Help Alibaba Pictures calculate whether it is a loss or not after buying Star Cinema for 100 million yuan

The board of directors of Alibaba Pictures announced that the company has entered into an investment agreement with StarWorld through Alibaba Pictures Tianjin to invest in StarWorld Hangzhou as planned.

According to the StarCraft investment agreement, Hangzhou Kunwei conditionally agreed to transfer, and Tianjin Alibaba Pictures conditionally agreed to acquire, approximately 60.94% of the equity of Hangzhou StarCraft for RMB 39 million; at the same time, Tianjin Alibaba Pictures conditionally agreed to inject RMB 61 million into Hangzhou StarCraft. After the transaction is completed, Tianjin Alibaba Pictures will own 80% of the equity of Hangzhou StarCraft.

All in all, Alibaba Pictures spent 100 million yuan on Star Cinemas. Is it worth it?

Insiders in the cinema industry revealed to Huxiu that whether it is worth it depends on the location of the cinema and the box office.

Hangzhou Star Cinema has two branches in the city, one in Jiangnan Times Square, Shiqiao Road, Xiacheng District, and the other in Tangqi, Yuhang District. (The map shows that Star Cinema also has a branch in Banshan Road, Gongshu District, but there is almost no information about this cinema, only a picture review on Dianping.com .)

Neither of these two stores is located in the main business district of Hangzhou, and has almost no geographical advantage. The competitive environment of the Shiqiao Road branch of Star Cinema is not bad, with the nearest cinema competitors being 2.3 kilometers and 3.6 kilometers away respectively.

Looking at the box office data, according to Maoyan Movie Professional Edition, the annual box office revenue of the two branches of Star Cinema in 2015 is as follows: Last year, the number one box office in Hangzhou was Xinyuan International Cinema, with revenue of 61.478 million yuan.

Shiqiao Road Store: 22.9 million yuan (No. 15); Tangqi Store: 4.928 million yuan (No. 58);

The above-mentioned industry insider told Huxiu that in the current cinema trading market, the valuation (quotation) of a single cinema is approximately 2-3 times its annual box office.

In fact, the valuation of cinemas based on this ratio is slightly inflated, and part of the reason for the inflated valuation in the industry is Wanda Cinema Line. In 2015, Wanda Cinema Line acquired Shimao 15 cinemas for 1 billion yuan, with an average price of nearly 70 million per cinema, which is higher than the general psychological expectation of movie investment company bosses for cinema prices. Since then, the prices of cinemas have risen sharply.

"A cinema with better qualifications and other aspects, for example, one with an annual box office of 10 million, can basically sell for around 20 million. But we have also seen ones with an annual box office of 12 to 13 million, which sold for 14 to 15 million," an industry insider told Huxiu.

Alibaba Pictures acquired approximately 60.94% of the shares of Hangzhou StarWorld for RMB 39 million. It is estimated that the overall valuation of StarWorld Cinemas is approximately RMB 64 million, which is 2.3 times the annual box office revenue of StarWorld Cinemas (2290+492.8).

Therefore, this deal for Alibaba Pictures was not cheap, because the geographical location and box office revenue level of Star Cinema were average, while the Shimao Cinema purchased by Wanda had a unique geographical location, located in a mature business district.

In addition to the RMB 39 million for the purchase of the cinema, Alibaba Pictures will also conditionally inject RMB 61 million into Hangzhou Star Theater, which may be used for subsequent expansion of the cinema.

Industry insiders believe that with the size of Alibaba Pictures, it is not very meaningful to only acquire a single cinema, and it may be an experimental acquisition. As for why Alibaba Pictures does not have a cinema chain, it may be because cinema licenses are scarce and there are no suitable investment targets at present. Alibaba Pictures is still waiting and watching.

As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity.