Reading affected Xinli Media’s goodwill impairment of 3.7 to 4.7 billion yuan, predicting a turnaround in the first half of the year

Financial News

Written by: Ou Jiajun

2020-07-21 09:58

The China Reading Group (0772) profit warning is expected to turn from profit to loss in the first half of the year, mainly due to the impairment of goodwill and trademark rights of RMB 3.7 billion to RMB 4.7 billion, and the revenue and operating results of Xinli Media did not meet expectations. Xinli Media is a subsidiary of Reading Media, engaged in the production and distribution of TV series, web series and movies in China.

According to the article, the mainland's film and television industry is currently undergoing in-depth adjustments under the influence of the macro environment. The number of industry-wide filing, start-up, and online projects has declined, and the profits of some single projects have been lower than expected. In addition, the outbreak of the novel coronavirus outbreak has had a continuous impact on the macro economy. The film and television industry in Mainland China has been hit hard, and the film and television production delays and release dates are yet to be determined. In the face of these pressures, the overall cycle of Xinli Media’s film and television projects has become longer and uncertainty has increased.

The reading continued that Xinli Media will experience impairment of goodwill and trademark rights, but it is expected that its performance in 2020 will not meet expectations, which will trigger the profitability of Xinli Media’s management team as the seller under the terms of the acquisition agreement. The reduction partially offset the impact of the impairment of goodwill and trademark rights on the Group’s financial performance, and the net loss is expected to decrease by RMB 1.3 billion to RMB 1.7 billion.

The latest reading of the article was 57.35 yuan, up 1.5%, and the turnover was 176 million yuan.

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