China Multiplex Expansion Weighs on Orange Sky Profitability

Profits at pan-Asian cinema exhibition company Orange Sky Golden Harvest slumped to close to zero, while revenue climbed by 31% to HK$675 million (US$87.1 million).

Net profit in the six months to end of June was HK$3 million (US$390,000), compared with HK$12 million (US$1.55 million) in the same period last year.

Revenues and profits were strong at both its Hong Kong and Taiwan circuits, and flat in Singapore. Its mainland China operations – where the company is trying to expand through organic growth and opportunistic acquisitions – moved further into loss. China revenues climbed from HK$412 million (US$53.2 million) to HK$544 million (US$70.2 million). Losses increased from HK$3.80 million (US$490,000) to HK$24.1 million (US$3.11 million).

At the end of June OSGH operated 63 cinemas in China, with 447 screens, up from 52 with 372 screens. Average ticket prices in China were seen to drop from RMB32 to RMB31 (US$4.84).

Marketing costs in China increased as the exhibition environment became more competitive. “Net [China] contribution to the group is still under pressure due to the incubation period of newly-opened cinemas and the effects of additional depreciation and finance costs,” the company said.

Next month the company will unfurl its once iconic Golden Harvest production banner for the first time in several years with the release of a remake of “Fly Me To Venus.”

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