We recently spoke of China’s catch up to US standard 3D television and now an official deal has been struck for their 3D cinema updates as well.
China 3D Digital Entertainment Limited today announced the signing of a Letter of Intent with ChongQing PengRun Real Estate Development Company Limited, to equip and operate a cinema complex in the prime area of Chongqing. The cinema is schedule to open before Christmas 2012, in the hope of contributing stable revenue and cash flow to the Group.
The subject cinema enjoys a geographic advantage as it is conveniently located at the pedestrian precinct in Chongqing city centre. It occupies an area of more than 3,200 square metres, with 8 theatres, including advanced digital 3D screens. There are 943 seats in total; as well as customer service centre, movie side product shop, and movie theme book shop. The operation lease is for 20 years, and the cinema will be developed in two phases. Phase One investment is estimated to exceed RMB 15 million, followed by Phase Two in 6 months after the cinema commences operation around Christmas 2012. The management expects the cash flow generated by Phase One will sufficiently cover the investment of the second phase, therefore there is no fund raising needs for further development.
According to the State Administration of Radio Film and Television, Chongqing’s box office has been growing at a rapid rate, recording total box office of RMB 429 million in 2011, a growth of 43% compared with 2010. Official statistics showed that Chongqing’s urban resident disposable income per capita was RMB 19,100, an increase of 11.1% year-on-year. The Group is well positioned to capture the potential growth in consumption by participating in cinema operation. As an operator, the Group will enjoy a certain share of box office receipts, and the sales of movie related products, food and beverage at the cinema.
On 20 March 2012, the Group has announced the acquisition of permanent global distribution right (excluding Mainland China but including Hong Kong, Macau and Taiwan) of a romantic comedy with one of the most sought after cast for Chinese language movies. The movie will feature the leading actor and actress, Kai Ko and Michelle Chen, of blockbuster “You Are the Apple of My Eye”, as well as superstar Yen Chi Tan and teenage icon AngelaBaby. Set to be another box office success, it is believed that the movie will benefit from the audience following created by “You Are the Apple of My Eye” in Asia.
Commenting on the prospects of cinema operation, Mr. Albert Lee, Executive Director of China 3D Digital Entertainment Limited said, “Cinema operation is a low-risk business. We believe it will become one of the Group’s future growth drivers. Set aside the equipment installation and renovation costs, monthly operating expenses are limited. According to the industry’s standard, assuming a ticket price of RMB 65-70 and an average occupancy of 35%, it only takes 2.5 year for a cinema of 1,000 number of seats to break even. We are most pleased to obtain the operation license for a cinema in Chongqing. Our target cinema is comparable to Chongqing UME International Film City (Jiangbei), the No.2 box office holder in 2010 in size and in location, giving us tremendous confidence in its prospects to generate satisfactory return to shareholders.”
About China 3D Digital
China 3D Digital Entertainment Limited and its subsidiaries are principally engaged in entertainment business specializing in (i) film and television programme production, distribution and licensing; (ii) cinemas operation and (iii) artiste management. The Group has earlier announced production of 4 movies, namely, 3D Iceman Cometh, 3D Bauhinia Heroine, Natural Born Lover and Dong Guan Wood in 2012-2013. The Group has solicited the agreement from Wanda Media Company Limited to co-invest a 70% share in the production and distribution of 3D Iceman Cometh. The charismatic kung fu superstar Yen Chi Tan will participate as lead actor and director of the movie. 3D Bauhinia Heroine is the territory’s first locally produced superhero movie. Starred by Chrissie Chow, the movie is inspired by the benevolence of an anonymous local heroine. Natural Born Lover is a work of HK romance master Patrick Kong, starring Julian Cheung and Annie Liu. The Dong Guan Wood is an erotic comedy of the Hong Kong version “American Pie”, originated from a bestselling novel “Yi Lu Xiang Xi” written by popular network author, Xiang Xi Cun Shang Chun Shu.
Source: Press Release
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