as early as 2018.

Affected by the industry cycle, Huayi Brothers and its actual controller, Wang Zhongjun, have actively worked to resolve debt issues, including selling personal collections to alleviate the crisis.

However, overall, the expected results have not been achieved.

Of course, in the broader film and television industry, Huayi Brothers is not the only one facing difficulties. In the first three quarters of this year, Huayi Brothers' revenue of 215 million yuan represented a year-on-year decline of 46.08%, with a net loss of 114 million yuan, down 168.15% year-on-year, and an adjusted net loss of 163 million yuan.

In the third quarter alone, Huayi Brothers' revenue of 62.5956 million yuan and a net loss of 39.462 million yuan.

From a revenue structure perspective, Huayi Brothers' main revenue still comes from its film and entertainment segment, meaning its future turnaround depends on this sector.

Huayi Brothers stated that in the first three quarters, its operations proceeded orderly, with continued participation in and incubation of film projects. Several films it invested in were released during this period, with others in production or preparation. Multiple TV series and online films it participated in are also progressing steadily.

In terms of its portfolio, this year's main investments, such as "Sunflower," "Lychee of Chang'an," and "Volunteers: Blood and Peace," received positive market feedback. Notably, the highly anticipated "The Mermaid 2," directed by Stephen Chow, is in post-production, while "Catch the Spy," directed by Feng Xiaogang and starring Lei Jiayin and Hu Ge, has wrapped up filming.

Additionally, Huayi Brothers has increased its investment in short dramas. It launched the "Huayi Brothers Fire Drama" label, collaborating with China Literature and Dianzhong Technology to release multiple works.

Overall, the cyclical nature of the film industry has indeed impacted the company's development. However, as long as it stays in the game, there are infinite possibilities ahead.

We believe that, given Huayi Brothers' situation in recent years, it must not overlook risks while pursuing growth. Like Yu Minhong's approach with New Oriental—maintaining sufficient cash reserves—Huayi Brothers can navigate industry downturns calmly and drive transformation. The same applies to the film industry. We believe that as the industry's downturn nears its end, with more high-quality projects in reserve, Huayi Brothers still has a chance to turn things around.