China’s Orange Sky Golden Harvest Warns Of Profit Slump

HONG KONG – Pan-Asian cinema chain Orange Sky Golden Harvest has warned that its profits will drop by 75%.

The Hong Kong-based company told the stock exchange that half year profits for the six months to June would slide, compared with the HK$50.2 million (US$6.48 million) gain it made in the same period last year. The company pointed to two problem areas.

It said that profits generated from film distribution in Hong Kong and China had dropped and that it had earned less from distributing TV programs. These reduced profits by HK$28 million (US$3.61 million).

The company, which reports in Hong Kong dollars, but these days sees an increasing proportion of its business in mainland China, said that the recent weakening of the Chinese Renminbi had cost it HK$5.6 million (US$720,000). In the comparable semester it had gained HK$12.6 million (US$1.63 million) from the Renminbi’s appreciation.

Orange Sky Golden Harvest is scaling up significantly as a mainland Chinese exhibition circuit and at the end of December operated 49 multiplexes in China, with another 28 cinemas in Hong Kong, Taiwan and Singapore.

In Friday morning trading, Orange Sky shares dropped by 8% to HK$0.520. Interim results will be announced later in August.

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