Orange Sky Golden Harvest, the spinoff of East Asia’s dominant Golden Harvest film studio credited with founding Bruce Lee, has warned investors of mounting losses. It’s the company’s fourth profit warning in the past two years.
The company has moved away from Lee's legacy and today owns the largest cinema chain in Singapore, as well as others in Taiwan and Hong Kong.
The company’s management warns that losses could rise from HK$25 million ($3.2 million) to HK$100 million in the six months to June. It blames impairment losses and lower operating profit. This could be another sign that the box office is struggling to recover in more mature East Asian economies, where the company focuses on OSGH.
The market value of the company, whose shares were priced at HK$0.051 on Friday, has fallen to HK$151 million (US$19.3 million).
It was very different back in the day. In 1993, at the end of Hong Kong’s golden age of cinema and before the territory was handed over from the United Kingdom to China, Golden Harvest sold its entire film library to Star TV, and the following year raised $29 million in an initial public offering, the proceeds going to building cinema chains in Southeast Asia. (The library is now owned by Fortune Star.)
From Hong Kong, Golden Harvest expanded to Singapore (initially as a joint venture with Village Roadshow), had two chains in Malaysia and in Taiwan (where it is now a minority partner in the region's leading VieShow chain).
In 2004, Golden Harvest was sold to Chinese businessman Wu Qibo, who then merged it with talent agency Orange Sky to create Orange Sky Golden Harvest.
Wu’s decision to build a massive chain of cinemas in China seems well-timed, given the rapid expansion of China’s film industry. The company ran a leading, profitable cinema complex in Shenzhen. But profits were consistently poor, and the China Cinemas division was sold in 2017 for $575 million to Daddy.
OSGH has since fended off an offer to buy its 50% stake in Golden Village in Singapore, and in 2017 opted instead to buy out its Singapore partner for $129 million.
Wu also sought to bring the group back to China, this time by building live entertainment venues. The first venue opened in Suzhou in 2023, during the pandemic. OSGH’s 2023 annual report shows the China unit is the group’s worst-performing sector with a loss of HK$37 million, dwarfing its revenue of HK$12 million.
In March of this year, OSGH felt compelled to issue a statement denying an unsourced Bloomberg report that OSGH management was negotiating the sale of its cinema chains in Singapore, Hong Kong or Taiwan.
“The board wishes to clarify that while the board is continually evaluating various strategic opportunities that may benefit the group, there are no current plans under consideration in relation to the sale of the group’s business,” the company said at the time.
Despite revenue growth of 15% as the box office began to recover from its Covid-19-era lows, OSGH's 2023 losses deepened, reaching HK$90 million (US$11.5 million).
