H&R(SZ:000892) Xin Lang Cai Jing·2026-01-21 02:31Core Viewpoint - The departure of core artist Cheng Yi from Huanrui Century has triggered significant market reactions, leading to a 12.32% drop in stock price and a market value loss exceeding 1 billion yuan, reflecting concerns over the company's future profitability [1][7]. Group 1: Impact on Revenue - Cheng Yi's exit is expected to severely impact Huanrui Century's artist management revenue, which reached 164 million yuan in 2024, a year-on-year increase of 86.86%, while film and television revenue declined by 5.15% [2][8]. - Cheng Yi is believed to contribute nearly half of the company's artist management revenue, making his departure a direct threat to the core revenue segment [2][8]. - The loss of Cheng Yi also disrupts the business synergy that has been crucial for revenue generation, as his projects have driven related business activities such as content investment and copyright negotiations [2][8]. Group 2: Talent Drain and Financial Performance - Huanrui Century has been experiencing a talent drain, with top artists like Yang Zi and Ren Jialun leaving, reducing the number of artists from over 40 to around 20, culminating in Cheng Yi's departure as the last major star [3][9]. - Financially, the company has faced volatile net profits from 2021 to 2024, with figures of -339 million yuan, 7.66 million yuan, -409 million yuan, and -241 million yuan, indicating ongoing struggles despite a 123.30% revenue growth in the first three quarters of 2025 [3][9]. Group 3: Industry Challenges and Business Model - The situation highlights the vulnerabilities of the "star-binding" model prevalent in the industry, where 80% of revenue for many companies relies on the top three artists, with leading stars' fees constituting over 60% of production costs [4][10]. - Huanrui Century's artist management revenue accounted for 87.35% of total revenue in the first half of 2021, with a single top artist contributing 33.08%, showcasing the risks of dependency on individual talents [4][10]. - The industry is shifting towards a decentralized model, focusing on quality content rather than star power, as seen with companies like Noon Sunshine [4][10]. Group 4: Urgent Need for Transformation - Huanrui Century must accelerate its business restructuring to reduce reliance on individual artists and establish an industrialized content production system to regain market trust [5][11]. - The company faces challenges in managing the copyright distribution of two unreleased projects featuring Cheng Yi, while its short drama business, despite rapid growth, is in a highly competitive environment [5][11]. - Analysts warn that if Huanrui Century does not identify new profit sources within three months, it may face greater risks, especially as Cheng Yi has formed his own studio and is exploring opportunities with quality resources [5][11].