Vietnam cinema venture to boost PPB earnings

Golden Screen Cinemas Group chief executive Koh Mei Lee.

KUALA LUMPUR: PPB Group Bhd, which has set aside RM161mil over three years to expand its entertainment business, expects its cinema investment in Vietnam to double its profit contribution for the current year compared to 2015.

PPB, with its main business in grains and agribusiness, owns Golden Screen Cinemas Sdn Bhd, which had recently increased its shareholding in Vietnam-based Galaxy Studio Joint Stock Co from 25% to 40%.

“It would double what it contributed in 2015 because of the 15% increase in shareholding, as well with the new openings,” said GSC group chief executive Koh Mei Lee in a press briefing after PPB’s annual general meeting yesterday.

The film exhibition and distribution segment is the second biggest constituent (17%) and contributed RM66mil to PPB’s core business profits of RM399mil in financial year 2015.

Galaxy Studio’s expansion programme of opening four to five new cinemas annually in Vietnam should also increase contribution to group profits.

PPB had first expanded abroad into Vietnam in 2013 with a 25% acquisition in Galaxy Studio JSC.

This year, it will inject US$6.5mil (RM26.86mil) into a joint venture to open a multiscreen cinema in the biggest shopping complex in Cambodia, with the first nine-screen cinema opening in Phnom Penh in the third quarter this year.

“In hindsight, the cinema business has been going good for us since the early 2000s when Mid Valley with 18 screens opened. That period marked some sort of change when malls became the popular place to hang out due to the climate,” she had said in an earlier report.

Now, GSC has opened four additional screens in Mid Valley.

GSC (then known as Golden Communications (M) Sdn Bhd) was first established after it took over the cinema operations of Shaw Brothers Malaysia in 1987.

The cinema operations further expanded when it acquired the then Borneo Filem Organization (M) Sdn Bhd which owned Cathay Organisation cinemas.

“We bought into the business while it was already making a profit and we grew the brand name. Like any other business it goes through its ups and downs and during the era of the VHS and TV, the cinema business was not doing so well then,” Koh said.

In the pipeline, GSC has plans to open eight new cinemas throughout Malaysia in the next two years.

Currently, GSC Group has 302 screens at 33 locations in Malaysia.

“This year and up to 2017, we will be expanding to 100 more screens,” Koh said, adding that the Klang Valley still had the highest growth in terms of the number of new malls. When there is a mall in a strategic location, GSC will like to be in that mall,” she said.

“The disposable income of people in the Klang Valley is still the highest and the admissions that GSC register there are still the highest.

“So, naturally, the expansion in the Klang Valley will be the highest,” she said.

PPB, which is spending RM383mil on capital expenditure over the next two to three years, is focusing on expanding the Golden Screen Cinemas (GSC) chain, where it has set aside RM161mil for the segment.

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