Open up the operation of China Resources Shopping Center, focus on cinemas, and plan to open 50 theaters in the next 3-5 years

China Resources Land is about to set up China Resources Cinema, which is fully responsible for the self-owned cinema brand "Vientiane Cinema". It plans to open 50 cinemas in the next 3-5 years. The first Vientiane Cinema in China will be launched in Shenzhen in February and March next year.

original title: Vientiane Cinema competes for Wanda Cinema? Exclusive revelation of China Resources Cinema Strategy

China Resources Land is about to set up China Resources Cinema, which is fully responsible for the self-operated cinema brand Vientiane Cinema. 50 cinemas are planned to open in the next 3-5 years. China's first Vientiane Cinema will land in Shenzhen in February and March next year.

it is reported that China Resources Pictures is a wholly owned subsidiary of China Resources Land. After five months of profit testing and feasibility research, China Resources Pictures formally formed a team in March this year, and in August, China Resources Pictures sent out the first batch of recruitment messages.

in mid-2016, the regional structure of China Resources Land was adjusted from nine regions to six regions. At present, in terms of organizational structure, China Resources Pictures is under the vertical control of China Resources Commercial Real Estate Division, which is in parallel with six regions. It is understood that the goal of China Resources Pictures is to complete the listing in the next 3-5 years. According to the current valuation of Wanda Film, the PE is expected to be 30-40 times.

after Wanda and Poly, China Resources Land is another real estate developer who has cut into the field of film and television culture and built its own cinema. In the domestic commercial real estate, especially the shopping center brand, the strength of the central enterprise China Resources should not be underestimated.

China Resources Land's commercial real estate mainly includes three product lines: urban complex Vientiane City, regional commercial center Vientiane City / colorful City and experiential Fashion lifestyle Pavilion 1234Space. Tang Yong, vice chairman of China Resources Land, revealed on the interim results conference call on August 23 that by 2019, China Resources will have 44 shopping malls with an operating area of 5.5 million square meters and operating income of more than HK $10 billion. China Resources is at the top of the list of China's top 100 commercial real estate companies in 2017 released by China Commercial Real Estate TOP100 Research Group, ahead of Wanda and Dayuecheng Real Estate.

in self-owned cinemas, China Resources Land has just begun to lay out. As of June 30, Wanda Film had opened 455 cinemas and had a total of 4000 screens, occupying the first place in the domestic market for eight consecutive years, according to Wanda Film's financial results for the second quarter of 2017.

"Wanda Cinema is one of the standard cinemas of Vientiane Cinema, but the positioning and thinking of China Resources Pictures is completely different from that of Wanda." Guo Cheng (a pseudonym), an insider of China Resources, said that Wanda Film locates the whole industry chain and light assets, while China Resources only focuses on cinemas and is self-built and self-run, with the core of opening up the operation of shopping malls. With January 1, 2018 as the node, all cinemas that have signed up but have not entered the China Resources Shopping Center will be terminated and are currently under friendly negotiation. China Resources incorporated the cinemas of all its commercial properties and set profit indicators, and finally determined the two positions of Vientiane Studios: high quality and high profitability.

Vientiane Cinema is named after the Vientiane Shopping Center of China Resources Land. Previously, among the cinema brands built by real estate developers, nothing is more well-known than Wanda Cinema.

but compared with Wanda's entire industry chain, China Resources only focuses on cinemas, does not invest in movies, and does not involve content production. It is understood that the domestic film industry chain mainly includes four links: film production, film distribution, cinema line and cinema. China Resources has only cut into downstream cinemas and has not introduced the concept of "big entertainment" yet.

in terms of order of magnitude, the Vientiane Cinema to be built by China Resources has not yet reached the scale of hundreds of Wanda Studios. People close to China Resources Land say Wanda sees film as a new industry that needs to keep grabbing share and foreign acquisitions to expand its plate.

the same is true of Poly, another central enterprise. According to Liu Debin, general manager of Poly Pictures in April, Poly will distribute, produce, integrate cinema terminal technology companies and form a closed loop after reaching the size of 200 cinemas. Poly Pictures is owned by Poly Culture, which is a listed company controlled by Poly Group.

"after selling some of its commercial assets, Wanda will become a light asset management brand, but China Resources is not doing this to enter a new industry, but to build a high-quality shopping mall." Guo Cheng pointed out that only investing in cinemas and hardware, China Resources has chosen an asset-heavy model that suits commercial real estate, and the number of cinemas will keep pace with shopping malls.

it is understood that China Resources began to explore the feasibility of this business in October last year. At that time, the consultant gave the suggestion of "doing it all in the industry chain", but China Resources had not dabbled in this field before. The decision-making team believed that "the characteristic of Chinese films is that it is' easy to call, but difficult to win', and eight out of 10 films may be losing money." The final conclusion is that the profits of film investment and production are not stable enough, and China Resources only works in cinemas.

China Resources Land's good commercial real estate qualification is considered to guarantee a better rate of return: first, Vientiane Studios opens in China Resources's own shopping malls, has sufficient resources and does not have to find external sites to find projects, so it is easy to form brand and scale effects; second, more than 80% of China Resources's commercial properties are located in the city's core business district, with advantages in location and passenger flow. Therefore, even if the domestic cinema market has become crowded, Vientiane Cinema can still cope with the competition well.

according to the China Resources Land Financial report, by the end of June this year, China Resources had opened 13 Vientiane cities, 8 colorful cities / Vientiane, and 2 other shopping malls, with an average occupancy rate rising to 94.2% from 92.7% in the same period last year.

