The cash flow is -926 million yuan, where did Huace spend all the money?

Right after the release of the three-quarter financial report, Hetu Jun noticed that the operating cash flow figure of Huace Film and Media stood out sharply: in the first three quarters, the figure reached -926 million yuan, down 437.79% year on year, while the same period last year was still +274 million yuan, and the figure in the first half of this year was -210 million yuan, which means Huace's cash outflow hit 716 million yuan in just one single quarter.

But another set of data shows that: the revenue in the first three quarters increased by 16%, and the non-recurring profit and loss deducted net profit in the third quarter rose by 1.8 times. The company did make profits, but the money was all spent out.

Where did the money go? Xiaoyu checked the balance sheet and found that prepayments amounted to 2.335 billion yuan, surging 424% compared to the beginning of the year; fixed assets reached 1.301 billion yuan, up 353.88% — the financial report explained both changes point to the same thing: payment for computing power equipment procurement. Looking through the announcements again: In May, the company announced a plan to purchase servers with a total value of no more than 3.3 billion yuan; in July, it set up a 400 million yuan AI video fund; in August, it spent 51.54 million yuan to subscribe for shares of an AI fund; in September, it proposed to invest another 100 million yuan in the second fund, and in the same month, it took equity in two AI companies; in late October, it also partnered with "Puppy Debbie" to establish a new company focused on interactive entertainment.

It is not a single case. Previously, Hengdian Group spent 235 million yuan to purchase computing power from Volcano Engine, aiming to integrate its assets including art design, set construction, performance and other resources to build an "AI version of film and television city". This time, Huace, known as "the first stock of TV drama industry", is moving all its assets from the financial statements to computing power and AI sectors.

China's film and television industry is undergoing a major transformation.

1

The largest deal: 3.3 billion yuan for 29,000P servers

On May 6 this year, Huace announced a plan to purchase servers from multiple suppliers, with the total estimated contract value not exceeding 3.3 billion yuan, to provide cloud computing power services for customers. According to the company's investor relations record, this order corresponds to a total of 29,000P (namely PFLOPS, Peta Floating-point Operations Per Second, with a 5-year service period, and all upstream and downstream orders had been signed before the announcement — after the project is completed, Huace's total computing power scale will reach about 37,000P.

The procurement was implemented very quickly. The three-quarter report shows that the 2.335 billion yuan prepayment is basically the paid part of this order; the 1.301 billion yuan fixed assets are transferred from the computing power construction in progress — 586 million yuan was transferred to fixed assets as early as the first quarter of 2026, and the project has started billing since January this year. By the end of August, the company stated that the first batch of equipment had completed arrival acceptance. On the other side of the cash flow, contract liabilities of 1.413 billion yuan (+55.41%) are the advance receipts from computing power sales, and long-term loans of 1.812 billion yuan (+422.37%) fill the funding gap of the procurement.

Computing power is indeed a promising business: Huace's revenue from this sector hit 126 million yuan in 2025, up 602.65% year on year; the figure reached 160 million yuan in the first half of 2026, up 184.03% year on year, accounting for 23.41% of the total revenue and becoming the largest source of income. However, the money spent on servers was counted in operating cash flow, which led to the -926 million yuan book figure.

2

Five moves in half a year: from self-built factories to getting Agent admission tickets

What is more noteworthy than computing power is the density of Huace's AI investment. Yule Zibenlun once sorted out this growth line with the description of "five moves in half a year", all operated by its wholly-owned subsidiary Xixi Investment (Zhejiang Film and Television Industry International Cooperation Experimental Zone Xixi Investment Management Co., Ltd.):

Entity expansion: The registered capital of Xixi Investment increased from 10 million yuan to 50 million yuan in April;

July: Proposed to contribute 400 million yuan to establish Qingdao Huace Xinda Equity Investment Partnership, with a total scale of 509 million yuan, the company accounts for 78.58% of the shares, and the investment scope is specified as AI video generation;

August: Contributed 51.54 million yuan to subscribe for 49.99% shares of Jiaxing Puhua Lichuan Fund, which has a total scale of 103 million yuan and invests in the artificial intelligence sector;

September: Proposed to contribute 100 million yuan to subscribe for shares of Hangzhou Junlian Jiatu Fund, the announcement states that this move is to "accelerate business layout and ecological collaboration in the artificial intelligence sector";

End of September: Directly invested in two Agent companies — took a 5% stake in AI design firm Jellyfish Intelligence (subscribed 398,300 yuan), its product "Chushou AI" covers the full process of comics, dynamic comics and short comic dramas, with total online views exceeding 1.2 billion times, and its 2024 work "All Jobs Transfer" was launched on Japan's Piccoma, known as the world's first commercial AI comic; took a 9.9% stake in Shanghai Zhiling Xinjing, whose product NeoAI is featured by "input the script, output the whole drama", its AI short drama "Fuguang" has gained more than 5 million views across platforms, and the tool has been launched on Volcano Engine Wanyou Mall with a package price of 600 yuan per month.

The total size of the three funds exceeds 550 million yuan, plus two direct investments, "three fund investments plus two direct investments, completed within half a year". Earlier in August 2024, Huace invested 100 million yuan in Zhipu Huazhang, and in June this year, it signed a strategic cooperation agreement with HiDream.ai. Calculated in this way, Huace's investment map has expanded to four layers: computing power and model layer (self-developed "Youfeng" and "Se" large models + Tonglu Intelligent Computing Center), tool layer (Chushou AI, NeoAI), production capacity layer (30,000 square meters creation base in Tonglu), and capital layer (3 AI funds).

The latest move is the most interesting. Industrial and commercial information shows that Xixi Investment newly invested in Zhejiang Puppy Debbie Technology Co., Ltd. on September 12 (public recruitment information shows that the company is recruiting "AI group live stream agents"); in late October, Huace established a new joint venture Huace Puppy Debbie (Zhejiang) Culture Technology Co., Ltd. with it, holding 40.0001% of the shares and subscribing 6.6667 million yuan. Previously at the AIGC industry-education demonstration zone event in Tonglu, Huace has mentioned that it will work with Puppy Debbie to "create high-quality IP communication programs and land interactive entertainment content in Tonglu Industrial Park" — AI group live streaming and interactive entertainment content are obviously targeted at monetization and cash flow growth.

3

The real test

Breaking down the -926 million yuan cash flow, half of it is the prepayment for the 3.3 billion yuan large computing power order, and the other half is the investment in AI spread out within half a year. This is not an isolated case in the industry — 2025 was a year of large cash inflow for the film and television industry, and peers generally saw a decline from the high base in 2026, but Huace's cash flow dropped by 437.79%, the largest decline in the industry, because what it spent was not money from the change of payment collection rhythm, but real money invested in new businesses.

The previous judgment of Yule Zibenlun still holds: when the investment departments of leading film and television companies start to systematically price the AI content tool chain, the valuation logic of AI comics and short dramas is shifting from technology stories to content asset stories. For Huace, the risks are also clear — the attributable net profit to shareholders has declined for two consecutive years since 2025, AI funds have long cycles and slow return, and the financial expenses in the first three quarters increased by 671% year on year. The repair of cash flow depends on whether the payment collection from computing power operation can outpace interest and depreciation after the procurement peak passes. A more practical problem is: whether the purchased Agent tools can build a truly lower-cost production line in the studios in Tonglu. It is not difficult to purchase all the links, but running through all the links smoothly is the real test.

This article is from WeChat Official Account "Yule Zibenlun" (ID: yulezibenlun), written by the Yuzijiang team, authorized to publish by 36Kr.