HONG KONG--(BUSINESS WIRE)--Highlights
- Benefiting from the development of China’s booming movie industry, revenue increased by 30.6% to approximately HK$1,833 million
- Gross profit increased by 30.2%
- Profit for the period attributable to owners of the Company increased by 43.9% to approximately HK$275 million
- Operated approximately 250 movie theatres as of 30 June 2016
- Targets to operate a total of over 300 movie theatres by the end of 2016
- Income from non-theatre operation surged 113.1%
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Financial Highlights |
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| For the period ended 30 Jun | |||||||||
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2016 HK$’000 |
2015 |
Change | |||||||
| Revenue | 1,832,887 | 1,403,428 | +30.6% | ||||||
| Gross Profit | 611,541 | 469,584 | +30.2% | ||||||
| Gross Profit Margin | 33.4% | 33.5% | -0.1p.p. | ||||||
| Profit for the period | 276,259 | 188,647 | +46.4% | ||||||
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Profit for the period attributable to owners of the Company |
275,019 | 191,054 | +43.9% | ||||||
| Earnings per share (basic)(HK cents) | 2.04 | 1.82 | +12.1% | ||||||
SMI Holdings Group Limited (HKSE stock code: 198, the “Company” or “SMI”) and its subsidiaries (collectively referred to as the “Group”) announced its results and financial position for the six months ended 30 June 2016. During the reporting period, benefiting from the development of China’s booming movie industry, the Group’s operating revenue reached HK$1,833 million, representing an increase of 30.6% as compared with the corresponding period in 2015 (corresponding period in 2015: HK$1,403 million). The gross profit was approximately HK$612 million, representing an increase of 30.2% as compared with the corresponding period in 2015, and its gross profit margin reached 33.4% (corresponding period in 2015: 33.5%).
Business Review
Movie Theatre Business
Together with the flourishing industry, the Group reported a striking accomplishment with its movie theatre business in the first half of 2016. For the first half of 2016, the Group’s movie theatre business segment generated revenue of approximately HK$1,556 million, representing an increase of 26.3% as compared with the corresponding period in 2015. The profit of this segment increased by 81.4% to approximately HK$381 million (corresponding period in 2015: HK$210 million).
As of 30 June 2016, the Group had approximately 250 movie theatres with approximately 1,700 screens in major cities across China, representing a significant increase as compared with 130 movie theatres and over 1,000 screens as at 30 June 2015. The Group will carry out its expansion by building its own theatres and through acquisitions. It is anticipated that, by the end of 2016, the Group will have a total of over 300 theatres, with a total number of viewing trips exceeding 100 million, and coverage across China’s 30 provinces and autonomous regions. The Group will continue to maintain its competitiveness in the first tier and second tier cities, and at the same time extend its development in the third tier and fourth tier cities, with an objective to ensure the overall quality of the newly constructed theatres, and bring about upgrades to acquired theatres in terms of infrastructure and services through the support of the brand name and cash flows.
Non-Theatre Operation
With the extension of the Group’s theatre network across the nation, a lot of traffic is attracted which is beneficial to the growth of the non-theatre operation. For the six months ended 30 June 2016, the revenue of the Group’s non-theatre operation reached approximately HK$277 million, representing an increase of 113.1% as compared with the corresponding period in 2015 and accounting for 15.1% of total revenue, which was above the average level of the peers in the industry. The Group’s objective is to set up over 300 theatres nation-wide by the end of 2016. It is expected that this can help to drive the development of value-added business in addition to box office revenue, and establish a brand new operating path which is different and with competitive advantage.
Advertising and Promotion Business
Other than the traditional food and beverage business, the Group’s advertising and promotion business is also benefited from the economies of scale as a result of the nation-wide theatre network. As one of the leading brands in the country’s theatres, the customers have absolute trust in the “SMI” brand name. Currently, the Group offers more than 20 types of advertising and promotion packages, which include advertisements before movies, position advertisements (posters, lobby displays, seat-back advertisements, seat-back LED monitors, etc.), new media advertising, and advertising through commercial and marketing events. We have also installed high-tech commercial facilities in some of the theatres.
Membership Integrated Scheme (“Membership Scheme”)
The Group launched a new membership scheme at the end of 2012 to improve the loyalty of existing customers as well as to attract new customers. As of 30 June 2016, the number of members of the Group reached 13 million. The Group has launched membership cards which include the SMI Living Card (星美生活卡), Movie Card (隨影卡), Senior Card (老年卡), etc. to enhance member loyalty. Members can enjoy viewing deals of newly-released movies and watch movies of which the copyrights are owned by SMI for free all year round. Those members with Movie Cards are also entitled to participate in the casting events for the roles in customized TV programs which the Group plans to shoot annually.
”SMI Living”
In 2012, the Group founded SMI Living, the first O2O e-shop based on movie theatre channels in China. Leveraged on the resources of the theatres, value-added services are developed, forming an ecosystem within two kilometres. In 2016, the Group announced the strategy of full service chain, which is a brand new business operating system and industry model integrating resources advantages including branded products, national theatre network, online platform, logistic distribution and end-users, etc. It is a business model built on top of movie watching, with communication services as carrier, and products, contents and day-to-day services as its core, which has become a brand new online platform.
Based on the full service chain strategic guidelines, the Group established its logistic distribution company in 2015, set up a national distribution system, and made way for an O2O full service chain operating mode within two kilometres from the theatres. Currently, the first batch of 2,000 logistic distribution vehicles have been deployed in the living areas surrounding the theatres in up to 100 cities, delivering SMI products to the doors of the end-users with no charge. To cope with the strategy of SMI full service chain, SMI customer service center has also been put into operation. Under the full channels service mode, phone calls, short messages, Wechat, online network and APPs are used to provide uninterrupted services to customers all year round.
Prospects
Looking ahead into the second half of the year, China’s box office revenue will be getting closer to that of the U.S. market, currently the number one market globally. The Group will seize the opportunity and grow with the industry. The plan is to set up more than 300 theatres across the nation by the end of 2016, continue to uplift the competitiveness of Cineplex malls in the first and second tier cities, and devise plans to develop business in the third and fourth tier cities. The O2O e-shop based on movie theatre channels that we have been working on have basically completed its deployment and positioning today. With the development of a national distribution system, the Group will cooperate with more brands, supply the customers with a range of diverse and high quality products and establish an O2O full service chain business model within a distance of 2 kilometers from the theatres. We believe that the revenue from non-theatre operation will become one of the most important sources of revenue of the Group.
About SMI Holdings Group Limited (0198.HK)
SMI Holdings Group Limited (0198.HK) is a company listed on the Main Board of the Stock Exchange of Hong Kong. The Company is principally engaged in the business of movie theatre operating and new complementary business, such as SMI Living and advertising & promotion business. Under its strong management team and powerful business network, the number of SMI’s movie theatre has grown from 3 in 2009 to approximately 250 at 30 June 2016.