Equity financing of 1.25 billion with only 400 million in dividends. Xinghui Entertainment launches another 300 million private placement to raise funds.

On March 30, 2026, right on the same day that it released its 2025 annual performance news, the board of directors of Star Glory Entertainment (300043.SZ) considered and approved a new financing proposal. It plans to ask the general meeting of shareholders to authorize the board of directors to issue shares to specific targets using a simplified procedure. The total amount of funds to be raised will not exceed RMB 300 million, to be used to supplement working capital.

This is the second time the company has reached out to the capital markets for money in its 16 years since listing. According to statistics, since it went public in 2010, Star Glory Entertainment has raised a cumulative amount of more than RMB 1.25 billion through initial public offerings, follow-on offerings, equity incentives, and other methods. However, as of now since listing, the company’s cumulative cash dividends have been only about RMB 400 million. The ratio between funds raised and cash dividends is as high as 3.13 times—meaning that for every RMB 3.13 taken from the market, shareholders receive only RMB 1.

Against the backdrop that in 2025 the company just achieved a turnaround to profit, with net operating cash flow of RMB 540 million and a sharp drop in its asset-liability ratio from 61.94% to 37.28%, why did the company kick off equity financing again? Where exactly will this RMB 300 million “capital replenishment” go? While the controlling party is cutting holdings to cash out, it also has the listed company raise funds to supplement working capital—does this involve a game of interests? A series of questions point to a funds-management puzzle at this long-established listed company that has crossed into both games and toys.

**　　Performance turnaround: from a massive loss of 458 million to a profit of 302 million**

The financial report shows that in 2025, the company achieved operating revenue of RMB 2.092 billion, up 53.81% year over year; its net profit attributable to shareholders was RMB 302 million, turning around from a loss of RMB 458 million in the same period of the previous year, with a year-over-year increase of 165.89%; and its net profit after deducting non-recurring items was RMB 249 million, up 153.52%. Returning from the brink of loss back onto a profit track is indeed a highly dramatic turnaround.

However, a substantial portion of this impressive results was driven by one-off factors. In October 2025, the company completed the sale of 99.66% equity interest in the RCD Espanyol club in Spain. This transaction contributed about RMB 47.0694 million to net profit attributable to shareholders. After deducting this gain from asset disposal, the true earnings quality of the company’s core business needs to be discounted somewhat.

From the expense side, in 2025 selling expenses surged to RMB 583 million, up 120.94% year over year, mainly due to a sharp increase in advertising spending after the launch of new games. At the same time, research and development expenses decreased by 27.25% year over year to RMB 55.0687 million, and the proportion of R&D investment to operating revenue dropped to 2.63%. Against the backdrop of increasingly fierce competition in the gaming industry and faster product iteration cycles, whether the decline in R&D investment will affect the company’s long-term competitiveness is something to be wary of.

**　　Financing vs. dividends disparity: 1.25 billion versus 400 million—historical ledger**

When the timeline is stretched, Star Glory Entertainment’s financing history is quite rich. According to Wind data, the company raised about RMB 581 million in its initial public offering. It then carried out follow-on equity offerings twice, raising a total of about RMB 672 million. The total amount of equity financing thus reached RMB 1.25 billion. And since it went public in 2010, the company’s cumulative cash dividends have been only about RMB 400 million. The ratio of funds raised to cash dividends is as high as 3.13—meaning that for every RMB 3.13 the company raises from the market, it returns RMB 1 to shareholders.

Looking at dividends over the years, the company’s dividend level has generally been low. In 2024, it paid only RMB 0.1 for every 10 shares. In 2025, although it proposed to increase this to RMB 0.3 for every 10 shares, based on earnings per share of RMB 0.24, the payout ratio would be only about 12.5%, far below the market average. Over its 16 years since listing, in as many as eight years it did not implement cash dividends at all, or only maintained symbolic dividend payments. Investors’ returns could be described as extremely limited.

**　　The controlling party reducing holdings to cash out and the company’s “dual-track operations” financing**

Even more noteworthy is that not long before the listed company launched the RMB 300 million financing, the company’s actual controller significantly reduced holdings and cashed out.

On November 24, 2025, Star Glory Entertainment disclosed a reduction plan by its actual controller, Chen Yansheng, and his acting-in-concert party, Chen Dongqiong. The two of them planned to reduce their holdings in total by no more than 36.0031 million shares, representing 2.90% of the total share capital. By January 23, 2026, the reduction plan had been completed: Chen Yansheng reduced holdings by 24.8297 million shares, cashing out about RMB 128 million; Chen Dongqiong reduced holdings by 11.1734 million shares, cashing out about RMB 70.0572 million. Together, they cashed out about RMB 198 million.

With the actual controller cashing out through reduced holdings running in parallel with the listed company seeking capital replenishment from the market, the situation forms a clear “outflow and counterflow” pattern: on one side, the actual controller withdraws money from the market; on the other, the listed company asks the market for money. In the end, it is the investors in the secondary market who foot the bill.

Some in the market have directly said that this kind of operating model is worrying: the funds obtained from the controlling party’s reduction are used for its own needs, while the listed company has to make up the funding shortfall by issuing additional shares. In effect, the capital burden is shifted to public shareholders.

**　　Conclusion: after the RMB 300 million financing**

This RMB 300 million private placement by Star Glory Entertainment is, on the surface, for “supplementing working capital,” but behind it is the deep-seated problem of funds management at a long-established listed company. Under the long-standing pattern in which its financing history is ample but its dividends are relatively stingy, investors’ actual returns are limited. Moreover, with the controlling party cashing out through reduced holdings while having the listed company supplement working capital through a rights issue, the market has even more doubts about where the funds flow.

After the Espanyol club—this long-term “money-burning” burden—was removed, Star Glory Entertainment indeed delivered results with both revenue and profit increasing. However, once you factor in the “cash-back” funds of over RMB 1 billion obtained by stripping out the football business, along with this RMB 300 million private placement financing, the company’s liquidity on its books will be further strengthened. Whether these funds will be used to enhance game research and development capabilities and build long-term competitiveness, or whether the company will continue down the old path of “high sales spending for short-term growth,” will determine whether this round of performance turnaround can truly become the starting point for the company’s long-term value growth—or instead be yet another prelude to a capital game.

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Editor: AI Observer