Orange Sky Golden Harvest, the company that descended from East Asia’s once-dominant film studio Golden Harvest and is credited with establishing Bruce Lee, has put out a warning to investors of deepening losses. It is the fourth profit warning by the company in the past two years.
The company has moved away from Lee’s legacy and these days owns the largest cinema chain in Singapore, as well as others in Taiwan and Hong Kong.
For the six months to June, management warns that losses may increase from HK$25 million ($3.2 million) to as much as HK$100 million. It blames impairment losses and a reduction in operating profits. That may be a further sign that cinema box office is struggling to recover in East Asia’s more mature economies, where OSGH is focused.
With its shares at HK$0.051 apiece on Friday, the company’s market capitalization is down to HK$151 million ($19.3 million).
It was once so different. In 1993, at the end of the Hong Kong film industry’s golden age and before the territory’s handover from the U.K. to China, Golden Harvest sold its entire film library to STAR-TV, and the following year raised $29 million through an IPO with the proceeds going towards building cinema chains in Southeast Asian. (The library is now owned by Fortune Star.)
From Hong Kong, Golden Harvest expanded into Singapore (initially as a joint venture with Village Roadshow), had two chains in Malaysia and into Taiwan (where it is now a minority partner in the territory’s leading chain VieShow).
In 2004, Golden Harvest was sold to mainland Chinese businessman Wu Kebo, who later merged it with his Orange Sky talent agency to create Orange Sky Golden Harvest.
Wu’s decision to build a huge chain of cinemas in China appeared well-timed, given the rapid expansion of the China film industry. And the company operated a pioneering and profitable multiplex in Shenzhen. But profits have been consistently scarce and the China cinema circuit was sold in 2017 for $575 million to Dadi.
Since then, OSGH fended off a bid for its 50% stake in Singapore’s Golden Village and in 2017 chose instead to buy out its Singapore partner for $129 million.
Wu also sought to move the group back into China, this time constructing venues for live entertainment. The first, in Suzhou, opened in 2023, during the pandemic. OSGH’s 2023 annual report shows the China unit as the group’s worst performing segment with losses of HK$37 million dwarfing their HK$12 million of revenues.
In March this year, OSGH felt it necessary to put out a statement denying an anonymously-sourced Bloomberg report that OSGH management was negotiating a sale of its Singapore, Hong Kong or Taiwan cinema chains.
“The board wishes to clarify that whilst the Board continuously evaluates various strategic opportunities that might benefit the Group, there are no current plans under consideration regarding the sale of businesses of the group,” it said at the time.
Despite a 15% growth in revenues as box office began to recover from the lows of the COVID-era, OSGH’s losses for 2023 deepened, amounting to HK$90 million ($11.5 million).