Produced by Radar Finance Written by Zhou Hui Edited by Meng Shuai
Li Ruigang, the “godfather of media” who holds many entertainment assets including Shaw Brothers, plans to spend more than 800 million to recognize a new “brother” in the film and television industry.
On September 16, Huayi Brothers, which had been issued an ST risk warning, issued an announcement stating that Chinese Culture had been identified as the company’s restructuring industry investor.
According to the “Reorganization Agreement” and the “Supplementary Agreement”, Chinese Culture will receive 896 million shares from Huayi Brothers at a consideration of 0.9333 yuan per share, accounting for 17% of the company’s total share capital after the reorganization, with a total consideration of approximately 836 million yuan.
If the reorganization is successfully completed, the controlling shareholder of Huayi Brothers will be changed to Chinese Culture, and the actual controller will be changed to Li Ruigang, known as “China’s Murdoch”.
As the “number one stock in film and television entertainment” in the past, Huayi Brothers also had its moments of glory under the leadership of its founders, brothers Wang Zhongjun and Wang Zhonglei. However, since 2018, Huayi Brothers has fallen into a quagmire of continuous losses, with a cumulative loss of more than 8.5 billion yuan in eight years.
In the first half of this year, Huayi Brothers only achieved revenue of 85 million yuan, a year-on-year decrease of 44.1%; net profit attributable to the parent company was still in the red, with a loss of 36 million yuan recorded during the period, a year-on-year decrease of approximately 50%.
Although Chinese Culture, which has become the “white knight” this time, has now grown into one of the few domestic cultural industry groups with top-level IP content creation capabilities, cross-border co-production capabilities, and global distribution capabilities, it has also faced the challenges of declining revenue and fluctuating profits in recent years.
It is worth mentioning that the capital market does not seem to be very optimistic about the restructuring plan disclosed by Huayi Brothers this time. On September 17th and 18th, ST Huayi’s stock price fell 10.05% and 2.79% respectively, and finally closed at 1.74 yuan/share, with its market value falling below 5 billion yuan.
Huayi Brothers came to “reinforce” the troops, but were “cold water” poured on them by the capital market?
Since the pre-reorganization process was launched in April this year, Huayi Brothers, the former “film and television brother” in domestic entertainment, finally waited for its own “rescues.”
On September 16, ST Huayi issued an announcement stating that after selection processes such as “5 out of 3” review, “one-on-one consultation”, and “select one and prepare for two”, Chinese Culture Co., Ltd. (hereinafter referred to as “Chinese Culture”) was identified as the reorganization industry investor in the company’s pre-reorganization case on September 15.
On the day of the announcement, Huayi Brothers and the interim manager had formally signed the “Reorganization Investment Agreement” and the “Supplementary Agreement” with the industrial investor Chinese Culture.
The restructuring investment plan shows that Huayi Brothers will use the existing total share capital of 2.775 billion shares as the basis, and implement the capital reserve to increase share capital at the ratio of 9 shares for every 10 shares, for a total of 2.497 billion shares.
After the completion of this transfer, the total share capital of Huayi Brothers will increase to 5.272 billion shares. None of the aforementioned transferred shares will be distributed to the original shareholders.
Among them, Chinese Culture will receive 896 million converted shares from Huayi Brothers, accounting for 17% of the company’s total share capital after the reorganization; financial investors will receive 1.128 billion converted shares, accounting for 21.4% of the company’s total share capital after the reorganization. The remaining converted shares will be partially or fully used to pay off the debts of this bankruptcy reorganization.
In terms of investment consideration, the price of the shares obtained by Chinese Culture this time was 0.9333 yuan/share, which was exactly 50% of the average trading price of Huayi Brothers stock in the 20 trading days before the signing of the above agreement, which was 1.8666 yuan/share. Based on this calculation, Chinese Culture’s acquisition of Huayi Brothers is expected to cost approximately 836 million yuan.
It is reported that the above-mentioned investment funds will be paid in four installments, and the funds will be used to pay for bankruptcy expenses, mutual debts, debts that should be paid off in cash, priority claims, etc. at 1 million yuan for each ordinary creditor required to implement the reorganization plan.
The remaining retained portion will be used to support Huayi Brothers’ ongoing operations, implement industrial transformation and upgrading plans, purchase high-quality operating assets with profitability and development prospects, implement industry integration and mergers and acquisitions, and provide liquidity support for subsidiaries.
