Consumer China

Huayi Brothers – holding out for next big picture

  • Published 15 Dec 2011

A lack of blockbusters this year and a high base of comparison with 2010 when the film distributor launched the record-selling 'Aftershock' is hurting 2011 performance.

A lack of blockbusters and a high base of comparison with last year led to a slowdown in the film distributor's revenues in the first three quarters of this year. Although Huayi Brothers (300027:SZ) has been working hard to diversify its business overseas, branching out to cinema operation and celebrity management, this still wasn't enough to offset declines in its distribution business. Results may improve next year when Huayi launches sequels to two of its popular films 'Detective D' and 'Painted Skin'. However, the company's top line remains under pressure and we expect at least a 5% decline in full-year revenues. Huayi's extremely high price to 2011 forecast earnings ratio of 52 times, as well as the recent resignation of its chief financial officer, Xu Jia, who cited personal reasons, also give cause for concern.

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