Chinese Entertainment: Starting from 1996

Chapter 528 I Can't Think of a Word
Of course, Jiahe’s accumulation over the past 30 years is important, but Liu Zhou’s contribution cannot be erased.

In the original time and space, Chengtian acquired Golden Harvest. It was prosperous for a while at the beginning, but soon it became mediocre and even almost went bankrupt.

Under Liu Zhou's leadership, Golden Harvest has now become the largest domestic film and television giant with a market value of nearly 100 billion yuan.

So it depends on the person and how you make good use of the foundation left by Golden Harvest.

Now Jiahe Group is almost self-sufficient. Even if it involves an investment of 600 to 700 million yuan, it can afford it without relying on loans or financing.

I thought that the cinema chain company and the Golden Harvest Film and Television Industrial Base were both big money-makers of the Golden Harvest Group, and that they would need loan financing to raise investment funds for these two major projects.

But now it seems that the investment in the cinema chain can be solved by the cinema chain’s branches, while the investment in the Golden Harvest Film and Television Base can offset the profits of the group’s various branches.

This was undoubtedly beyond Liu Zhou's expectations. It seemed that he had underestimated the development of Jiahe Group and underestimated its profitability.

The film and television industry is indeed an industry with high investment risks, but it is also a highly profitable industry.

During the heyday of Hong Kong films in the 1980s, 1990s and 2000s, a tiny place like Hong Kong could actually produce two listed film and television companies with a market value of over 10 billion Hong Kong dollars.

There are also many film and television giants that come and go, and their market value should not be underestimated. Although it is not worth tens of billions, it is worth tens of billions at its peak.

In fact, the current mainland film market is a bit like Hong Kong in the 1980s, and is also entering the early stages of the market's most prosperity.

But the size of the mainland is larger than Hong Kong plus Taiwan plus the Southeast Asia region, so there are more film and television giants than in Hong Kong, and their scale is also larger.

Not to mention Golden Harvest, even the market capitalizations of Huayi, Guangguang and Bona, which are already listed, have exceeded 10 billion yuan, and this is still the second tier of mainland film and television companies.

It goes without saying that Golden Harvest is in the first tier, and there are also the two state-owned companies, China Film and Shanghai Film. If they were to go public, their market value would be at least over 20 to 30 billion yuan.

In addition, giants such as Wanda, Penguin, and Ali are eyeing the market. If they really enter the market, the amount of money they invest in real money may exceed 10 billion.

The market capitalization of Golden Harvest and Yongsheng in Hong Kong once reached tens of billions at their peak. However, their valuations were somewhat inflated, so their market capitalizations did not stay above the tens of billions mark for long and fell soon after.

So when Hong Kong films started to fail, the share prices of the two companies fell particularly quickly.

At least Golden Harvest is an old film company with something to offer, whereas Yongsheng has a lot of bubbles, so their stock prices have really plummeted.

Otherwise, the Xiang family would not have held on to Zhou Xingxing so tightly. In the beginning, they used their connections to let him play a supporting role, but they didn't expect that they would defeat the then young Zha Zha Hui in seconds without leaving anything behind.

Later, when he saw that this didn't work, he still wanted to let Zhou Xingxing work like a slave to make movies and make money like before, but by then he had already started to be his own boss, so naturally he wouldn't work like a slave anymore.

This also led to the Xiang family wanting to use their influence to force others. When Stephen Chow was preparing for "Shaolin Soccer", the Xiang family shouted in the circle that anyone who dared to invest in Stephen Chow would be against them.

But Lin Xiaomin, the boss of Media Asia at the time, ignored them and invested in "Shaolin Soccer".

Lin Xiaomin started out by making laser discs, which was actually piracy, and his business was huge, with channels spread across Hong Kong, Taiwan and Southeast Asia.

Anyone who has made it this far in this line of work must have deep community connections, so they are not afraid of the Xiang family at all.

Later, at the Academy Awards, when accepting the award for Best Picture for Shaolin Soccer, Zhao Xueying, wife of the boss of Media Global, an investor in the film, openly criticized Xiang Huaqiang.

If the host Eric Tsang had not interrupted her quickly, she would have read out a manifesto denouncing the Xiang family in her acceptance speech.

Despite this, the sentence "Justice is in the hearts of the people, and truth lasts forever" is still very impressive.