Regarding the business plan after the reorganization, the announcement mentioned that Chinese Culture will use its own industry and resource advantages to help improve Huayi Brothers’ profitability, and timely introduce business resources or inject synergistic assets according to the company’s conditions to promote the development of listed companies.
However, the announcement also emphasized that Huayi Brothers and Huayi Films are still in the pre-reorganization stage, and there is significant uncertainty as to whether they will enter the reorganization process in the future.
Huayi Brothers stated that if the company subsequently enters the reorganization process and the reorganization is successfully implemented, it will help improve the company’s operating and financial conditions, enhance operating capabilities, and optimize the asset and liability structure. At the same time, the company’s controlling shareholder will be changed to Chinese Culture and the actual controller will be changed to Li Ruigang.
If the reorganization fails, the company will be at risk of being declared bankrupt. The company may lose control of Huayi Films and risk losing its shareholding in its wholly-owned subsidiaries. At that time, the company will no longer be able to include Huayi Films in its consolidated statements, which will have a certain impact on the company’s assets, current and subsequent profits.
It is worth mentioning that the capital market’s response to this restructuring plan has been quite cold. On September 17, ST Huayi quoted 1.79 yuan per share, and its stock price fell 10.05% from the previous trading day.
On September 18, ST Huayi’s stock price fell another 2.79% to close at 1.74 yuan per share, down more than 90% from its historical high, and its total market value was less than 5 billion yuan.
Losing more than 8.5 billion in 8 years, a film and television tycoon once revealed that he “sold paintings to pay off debts”
As Huayi Brothers is about to change owners, the legend of its founders Wang Zhongjun and Wang Zhonglei may also come to an end.
The timeline goes back to 1989. Wang Zhongjun, who was born in a military family, gave up his “iron rice bowl” job at the State Administration of Materials and went to study in the United States to major in media.
In 1994, Wang Zhongjun, who had returned from his studies, co-founded the Huayi Brothers Advertising Company, the predecessor of Huayi Brothers, with his brother Wang Zhonglei with $100,000 saved in the United States and funds raised from relatives and friends.
In 1998, Huayi Brothers began to get involved in the film and television business. Back then, under the control of the Wang brothers, Huayi Brothers invested in the movie “Endless” directed by Feng Xiaogang. Taking advantage of this opportunity, Huayi Brothers and Feng Xiaogang completed an in-depth binding and successfully transformed into a film company.
In 2009, Huayi Brothers was listed on the GEM of the Shenzhen Stock Exchange, becoming China’s “No. 1 film and television entertainment stock”. At its peak, the company owned dozens of stars including Li Bingbing, Fan Bingbing, Zhou Xun, Huang Xiaoming, and Deng Chao.
After listing, Huayi Brothers began to seek diversified layout, and its business gradually extended to areas such as Internet entertainment, brand licensing, live entertainment and industrial investment, trying to find more growth points besides movies.
At the same time, Huayi Brothers’ revenue has also been rising. By 2017, the company’s annual revenue was approaching the 4 billion yuan mark, and the net profit attributable to the parent company was as high as 828 million yuan.
But the following year, Huayi Brothers’ business conditions took a turn for the worse. In 2018, Huayi Brothers achieved annual revenue of 3.814 billion yuan, a year-on-year decrease of 3.34%; it recorded a net profit loss of 1.169 billion yuan attributable to the parent company, turning from profit to loss year-on-year.
Since then, the company has suffered from losses for many years. Flush iFinD data shows that from 2018 to 2025, Huayi Brothers’ cumulative losses in eight years exceeded 8.5 billion yuan.
Entering 2026, Huayi Brothers’ performance has not yet seen a significant improvement. The financial report shows that in the first half of this year, Huayi Brothers achieved revenue of 85 million yuan, a sharp drop of more than 40% year-on-year; although the net profit loss attributable to the parent company narrowed 51.12% year-on-year, it still recorded a loss of 36 million yuan.
Regarding the decline in the company’s revenue, Huayi Brothers explained that it was mainly due to the decrease in revenue from the film and television entertainment business during the reporting period.
Specifically, in the first half of 2026, Huayi Brothers’ revenue from the film and television entertainment sector was 85.3553 million yuan, a decrease of 43.77% compared with the same period last year; the gross profit margin was approximately 18.79%, a decrease of 15.77 percentage points year-on-year.
