Huayi-Tencent entertainment venture posts wider interim loss
Hong Kong-traded company targets increased collaboration with top Hollywood directors and major studios
Huayi Tencent Entertainment Company, the Hong Kong-based venture controlled by filmmaker Huayi Brothers Media Corp and internet giant Tencent Holdings, recorded a wider year-on-year loss in the first half amid a busy slate of projects on the mainland and overseas.
Wang Zhongjun, the chairman at Huayi Tencent Entertainment, said in a regulatory filing on Monday that “a steadily recovering world economy and an improving overall economic atmosphere in China...[is] creating a suitable marketplace for the group’s entertainment and media operations, and health care services”.
The company reported a net loss of HK$73.4 million in the six months to June, in line with its profit warning two weeks ago, compared with HK$58. 6 million in the same period last year.
It primarily attributed the loss to the provision for impairment of certain film rights, prepayments and investment in an associate.
Total revenue rose 5 per cent to HK$67.3 million, up from HK$64.4 million a year earlier, on the back of strong sales from entertainment and media operations, as well as online health care services.
Shares of the company were unchanged at 31 Hong Kong cents on Monday at the close of trading.
Wang said Huayi Tencent Entertainment aims to collaborate with Hollywood’s top directors and major studios, while investing in the development of film and television projects, as “quality imported blockbusters...[were] the main contributors to China’s box office receipts” in the first half.
Mainland China’s gross box office receipts in the first half of this year grew 11 per cent year on year to 27.3 billion yuan (US$4.1 billion), of which 16.7 billion yuan were contributed by imported films, according to data from the State Administration of Press, Publication, Radio, Film and Television.
It also estimated that 41 films recorded box office receipts of over 100 million yuan, about 60 per cent of which were imported films.
Deloitte has forecast the mainland’s culture and entertainment industry will be worth 1 trillion yuan by 2020, with the Chinese film industry set to become a 200 billion yuan sector by then.
In April, Huayi Tencent Entertainment invested 1 billion won (US$892,960) in the Huayi-Warner Contents Fund, the first dedicated investment fund in South Korea by Hollywood studio Warner Brothers.
By participating as a limited partner in the fund, the Hong Kong-listed company expects to “get preferential access to investments in premier film projects led by Warner Bros” in South Korea, Wang said at the time.
Last year, Huayi Tencent Entertainment invested in Korean television series producer HB Entertainment, in which it currently owns a 22 per cent stake.
“The group believes that the demand of the Korean market and other Asian markets for quality Korean films and TV programmes remains strong,” Wang said.