The photographer at the scene was quite talented and courageous. He gave a close-up of Xiang Huaqiang, and you can see that his face has turned black.

This also led to a complete breakup between the Xiang family and Zhou Xingxing. Later, the Xiang family launched massive anti-Zhou movements in 2003, 2009 and 2014 respectively.

However, Zhou Xingxing's fan base is so huge and loyal that even if people remain silent, they will not be shaken at all.

By doing this, the Xiang family exposed their own secrets and let more people know about their gang membership.

The reason why the Xiang family has always been interested in Zhou Xingxing is because they are very clear about his value. When Yongsheng’s market value was able to break through the 10 billion mark, Zhou Xingxing made great efforts.

Film companies actually have a bit of a winner-takes-all mentality, and shareholders are relatively simple-minded. They mainly look at whether the movies produced by your company have high box office performance. They don’t care much about other strengths, and it is difficult for them to understand them intuitively.

Therefore, the movie box office has almost become the most critical factor in whether investors buy your stocks.

In fact, the current situation of mainland stock investors is similar. Not only ordinary stock investors, but even some small and medium-sized investment institutions mainly buy stocks based on movie box office results.

In the past two years, there have been almost no failed movies produced by Golden Harvest. Even if they did fail, they were small or medium-budget movies that hardly caused any waves.

Almost all the blockbusters or key projects produced by Golden Harvest are box office hits.

Therefore, this item attracted a large number of investors to chase after Golden Harvest's stocks, not to mention that last year's TV series and variety shows also achieved a breakthrough influence.

Moreover, ordinary stockholders may not investigate in detail the various business segments of Jiahe Group and its industry influence, but those large investment institutions will investigate and have the ability to do so.

There is no doubt that Jiahe Group can withstand investigation. With such a high market value, there is almost no bubble, so Jiahe's stocks are also favored by those large investment institutions.

This is also why in just less than two years since Jiahe Group went public, its stock price has more than doubled, and its market value has increased from 30 to 40 billion to more than 90 billion today.

It would be difficult for a company's stock price to rise so sharply if it relied solely on retail investors, let alone a film and television company.

Only when those investment institutions acted together could the market value of Jiahe Group surge by 40 to 50 billion.

Although the surge in Golden Harvest's market value is due to the outstanding results achieved in each of its business segments, its strength is far ahead of its peers.

However, the biggest influencing factor is undoubtedly Golden Harvest's ability to continuously launch blockbuster movies, especially last year, which lasted from the beginning of the year to the end of the year.

The box office success of the movie has indeed made Golden Harvest a winner, which can be clearly seen from the profit of more than 2 billion yuan handed in by Golden Harvest Pictures last year. Moreover, Golden Harvest Group not only produces and promotes its own movies, but also distributes them overseas, so it can be said that it pockets most of the profits of a movie.

Therefore, Golden Harvest has almost cut a large piece of the lucrative cake of film investment, and because of the existence of Liu Zhou, there is almost no risk in film investment.

This also made Liu Zhou somewhat under-appreciative of the strength of Jiahe Group. He did not expect that the company's profitability was already so strong in 2011.

But it’s normal to think about it. Perhaps some of Jiahe Group’s domestic industries may not be able to support such a high market value.

Last year, Jiahe Group had the highest profit. If all the profits were added up, it would be nearly 3 billion. Based on a price-to-earnings ratio of 15 times, Jiahe's market value should be around 45 billion.

The P/E ratio of an average company is around ten times, but the P/E ratio of the film and television industry is generally higher, and fifteen times is considered normal. In the original time and space, some companies had a P/E ratio of up to twenty times.

The domestic part is worth 45 billion, but don’t forget that Golden Harvest Group also has a powerful film company in Hollywood, Summit Entertainment.

The company's profit last year converted into RMB was more than 2 billion, which is no worse than the entire domestic group.

In addition, there are currently additional filters for overseas companies, so it should not be a big problem for Summit Entertainment to contribute 45 billion in market value.

This adds up to 90 billion yuan, and with the optimism of investment institutions and the enthusiastic pursuit of many shareholders, it is normal for the market value to increase by 10 to 20 billion yuan.

As the number one in the industry, Golden Harvest’s market value is inevitably going to have some bubbles, so it’s not so surprising that Golden Harvest is now approaching the 100 billion mark.