In the same period, the brand licensing and reality entertainment segment contributed NT $92,400 to the company’s revenue, accounting for only 0.11% of the total revenue in the current period; while the Internet entertainment and other businesses did not contribute any revenue.
As of the end of the first half of the year, Huayi Brothers’ total assets were approximately 2.13 billion yuan, but its total liabilities were as high as 2.136 billion yuan. The asset-liability ratio was 100.28%, and the company was already insolvent.
It is worth mentioning that, aside from being the founder and chairman of Huayi Brothers, Wang Zhongjun is also a well-known art collector.
According to Red Star Capital Bureau, Wang Zhongjun spent 377 million yuan and 185 million yuan respectively in 2014 and 2015 to acquire famous paintings by Van Gogh and Picasso.
However, when Huayi Brothers faced a business crisis, Wang Zhongjun also had to sell a collection of artworks to help the company tide over the difficulties.
In this regard, Wang Zhongjun once said at a summit forum, “I don’t think there is any shame. Half of the nightclubs at Guardian last year were my paintings, but I sold them and I felt very happy. I am not talking about returns. What I want to talk about is my collection today. For the safety of the company, I can sell anything. There is nothing shameful about this.”
Can “China Murdoch” take action to revitalize the former “number one film and television stock”?
Tianyancha shows that Chinese Culture Co., Ltd. (“Chinese Culture”), which plans to take over Huayi Brothers this time, was established in 2015, and the actual controller of the company is Li Ruigang.
Public information shows that Li Ruigang served as chairman and president of Shanghai Culture, Radio, Film and Television Group (SMG), party secretary and director of Shanghai Radio and Television Station, and other positions.
As a media boss, Li Ruigang was called “China’s real content king” by People magazine, and his other well-known title is “China’s Murdoch.”
In 2010, Li Ruigang founded China’s first cultural industry private equity investment institution “CMC Capital” (formerly known as Chinese Cultural Industry Investment Fund).
In 2015, Li Ruigang resigned as president of Shanghai Culture, Radio, Film and Television Group and began to focus on his personal career. In the same year, he founded Chinese Culture and became the largest shareholder of Hong Kong TVB through equity acquisition.
In 2016, under the leadership of Li Ruigang, Chinese Culture successfully acquired the Fujian sports brand Meike International, which was subsequently renamed Shaw Brothers Holdings. In the same year, Li Ruigang became the chairman of the board of directors of Shaw Brothers and joined the board of directors of TVB.
Radar Finance learned from the official website of Chinese Culture that Chinese Culture’s entertainment, media, sports, culture and tourism resources are rich, and it owns a series of industry leading companies such as TVB, Shaw Brothers Pictures, Noon Sunshine, Caixin Media, Chinese Pictures, Oriental DreamWorks, UME Cinemas, Zilong Games, and Pear Video. It also jointly manages the Shenzhen Xinpengcheng Football Club with the British City Football Group CFG, and promotes the landing of well-known global IPs such as Lego Theme Park in China.
In January this year, Li Ruigang also carried out a “snake swallowing elephant”-style integration of his subsidiaries, packaging and injecting core film and television assets, including 50.05% equity of Noon Sunshine, 100% equity of Chinese Pictures, and 100% equity of Shanghai Siyuan, which operates UME Cinemas, into Shaw Brothers, which has a market value of less than HK$500 million, at a consideration of approximately 4.577 billion yuan.
If it can successfully acquire Huayi Brothers this time, Chinese Culture will gain another A-share listing platform and gain access to the mainland capital market.
According to Chen Yanyi, a brand IP marketing expert and chief strategy officer of Guangzhou Siyide, the core value of Huayi Brothers lies in its IP library and film production capabilities accumulated over the years. The essence of incorporating Huayi Brothers into the system is to fill the gap in Chinese culture in film production and form a “drama + movie” content matrix with Noon Sunshine.
However, for Chinese culture, this restructuring also poses considerable challenges. At the performance level, Chinese culture itself is also facing certain problems.
According to the reorganization announcement disclosed by ST Huayi this time, in 2023, Chinese Culture achieved revenue of 4.571 billion yuan; by 2024, the company’s revenue fell to 4.022 billion yuan; in 2025, it further dropped to 3.178 billion yuan.
During the same period, the profit indicators of Chinese Culture showed a trend of fluctuation. From 2023 to 2025, the company recorded net profits of 287 million yuan, 363 million yuan, and 297 million yuan respectively.
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