in the first half of the year, retail sales of commercial complexes represented by Vientiane City reached 16.31 billion yuan, an increase of 33% over the same period last year. As a result, the rental income of China Resources Land property reached 4.01 billion Hong Kong dollars in the first half, an increase of 13.2% over the same period last year, and the overall gross profit margin was as high as 62.3%. As a benchmark project of China Resources commercial real estate, Shenzhen Vientiane City is one of the shopping malls with the highest return on investment in the country.

in August this year, China Resources Pictures officially began to recruit. All-weather technology has learned that, in addition to the management from China Resources Land, China Resources Pictures plans to recruit a core business leader, who is already interested in it. "Cinema is a highly standardized industry, and at present the team will focus on operation." Guo Cheng said.

the expansion plan of Vientiane Cinema is synchronized with the opening of China Resources Shopping Center. According to a preliminary progress plan obtained by all-weather technology, China Resources's first Vientiane Cinema will be launched in March 2018 in the Vientiane project in Buji, Shenzhen, followed by Xiaoshan and Nantong in Hangzhou in April and May, and in Xiamen, Shijiazhuang and Taiyuan in September. 12 are expected to open next year and 8-10 a year starting in 2019.

behind this speed, within 30 months from the second half of 2017, 21 shopping malls under China Resources Land will usher in a centralized opening period. the two most recent debut were Vientiane City in Shanghai on September 23 and Vientiane in Shenzhen on September 27.

it is reported that the cinemas of Tesco and China Resources Wanjia Commercial bodies, which are responsible for the China Resources Real Estate Business Service Division, will also be run by China Resources Pictures. Coupled with a small number of municipal projects, it is estimated that 50 Vientiane cinemas will be landed nationwide in the next 3 to 5 years.

generally speaking, apart from the supermarket, the cinema is the largest main store in the shopping center, but the rental return is often lower than expected. It is understood that after the cinema is self-operated, Vientiane Cinema will provide two stable operating income for China Resources Land: one is rent, the other is operating income, and China Resources is equivalent to "being both Party An and Party B."

Fang Bin, general manager of Dadi Cinema Line, said in an interview that the cinema model of asset-linked cinema was the main reason for the success of Wanda Cinema Line in the past. Wanda Cinema's income is very diversified, including sales, derivatives and so on, which far exceeds the revenue source of the cinema line.

Zhang Tong, an analyst at the China Commercial Real Estate Research Center at RET Rui Yide, believes that shopping malls provide passenger traffic for cinemas, while more than 50% of people who go to the cinema will have food and beverage spending and more than 40% will have other retail spending. Therefore, shopping malls and cinemas complement each other.

"self-owned cinemas are also conducive to opening up the operation of shopping malls horizontally and vertically," said Guo Cheng. horizontally, it refers to the cooperation and linkage between tenants; vertically, China Resources launched the Internet mobile life service platform "China Resources" at the end of 2016, and all its commercial products will be packaged in the future.

based on the high-end positioning and mature operation of most China Resources businesses, Vientiane Studios has put forward the feature of "high quality". According to Yien's data, in the first quarter of this year, domestic cinema investors are also increasing their investment in high-end cinemas as never before. Boehner Pictures said earlier this year that the number of IMAX studios owned by Boehner would increase to 35 by 2022.

data from Yien show that in the first quarter, the number of 3D screens accounted for 70% of the newly opened cinemas in China. China has overtaken the United States to become the world's largest market for IMAX. Technologies such as Chinese giant screen, Dolby Cinema and RealD (a 3D projection technology) are also seen as bargaining chips for competition among cinemas.

with the trend of consumption upgrading, cinemas have become standard in shopping centers. According to the Film Bureau of the State Administration of Press, publication, Radio, Film and Television, China added 1612 cinemas and 9552 new screens in 2016, bringing the total number of screens to 41179, maintaining an average rate of 26 screens per day for the whole year. As of May this year, China had nearly 45000 screens, nearly 5000 more than the United States, ranking first in the world. China Resources judged that the cinema market is not yet saturated.

but Wang Zheng, chief media analyst at Everbright Securities Research Institute, believes that there are still two core changes in domestic cinema investment:

first, with the rapid growth in the number of screens and cinemas, cinema investment and overall operation are more competitive and more difficult than before. "Last year, there were nearly 10, 000 screens, and more than 3000 in the first quarter of this year alone."

second, the current cinema market concentration is relatively low, and this decentralized pattern will continue for some time. At present, Wanda, which ranks first in the domestic cinema chain, accounts for only 14% of the market share, while the top four cinema chains account for 60% of the nearly 40,000 screens in the United States.

at present, the concentration of the domestic cinema market is low

according to the monitoring of Yien data, except for Wanda, the penetration rate of domestic real estate developers such as Poly, Evergrande, Taihe and other domestic real estate developers is 7%.

among them, according to the semi-annual report of Poly Culture, after the acquisition of Star Culture, the number of studios owned by Poly has reached 55. Liu Debin, general manager of Poly Pictures, said that Poly will actively merge in the future, with a target of about 200 cinemas, accounting for 4% and 5% of the market share. According to the official website of Evergrande Cinema, at the end of September 2017, Evergrande cinema opened a total of 103 cinemas with 714 screens, and it is planned that the number of cinemas will reach 500 in the next three years, with more than 5000 screens. In addition, Taihe, a real estate company in Fujian, has also signed up more than 50 studios, covering more than 20 provinces.

Wang Zheng believes that under the current situation, there are still three types of funds that are more active in the cinema market: first, medium and large cinema investment companies that hope to further consolidate their share; second, commercial real estate developers seeking consumer diversion through cinemas; and third, media listed companies with demand for building an entertainment industry chain.

some analysts also said to all-weather technology that investment and mergers and acquisitions in the industry are intensified, the output efficiency of small studios is not good, and commercial real estate developers will be more rational and less willing to cooperate in the future. By contrast, self-run studios such as Wanda and China Resources have long-term competitiveness.

Edit: mary