Will focus on core movie theatre business, and actively expand into non-box office businesses

Highlight

Revenue increased by 8% to approximately HK$2,448millionGross profit increased by 14% to approximately HK$883 millionOperated approximately 365 movie theatres with a total of approximately 2,290 screens as at 30 June 2017, increased by 47 movie theatres and 280 screens respectivelyPushing forward the strategy of "one cinema in every county", that is, to operate at least one movie theatre in every county in China in order to capture the opportunity and consolidate its leading position in the industry.

HONG KONG, CHINA -- 31 August 2018 - SMI Holdings GroupLimited (HKSE stock code: 0198.HK, the "Company" or "SMI") and its subsidiaries (collectively referred to as the "Group") announced its interim results and financial position for the six months ended 30 June 2018 (the "Reporting Period"). 

During the Reporting Period, the Group's revenue recorded HK$2,448 million, representing an increase of 8% period-on-period (corresponding period in 2017: HK$2,259 million). Profit for the period attributable to owners of the Company reached approximately HK$301 million.

Basic earnings per share were HK$11.06 cents (corresponding period in 2017: HK$11.22 cents).

Business Review

Benefited from China's burgeoning movie market, the Group's profit for the 6 months ended 30 June 2018 reached approximately HK$301 million. During the Reporting Period, the Group's operating revenue was approximately HK$2,448million, representing an increase of 8% as compared with approximately HK$2,259 million for the same period in 2017. 

Gross profit was approximately HK$883 million (same period in 2017: approximately HK$774 million), representing a gross margin of 36% (same period in 2017: 34.3%). Earnings before interests, taxation, depreciation and amortization (EBITDA) was approximately HK$677 million (same period in 2017: HK$648 million), represent an increase of 5% compared to the same period of last year.

 

Thanks to the thriving industry, the Group's movie theatre business has achieved stable progress. For the 6 months ended 30 June 2018, the Group's movie theatre business generated a revenue of approximately HK$1,524 million.

The Group will continue to leverage on the advantage of the industry. While maintaining our leading position in Beijing, Shanghai, Guangzhou, Shenzhen and other first-tier cities, SMI has vigorously expanded to the second and third tier cities, which possess huge potentials for box office receipts, by speeding up its nationwide acquisitions, as well as pushing forward the strategy of "one cinema in every county", that is, to operate at least one movie theatre in every county in China in order to capture the opportunity and consolidate its leading position in the industry.

SMI Living

SMI Holdings has been well established in the movie market for a long time. Relying on the advantage of its main business and actively exploring its channels, the proportion of its comprehensive income from non-box office business has far exceeded the average level of its peers in the industry, thus creating a brand new business path with sufficient differentiation and competitiveness, which has opened up a new era in the operation of cinema malls.

With nearly 43.75 million members it has accumulated, SMI took the lead in developing a consumption model of "online and offline synergistic marketing", and multi-dimensionally explored the potentials in members' consumption. 

"SMI Living", the Internet platform of SMI, was launched in 2015. Through its big data analysis system and membership privilege management system, the platform has led to a thorough online and offline integration of industry chains of SMI, and has become the online portal and entry point for various business lines of SMI. "Xingmeihui",

an offline shop established in 2012, has already populated in all the SMI cinema malls nationwide. With SMI theatres as the focal point, customers in communities located within two kilometers are offered free delivery of diversified products, thus providing the customers with intimate encounter with products and brand names. 

"SMI Living" targets at the young and fashionable crowd. With the special characters of movies, culture and entertainment, brand promotion is carried out through theatres, WeChat, Weibo, forums, media, communications and physical stores, while at the same time online marketing service is provided to boost the operation of Xingmeihui and bring the consumption experience to the customers. 

In the first half of the year, SMI has been authorized by Apple China to set up apple authorized stores in SMI's cinema lobbies which allows all members to purchase the latest Apple products while enjoying movies and further helps the construction of SMI's ecological system of "Internet+cinema audience+daily life services+two-kilometer ecological circle" with an aim to substantially increasing its overall profitability.

Prospects

Under the uncertainties brought by the US interest rate hike and China-US trade war, market sentiment and consumer spending will be more or less affected and the overall operating environment will probably face challenges to a certain extent. 

The Group will continue to review its business strategies and implement prudent financial management to respond to possible new challenges.

Looking into the future, it is expected that movie watching will continue to be a popular entertainment in China. 

In the second half of 2018, the launching of domestic blockbusters will continue. Xu Zheng's "Dying to Survive", Huang Bo's "The Island (2018)", Shen Teng's "Hello Mr. Billionaire" as well as various types of movies including mega productions with special effects such as "The Meg", "Detective Dee: The Four Heavenly Kings" and the suspense movie "Candle in the Tomb: The Valley of Worms in Yunnan" will be released one after another, feeding the audience's appetite of the Chinese movie market with a feast for their eyes in 2018 and in the coming year. 

The Group's movie theatre business will continue to benefit from the development momentum of the industry.

Currently, SMI Holdings Group Limited continues its commitment in implementing the strategy of comprehensive service chain. 

In addition to the traditional of food and beverages, red wine, advertising and promotion businesses, SMI has launched the strategy of "Two Kilometers Perimeter from Theatres Ecosystem", and established the SMI Logistics Delivery Company to promote online and offline consumptions. In the future, the Group will focus on our core business, the movie theatre business, while at the same time actively expanding into non-box office businesses.

About SMI Holdings Group Limited

SMI Holdings Group Limited (HKSE stock code: 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 365 at 30 June 2018. (mor/roc).