Golden Harvest shares soar 39pc after deal to sell its mainland cinemas
The Hong Kong studio that made Bruce Lee and Jackie Chan famous divests its mainland China cinemas in HK$3.3bn deal
The iconic Hong Kong film studio that brought Bruce Lee and Jackie Chan to fame saw its shares shoot up as much as 39 per cent on Friday after selling its mainland cinema arm for HK$3.3 billion, in a move underscoring a potential return to film production for the 47-year-old company.
The buyer, Nan Hai Corp, an entertainment-to-real estate conglomerate that runs China’s second largest cinema chain Dadi Cinema, also got a boost from the deal with its shares leaping as much as 8 per cent to HK$0.27 in Hong Kong trading.
After the transaction it will now be left with six movie theatres in Hong Kong, 14 in Taiwan and 11 in Singapore.
“Running a cinema in China is a tough job, especially when you are not big enough and the overall movie market suffers a setback,” said Ray Zhao, a media analyst with Guotai Junan Securities.
Golden Harvest said it planned to ramp up its film production business through either co-financing or making an average of two or three “mid-to-large scale” titles every year, possibly based on blockbusters from the glory days of the 1970s.
But the last two decades has witnessed a struggling Golden Harvest studio, a similar fate that befell its local rival Shaw Brothers earlier, amid the double whammy of the Asian Financial Crisis and fierce competition from mainland counterparts led by Huayi Brothers Media.
In 2005, Golden Harvest made a foray into the theatrical exhibition market across the border with its first flagship cinema launched in Shenzhen. While growing in scale, its mainland cinema unit started bleeding red over the last three years, dragging the company into a loss of HK$180 million in 2015, according to the company’s filing to the Hong Kong stock exchange.
Looking forward, it is likely that many of its classic box office hits are poised to come back to life.
“The company’s film library has 135 Chinese and English films and we have identified around 20 films which have the market potential for film remakes,” it said in a filing to the Hong Kong stock exchange.
Golden Harvest shares pared back some of their gains to close at HK$0.78, up 13 per cent, while Nan Hai settled Friday trading up 4.08 per cent at HK$0.255.