Huace Film recently released its third-quarter financial report, revealing operational concerns such as insufficient profitability in its core business and periodic cash flow strains.
The company's performance in 2025 started strong but declined sharply, with significant quarterly fluctuations. While Q1 saw a robust rebound driven by the hit drama *National Beauty*, the following two quarters showed revenue growth without profit increases. In Q3, non-GAAP net profit attributable to shareholders plummeted by 80%.
Beyond financials, Huace has faced public scrutiny over its talent management. Star actress Yu Shuxin removed all company references from her social media, officially ending an eight-year partnership. Fans criticized Huace for inadequate resource allocation, while newcomer Tian Xuning’s controversies further fueled doubts about the company’s artist management.
Reports indicate Huace experienced a wave of talent departures in 2020. Currently, its official website lists fewer than 20 signed artists, highlighting challenges in retaining stars under its "drama-driven talent" model.
**Earnings Volatility and Profit Decline** Huace’s Q3 report showed revenue of 10.41 billion yuan (up 16.62% YoY) and net profit of 1.75 billion yuan (up 5.35% YoY). However, quarterly performance was erratic: Q1 profits surged over 200% due to *National Beauty*, but Q2 and Q3 saw nearly 40% profit drops despite revenue growth.
Non-GAAP net profit reflected deeper issues—Q2 was negligible at 273,400 yuan, while Q3 fell 82.94% to 12.39 million yuan. Non-recurring gains (e.g., government subsidies, asset valuation changes) accounted for 45.22 million yuan, masking weak core operations.
Cash flow remained negative since Q1 2024, turning positive in Q3 2025 at 274 million yuan (up 137% YoY).
**Diversification Risks** Huace is expanding into short-form dramas and computing power, with the latter contributing 56.5 million yuan (7.15% of H1 revenue). However, high prepayments and potential asset impairments pose risks.
CICC noted its National Day film *Assassin in Red 2* earned 364 million yuan at the box office but likely incurred losses, leading to downgraded profit forecasts for 2025/26.
**Yu Shuxin’s Exit and Fan Backlash** Yu’s departure, framed as a mutual contract expiry, sparked fan outrage over perceived lack of support. Fans pointed out her hits (*Love Between Fairy and Devil*, *The Last Immortal*) were not Huace productions, and criticized the company for inadequate crisis management and pressuring her to promote新人 (newcomers).
**Talent Drain and Structural Challenges** Huace’s TV production remains its core (45.59% of H1 revenue), but its经纪 business, though growing to 10.02% of revenue (79.16 million yuan), faces talent retention issues. Past exits (e.g., Lan Yingying, Xu Zhengxi) and Yu’s departure have left fewer than 20 signed artists, including Wu Qian and Tian Xuning.
Industry analysts suggest Huace’s project-centric approach often sidelines its own artists in key productions, pushing established stars to seek external opportunities. The company may need more flexible partnerships and deeper profit-sharing to retain top talent.
Comments