CENTRAL CHINA (HK00832, stock price HKD 0.037, market cap HKD 112 million) announced on July 23 that it had entered into a share transfer agreement with relevant entities of CITIC Capital, finalizing a major cultural tourism asset transaction involving two core projects: "Only Henan·Drama Fantasy City" and "Jianye Movie Town." The total consideration for this transaction is 3 billion yuan.

Upon completion of the deal, the entity under CITIC Capital will hold 100% equity of the two newly established target companies carrying these cultural tourism assets. CENTRAL CHINA will no longer hold equity interests in the cultural tourism assets related to Drama Fantasy City and Movie Town. The underlying entities, Henan Zhongyuan and Yiluyouxi, will repurchase the state-owned shares, becoming indirect wholly-owned subsidiaries of CENTRAL CHINA, retaining only the remaining residential assets.

Once Viewed as a Strategic Transformation Initiative

These were once Chairman Hu Baosen's two flagship cultural tourism projects. According to CENTRAL CHINA's 2025 annual report, both "Only Henan·Drama Fantasy City" and "Jianye Movie Town" are located in Zhongmu County, Zhengzhou City.

"Only Henan·Drama Fantasy City" was co-created by CENTRAL CHINA and director Wang Chaoge, covering 622 mu. The core area features a fantasy city with a single side length of 328 meters and a height of 15 meters. It houses 21 theaters of various sizes, capable of accommodating 10,000 visitors simultaneously. The total performance time for all shows in a single round is nearly 800 minutes, making it one of the largest and longest-running drama clusters in China.

The project officially opened on June 6, 2021. By the end of 2025, "Only Henan·Drama Fantasy City" had accumulated 58 million spectator visits, with over 18 million visits in 2025 alone. More than 80% of visitors came from outside the province, tourists from over 50 countries visited, and over 85% of visitors were young people.

The other project, "Jianye Movie Town," originally named "Jianye·Huayi Brothers Movie Cultural Town," is a film culture experience destination integrating movie set tours, film culture exhibitions, interactive movie games, folk and intangible cultural heritage experiences, large-scale performances, specialty dining, and themed inns. It opened on September 21, 2019. At the time, Hu Baosen stated that the Movie Town was an original work created by CENTRAL CHINA through strategic transformation, blending cultural tourism with commercial and residential living, hoping it would continuously grow, maintain, improve, and gain new vitality and life.

However, developments did not meet expectations. In April 2021, due to immense debt repayment pressure, Huayi Brothers transferred its 10% stake in the Movie Town to CENTRAL CHINA. By 2022, the Movie Town changed hands again, with Henan Wento holding 90% and CENTRAL CHINA holding 10%. In 2025, the town hosted events from the New Year's Eve celebration onward, staging 15,862 performances and receiving over 4.5 million spectator visits.

Financially, CENTRAL CHINA's cultural tourism business has been under pressure in recent years. The announcement shows that the target assets incurred a loss of approximately 55.2967 million yuan in 2025. CENTRAL CHINA stated that the cultural tourism business is capital-intensive, requiring continuous operational funding, coupled with bank and other debts. The related cash flows have long been used for debt repayment, limiting the group's liquidity and financial flexibility.

Regarding the sale, CENTRAL CHINA stated in the announcement that it is a major move to optimize the business portfolio, deleverage, and resolve debt. The target assets are non-core businesses, significantly different from the company's main real estate development operations. Disposing of them will improve the company's liquidity, allowing it to focus financial and management resources on core real estate development.

Proceeds from the Sale Will Be Used for Debt Repayment

Among listed real estate companies, CENTRAL CHINA has always been a unique case. Over 30 years, the company has rarely expanded outside Henan Province, with most of its land reserves and projects concentrated in Henan, covering various cities and counties across the province. As of the end of 2025, all 79 of its projects under construction were in Henan. Its land reserves total 25.4 million square meters of floor area, with 98.97% located within Henan. In 2019, its sales exceeded the 100 billion yuan mark, setting an industry record for sales exceeding 100 billion yuan in a single province.

In Hu Baosen's business vision, covering all counties in Henan and providing quality housing for Henan residents was the first step. The second phase involved expanding into cultural tourism, football, and other sectors, transitioning from a real estate developer to a lifestyle operator. However, in June 2023, the company officially defaulted on an offshore bond interest payment after the grace period expired, subsequently seeking a comprehensive solution for offshore debt restructuring.

At the annual management meeting of the Jianye Group in January 2026, Hu Baosen participated only via video, breaking his long-standing tradition of attending in person. An announcement by CENTRAL CHINA on June 30 this year revealed that the company has completed the due diligence and initial draft of the liquidation analysis report for its offshore debt restructuring plan. It is formulating a preliminary restructuring scheme and has submitted the core framework of the restructuring terms to creditors' financial advisors. Additionally, the company has reached an agreement with existing lenders to extend a loan of approximately 925 million yuan for the group, while continuing to push for the renewal or extension of other maturing loans and actively seeking financing channels such as assistance loans.

Nevertheless, as of the end of 2025, the company's total liabilities amounted to 103.5 billion yuan, with interest-bearing debt of 23.247 billion yuan. Its book cash was only 420 million yuan, and net assets were negative. The sale of cultural tourism assets is part of its ongoing debt optimization efforts. According to the announcement, from the 3 billion yuan transaction, funds will be prioritized for repaying related debts. After the transaction funds are received, they will first go to creditors, including repaying financial liabilities associated with the target assets, which involves approximately 1.374 billion yuan in cultural tourism payables. CENTRAL CHINA estimates it will ultimately receive net proceeds of about 705 million yuan.

Regarding the use of funds, CENTRAL CHINA plans to allocate the money to fulfill property delivery obligations, clear project payables, and support debt restructuring and related arrangements. However, the transaction will also have accounting implications. The announcement states that CENTRAL CHINA expects to recognize a loss of approximately 1.216 billion yuan after the transaction is completed, subject to final audit confirmation.

On the other hand, the company's overall sales pace remains relatively slow. According to CENTRAL CHINA's disclosure, for the six months ending June 30, 2026, the company achieved total contracted property sales of 3.755 billion yuan, a decrease of 15.5% year-on-year. Contracted sales floor area was 567,900 square meters, a decrease of 19.8% year-on-year.