Dadi Cinema Group’s asset-backed securities come into the market, financing RMB 1.13 billion to expand the cinema terminals.
On Feb. 1, 2016, Dadi Cinema Group’s parent company, Nan Hai Corporation Limited (The Stock Exchange of Hong Kong, Stock Code: 00680) announced that its two indirect wholly-owned subsidiaries, Dadi Cinema Development Limited and Guangdong Dadi Cinema Construction Limited (hereinafter uniformly referred to as Dadi Cinema Group) took a part of future box office revenue as the pledge to issue the asset-backed securities, listed in Shenzhen Stock Exchange (SZSE) on Feb. 1, financing RMB 1.13 billion to develop its cinema–related business.
As of November 30, 2015, Dadi Digital Cinema had over 270 directly operated cinemas across China in addition to more than 300 in the pipeline. For the first 11 months of 2015, Dadi Digital Cinema served more than 64 million guests with box-office revenue topping RMB 2 billion, up approximately 47% y/y, ranking second among cinema chains in China, next only to Wanda Cinema Line Corporation. Since its establishment, Dadi Digital Cinema has achieved a rapid business growth, recording a compound annual growth rate of approximately 40% in box-office receipts over the past three years (from 2011 to 2014). Such financing is to accelerate the expansion of its terminals.
At present, the breakthrough growth in China cinema industry could be seen from the box office data of the year 2015. In 2015, domestic total box office reached RMB 44.069 billion, with the year-on-year growth of 48.7%; the cinemas increased by 8,035 screens, with the 31,627 screens in total; the number of film viewers reached 1.26 billion, with the year-on-year growth of 51.08%. Yu Xin (Dadi Cinema Group’s General Manager) is optimistic for the prospect of China cinema industry. In her opinion, the total box office of China cinema has ranked second only to the USA, but China cinema market is still at the initial stage. The average number of film viewers in China is only 1.6 times, much less than that in some developed countries. The number of screens in China is expected to be doubled.
Moreover, Yu Xin is also confident in the capital source for rapid cinema expansion. She indicated that, with the national support in cultural industry and the rapid development of China cinema industry, the capital is centralized increasingly. Dadi Cinema Group’s parent company, Nan Hai Corporation Limited, as a prospective diversified business investment company, has been attaching importance to the development of cinema business, and providing diversified resource support. In addition, Dadi Cinema Group, with well-reputed informationized and standardized management ability, and relatively-strong financing capacity, will accelerate its layout expansion through self-building, merger and acquisition, etc., and attempt various innovative financing modes to perfect its capital structure constantly. Such asset-securitization business is its successful exploration and attempt in the diversified financing.