In the original time and space, Huayi, the first mainland film and television company with a market value of over 14 billion yuan, had its stock price at its highest in 15 and , and this was only relying on the domestic market.

Today, Golden Harvest Group’s strength and influence in China are even stronger than Huayi’s in 14 and 15, not to mention the presence of a Hollywood film company, Summit Entertainment.

It is no surprise that Jiahe was able to approach the 2011 billion mark in , which is why Liu Zhou set the target for Jiahe Group at billion.

The domestic film and television market is just starting out, and the craziest times have yet to come.

However, Golden Harvest Group has already reaped the biggest benefits from the rise of the film and television industry.

Now Jiahe’s market value of more than 90 billion yuan is higher than that of some old-established companies, which directly shattered some concepts of traditional entrepreneurs.

Therefore, Liu Zhou is very famous in the Chinese business community, not only because he is the richest man in mainland China, but also because he was able to build a film and television company with a market value of tens of billions.

Even if we do not include the wealth that the Internet industry has contributed to Liu Zhou, his shares in Golden Harvest Group alone would make him one of the top ten richest people in the country.

Even if Liu Zhou was a little stingy and didn't give so many shares to the group's management, nor did he give shares to Zeng Li and Zhang Tong, Liu Zhou would still have a chance to take the title of the richest man.

If he really becomes the richest man in the country just by relying on the film and television industry, it will subvert the three views of some business entrepreneurs.

In fact, even now the Golden Harvest Group is already quite shocking. If the group announced in detail that it made a total profit of nearly 3 billion last year, it would be jaw-dropping.

This level of profit can be said to be better than more than 199 percent of private enterprises. Even if large state-owned enterprises are included, there will be no more than 30 of them.

And there are even fewer companies that can mobilize 2.3 billion in profits to distribute at will.

“Since Jiahe Film and Television Base needs 2 billion this year, then we will allocate all of it, and keep the remaining 300 million as a backup.

If there is any unexpected situation and 300 million is not enough, I can then apply for a loan or I can lend the funds to the company first."

After acquiring Golden Harvest, Liu Zhou paid great attention to distinguishing between his own money and the company's money. After Golden Harvest went public, he made an even more complete separation.

But Liu Zhou himself also earns hundreds of millions of yuan every year, in addition to the dividends from Sina Group and Penguin Group, there are also royalties from his novels every year.

In addition to this, there is also his remuneration as a director and screenwriter. With his current status, he not only receives a fixed salary, but also a share of the box office revenue.

The movies he made all had great box office success, like last year's "Interstellar", for which he also received nearly 100 million yuan in box office revenue.

All in all, after paying taxes, the funds in his personal account amounted to about 300 to 400 million.

He doesn't have much expenses on a normal day. As the chairman of two listed companies, Sina Group and Golden Harvest Group, most of his daily expenses can be paid by these two companies.

In addition to donating money to charity, he saves most of his money. Now he has more than 1 billion yuan in his personal account.

Therefore, if the situation becomes urgent, he can personally provide assistance to his companies.

"Okay Mr. Liu."

“After listening to your reports, I don’t think I have much to say. Everyone has done an excellent job.

Since everyone has their own plans, I won't interfere any more and just arrange your work according to your plans.

I thought our group's revenue would break through the 100 billion mark last year, but it was still a little short. I hope we can reach this goal earlier this year." Liu Zhou said.

"Mr. Liu, if we announce the detailed profits of each branch, I think Golden Harvest's stock price will definitely rise in response, and it should not take more than a week to break through 100 billion." Zhang Zhao replied with a smile.

“Forget it, let’s not announce it. It’s too eye-catching. Anyway, we still have the big project of Golden Harvest Film and Television Base, so the data in the financial report doesn’t need to be so high.

I think we should be able to achieve this goal after Aftershock is released in the summer at the latest.”

"That's for sure. 'Aftershock' is a highly anticipated blockbuster and is also predicted to be a billion-dollar film. Once the movie is released, it will definitely boost Golden Harvest's stock price," Chen Guofu continued.

"Aftershock" has been a highly anticipated film since the project was launched. Coupled with the huge success of "Interstellar" during last year's Lunar New Year holiday, as Liu Zhou's next blockbuster, everyone's expectations for this film are even higher.

At the beginning of this year, because the movie was scheduled to be released early, many media believed that its box office would exceed the 1 billion mark.

(End of this chapter)