Recently, Hubei Radio and Television (000665.SZ) unveiled its performance forecast for the first half of 2026, projecting continued losses. The company anticipates that its net profit attributable to shareholders, after accounting for non-recurring gains and losses, will exceed RMB 252 million, roughly mirroring the losses incurred during the same period last year.

Stock Star highlights that, in recent years, Hubei Radio and Television has faced substantial performance pressures due to factors such as the decline of the cable TV industry and intensified market competition. From 2020 to 2025, the company experienced losses for six consecutive years. As it steps into 2026, its operational conditions have shown no signs of improvement. In recent years, the company's TV and broadband businesses have consistently contracted. Despite ongoing efforts to transform, new businesses have yet to provide significant support, resulting in a continuous decline in overall revenue. High operating costs under the heavy asset model, coupled with a substantial financial burden, have severely squeezed the company's profit margins. Last year, the gross profit margin plummeted to just -8.38%. Additionally, Hubei Radio and Television is grappling with severe liquidity issues, with a short-term debt gap of nearly RMB 2 billion as of the end of the first quarter of this year. Faced with operational challenges, Hubei Radio and Television is striving to break through by vigorously developing government and enterprise businesses and capitalizing on national policy dividends, but significant results are unlikely in the short term. Amid these intertwined pressures, Hubei Radio and Television's transformation journey continues to face formidable challenges.

01. Shrinking Revenue and Stubborn Costs Lead to Continued First-Half Losses

Hubei Radio and Television, which achieved a backdoor listing in 2012, is a prominent state-controlled cultural and high-tech enterprise in Hubei Province. Its business portfolio for public customers encompasses digital TV, broadband access, and 5G communication services for radio and television. For group customers, it offers scenario-based private network services and industry information application construction services.

The performance forecast indicates that Hubei Radio and Television expects revenue between RMB 710 million and RMB 750 million for the first half of this year, representing a year-on-year decrease of 13.67% to 8.8%. Net profit attributable to shareholders is projected to range between -RMB 247 million and -RMB 257 million, compared to -RMB 246 million in the same period last year. Net profit after non-recurring gains and losses is expected to be between -RMB 252 million and -RMB 262 million, versus -RMB 258 million last year.

Regarding the losses in the first half of this year, Hubei Radio and Television explained that revenue from traditional basic businesses, such as TV and broadband services, declined year-on-year during the reporting period. The company has been actively promoting market expansion for businesses like 5G for radio and television and government and enterprise informatization. However, as these related businesses are still in their nascent stages and have not yet generated substantial revenue, they are unable to offset the decline in traditional businesses. Due to limited scope for compressing rigid costs, the company posted losses in its operating performance for the first half of the year.

Stock Star notes that Hubei Radio and Television's performance peaked in 2015. Since then, with the decline of the cable TV industry and intensified market competition, the company's performance has consistently declined. From 2020 to 2025, it posted losses for six consecutive years, with cumulative net profit after non-recurring gains and losses exceeding RMB 4.3 billion.

The sharp decline in revenue is the direct cause of Hubei Radio and Television's continuous losses. In recent years, impacted by multiple factors such as the development of the internet and new media and intensified market competition, revenue from the company's two major traditional businesses—TV and broadband, which are its primary income sources—has continued to decline. For instance, in 2018, when the company's performance peaked, revenue from these two businesses reached RMB 1.467 billion (53.37% of total revenue) and RMB 549 million (19.97% of total revenue), respectively. Last year, revenue from these two businesses was only RMB 557 million (36.71% of total revenue) and RMB 220 million (14.46% of total revenue), respectively, representing declines of 62% and 60%.

In recent years, although Hubei Radio and Television has been continuously striving to transform into a comprehensive information service provider for smart radio and television, the results of the transformation have not yet fully materialized. The company's key expansion area, 5G for radio and television, also faces fierce competition, with revenue accounting for only 3% last year. Although the revenue from government and enterprise businesses, which the company has high hopes for, accounted for 23.75% last year, it is still insufficient to reverse the overall decline in the company's revenue.

Financial reports reveal that from 2019 to 2025, Hubei Radio and Television only experienced a slight year-on-year increase in revenue of 0.17% in 2022, with revenue declining in all other years. Last year, the company's overall revenue decreased by 44.76% compared to 2018.

In the first half of this year, Hubei Radio and Television's operational difficulties have persisted. In the first quarter of this year, the company's revenue was RMB 340 million, a year-on-year decrease of 18.14%. Net profit attributable to shareholders was -RMB 115 million, a year-on-year decrease of 3.64%. Net profit after non-recurring gains and losses was -RMB 118 million, a year-on-year decrease of 6.57%. Declining revenue remains one of the primary factors contributing to the pressure on the company's first-quarter profitability.

