The new film 'Catching a Spy' directed by Feng Xiaogang has been a hit over the Dragon Boat Festival holiday, yet its former home studio is facing scrutiny over contradictory statements regarding its involvement in the project.
The movie 'Catching a Spy', directed by Feng Xiaogang and starring Lei Jiayin and Hu Ge, premiered during the holiday. It opened with a 7.5 rating on Douban and earned approximately 24.12 million yuan on its first day, ranking third for the holiday period. Beyond its box office performance, a significant question has emerged for investors: did Huayi Brothers Media Corporation (ST Huayi) invest in this film?
The Investment Conundrum
On June 17th, the company explicitly stated on the Shenzhen Stock Exchange's interactive platform that it "did not participate in the investment of the movie 'Catching a Spy'." However, records from the same platform show that in June 2024, the company's board secretary had responded to an investor inquiry by stating, "'Catching a Spy' is a film project the company has participated in investing in." This discrepancy has left many investors confused. The situation is further complicated by similar inconsistent statements made by the company regarding its potential investment in the film 'Dongji Island', directed by Guan Hu.
The company's 2025 annual report, released in April 2026, listed 'Catching a Spy' as "in production" with the cooperation method noted as "participating investment (if confirmed)." Financial analysts suggest that the phrase "(if confirmed)" indicates an initial intention rather than a firm commitment, and that such project terms can change throughout the development cycle. They argue that the tentative language in the annual report is not necessarily contradictory to a later definitive statement of non-investment, as the deal status could have evolved in the intervening months.
Nevertheless, the company's 2024 annual report, published in April 2025, also listed the project as "participating investment (if confirmed)." Its June 2024 statement on the interactive platform, however, omitted any qualifying language like "if confirmed." This raises questions about whether the company's communications on the platform constituted an information disclosure violation. Experts note that for a violation to be established, it would require the company to have knowingly omitted crucial uncertainty, intentionally misled the market, and caused significant investor losses due to the statement.
Historically, 'Catching a Spy' had appeared on Huayi Brothers' books as inventory, which typically implies full ownership and control of a project. The company had previously recorded development costs for it and even took impairment charges against the project in 2022, suggesting it was treated as a wholly-owned asset at that time.
Feng Xiaogang's New Alliance
Feng Xiaogang's long-standing capital relationship with Huayi Brothers appears to have concluded. In 2015, Huayi Brothers acquired a 70% stake in Dongyang Meila, a company co-founded by Feng, for 1.05 billion yuan. The deal included a five-year performance commitment. When Dongyang Meila failed to meet certain targets in 2018 and 2020, Feng Xiaogang compensated the company a total of 236 million yuan. In 2024, Huayi Brothers sold its entire stake in Dongyang Meila to Alibaba Pictures at a significant discount. Feng Xiaogang, who retains a 30% stake, has now effectively partnered with the new majority owner, Alibaba Pictures.
Facing a Financial Crossroads
Huayi Brothers is currently navigating a severe financial crisis. On June 5th, the company announced it was publicly seeking restructuring investors. This followed an application by a creditor, Beijing Tairui Feike Technology Co., Ltd., to a court for a judicial restructuring of the company due to its inability to repay a debt of 11.405 million yuan. The company has stated that if the court accepts the restructuring application, its stock will be subject to a delisting risk warning. Should the restructuring ultimately fail, the company faces the possibility of bankruptcy and termination of its listing.
Once a star of China's capital markets and dubbed "the first share of Chinese film and entertainment," Huayi Brothers has reported losses for seven consecutive years from 2018 to 2024, totaling over 8.2 billion yuan. Its financial strain is severe, with high liabilities, overdue debts, frozen bank accounts, and its executives subject to court-issued consumption restrictions. The company attributes its liquidity issues to delayed repayments and is negotiating loan extensions while planning further asset disposals.
As 'Catching a Spy' continues its theatrical run, the on-screen cat-and-mouse game spans decades. Off-screen, the lengthy capital partnership between Feng Xiaogang and Huayi Brothers seems to have reached its final chapter, while the studio itself fights for its corporate survival.
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