Asia's leading integrated film and entertainment company:
The strong interest in cinema in Singapore, the development of the gaming industry and the increase in the number of visitors have promoted the development of the local film market. With its strong influence in the local market, the company's cinema-Jiahua cinema chain in Singapore grossed S $80 million in 2011, with a market share of 43%. The strong viewing habits in Taiwan and the great potential of Mandarin films have brought stable and sustainable development space for the group's local business. In December 2011, Weixiu opened two cinemas in Taiwan, accounting for nearly 40% of the box office in Taiwan. The company's cinema in Hong Kong-Golden Harvest Cinema chain has maintained a leading position in the market all the year round, and the design of its cinema with both beauty and function has been praised by industry experts.
The number of screens per capita in China is still lower than that in developed countries, and national industrial policy support will further promote the development of the industry:
Compared with the strong demand in the domestic film market, the number of film production, cinemas and screens is still on the low side. Compared with the mature film markets such as the United States, the absolute number of screens and per capita screens in China are still relatively small, and the market space is huge. In 2009, the number of screens in the United States reached 39171, which is 8.29 times that in China. The screen density in China is only 7.3, far behind the 129.8 screens in the United States in 2009.
According to the development goal of "doubling the value of the cultural industry in the next five years compared with 2010" put forward by the Ministry of Culture, the added value of the cultural industry will increase from 2.5% of the GDP in the Eleventh five-year Plan period to more than 5% during the 12th five-year Plan period. With the deepening of the reform of the cultural system, the continuous upgrading of consumption and the rapid progress of technology, China's cultural industry will gradually enter the digital and consumer era, and the film industry, as the vanguard of the rapid development of the cultural industry, will develop rapidly. On February 18, 2012, China and the United States reached an agreement on a memorandum of understanding to resolve issues related to WTO films. The Chinese government has agreed to increase the quota for 14-part films in addition to the annual quota of 20 overseas films, but only for 3D or IMAX films, and its box office share will be increased to 25 per cent from the previous 13 per cent. The signing of the new policy and the increase in the number of ledger films will promote the further growth of the domestic box office.
Orange Sky Golden Harvest has greatly increased the number of cinemas in China:
By the end of 2011, the company had 53 cinemas, including 27 in Chinese mainland, 6 in Hong Kong, 10 in Taiwan and 10 in Singapore. Benefiting from the rapid growth of box office revenue in the Chinese mainland market, the company will increase the number of cinemas in Chinese mainland region. We expect the total number of cinemas to be about 88,113,129and 149in 2012-1025. The pace of expansion in the future is very great.
Target price of HK $0.629, maintain buy rating:
The company's share price now corresponds to a PE of 9.5 times in 2012, compared with a significant discount of 15.15 times for its peers. We give it the same pe as its peers and give it a target price of HK $0.629, corresponding to a target price of 15.15 times pe in 2012, which is 63.3% higher than the current price and gives it a buy rating.