Based on these calculations, in the second quarter of this year, Hubei Radio and Television's revenue is expected to range between RMB 369.9 million and RMB 409.9 million, with net profit attributable to shareholders between -RMB 132 million and -RMB 142 million, and net profit after non-recurring gains and losses between -RMB 134 million and -RMB 144 million. Although net profit after non-recurring gains and losses in the second quarter of this year showed a slight year-on-year increase, the quarter-on-quarter losses continued to widen, and there are no signs of substantial improvement in the company's performance. As of the second quarter of this year, the company has posted losses for 23 consecutive quarters.

02. Heavy Assets and Financial Burdens Impede Transformation Efforts

More seriously, in recent years, Hubei Radio and Television's gross profit margin has been under severe pressure.

Stock Star notes that Hubei Radio and Television's entire broadcast and television transmission network operates under a heavy asset model, necessitating significant annual depreciation and amortization. Coupled with the high costs of new construction, renovation, and maintenance of related facilities, the company's fixed costs remain elevated. In recent years, as the company's revenue has continued to decline, Hubei Radio and Television's gross profit margin has declined year by year, dropping from about 39% in 2018, when its performance peaked, to -8.38% last year. The company has found itself in a predicament where 'the more it sells, the more it loses.'

Additionally, in recent years, Hubei Radio and Television has vigorously expanded its government and enterprise businesses, which have long payment collection cycles, further increasing the company's accounts receivable. As of the end of last year, the company's accounts receivable reached RMB 1.196 billion, nearly 80% of its revenue for the same period.

Continuous years of losses, coupled with high accounts receivable, have kept Hubei Radio and Television's capital chain under continuous strain. The company has had to rely on borrowing and financing to maintain daily operations, significantly increasing its financial burden. From 2018 to 2025, Hubei Radio and Television's debt has increased by approximately RMB 1.7 billion, with the increase primarily coming from short-term borrowings. Last year, the company's total financial expenses were RMB 113.2 million (including RMB 112.7 million in interest expenses), a 471% increase compared to 2018, while the company's revenue decreased by more than 40% during the same period. This has further squeezed the company's profit margins.

As of the end of the first quarter of this year, Hubei Radio and Television's debt still stood at a high RMB 6.005 billion. Among this, short-term borrowings and non-current liabilities due within one year totaled RMB 2.198 billion, while the company's holdings of cash and cash equivalents and trading financial assets totaled only about RMB 215 million, leaving a short-term debt gap of nearly RMB 2 billion.

With traditional businesses sharply declining, new businesses of limited scale, and a heavy historical burden, Hubei Radio and Television's transformation journey under multiple pressures appears increasingly arduous.

In its 2025 financial report, Hubei Radio and Television disclosed its operating plan for 2026. Regarding government and enterprise businesses, the company will focus on high-value areas such as smart cities, smart education, and smart cultural tourism, aiming to become the preferred partner for local governments' digital transformation. For public customer businesses, in 2026, the company will shift to refined operations centered on user value, extending public customer businesses to comprehensive value services such as smart homes, achieving growth in both user numbers and revenue. The company also disclosed that it is seizing the national policy window period, actively seeking policy support for the construction of exclusive cable TV networks and the national cultural big data system, and exploring new paths for the integrated development of cultural tourism and radio and television. In 2026, the company will accelerate the conversion of the first phase of 14 intended projects for cultural tourism integration, turning policy dividends and market opportunities into operational growth.

In July of this year, Hubei Radio and Television disclosed during exchanges with investors that the implementation of the first phase of 14 key projects for cultural tourism integration is underway. Regarding public customer businesses, the company has launched a special campaign across all regions, relying on two core platforms—Beautiful Countryside and Future Community—to deepen channel cooperation in four major industries: veterans, cultural tourism, finance, and elderly care. It is also leveraging events such as the World Cup and summer vacation to expand its customer acquisition market and encourage fixed-line users to return. Regarding government and enterprise businesses, the company will focus on high-value areas and accelerate the construction of key projects such as the National Cultural Big Data Central China Regional Center and emergency broadcasting.

However, judging by Hubei Radio and Television's first-half performance, the above measures have not yet had a significant impact on improving the company's performance. Whether the company can successfully reverse its fortunes still hinges on whether these strategies can be truly implemented and translated into sustainable revenue growth. (This article was first published on Stock Star, Author | Liu Haohao)

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