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Haichang Ocean Park (2255.HK) net profit increased 20.6%

Actively develop "Light-asset" innovative business. To build No.1 marine-cultural tourism and leisure brand in China.

HONG KONG – Haichang Ocean Park Holdings Ltd., a leading developer and operator of theme parks and ancillary commercial properties in China, announced a net profit of RMB 65.4 million for the six month s ended 30 June 2014, representing an increase of 20.6%. During the Period, revenue from park operations increased 18.0% to RMB 425.2 million. Park EBITDA increased 68.5% to RMB 196.7 million, and rental income increased 30.6% to RMB 28.6 million.

During the Period, the profitability kept const a ntly rising, as the Group’s overall gross profit and overall gross profit margin were RMB214.5 million and 40.3% respectively. Segment gross profit of the Group’s park operations which accounted for over 79.9% of the Group’s total revenue increased by 63.8% to RMB172.1 million . The gross profit margin of park operations improved from 29.2% in the first half of 2014 to 40.5% in the first half of 2015, primarily due to effective cost control and the stable growth of park r ev enue.

Mr. Wang Xuguang, Executive Director and Chief Executive Officer of Haichang Ocean Park Holdings Ltd., said, “In 2015, despite China’s slowing economic growth, tourism industry has maintained rapid growth and become a new impetus to promote economic growth and a new growth driver to expand domestic demand. Under this circumstances, the Group formulated the strategic development objective of becoming ‘No.1 marine-cultural tourism and leisure brand and an international marine related tourism platform enterprise in China’ at the beginning of the year. The Group continued to upgrade and innovate products and services of existing theme parks and effectively enhancing the experience of visitors. Meanwhile, the Group improved the layout of the sales channels, launched a series of branding and marketing events, and effectively increased attendance and revenue. In addition, the Group accomplished significant progress in relation to Shanghai, Sanya projects and the company’s asset light innovative business in the first half.”

Business Review
Enrich the brand connotation
In order to improve brand awareness and expand market penetration, the Group has been officially renamed to “Haichang Ocean Park”, as well as further improved the company’s CIS system and brand value. In March, riding on the ground-breaking ceremony of the Shanghai Haichang Polar Ocean Park project, the Company kicked off a nationwide branding event which aroused great public interest and became a hot topic. In addition, the Group cooperated with various brands to further enhance Haichang Ocean Park’s market competitiveness and awareness.

Develop online channels and p recision marketing campaigns to increase attendance
In order to accurately identify target customers and analyze their needs, the Group carried out a tourist mapping analysis and effectively formulated the overall marketing strategies: penetrate the regional market, focus on online channels. On top o f such a strategy, the Group succeeded in building a complete network distribution platform, by finishing the construction of a self-owned platform and cooperating with others. The Group joined hands with Alitrip.com to commence the “Ma Shang You” promotion event, which topped the sales chart at Tmall platform during May Day Festival. In June, through strategic cooperation with Ly.com, the Group also mapped out complete network newsy marketing for special products, and held the “Customer Experience Contest” and created the parent-child travel brand “Happy Childhood” through famous TV show “Dad! Where Are We Going?”, which successfully fostered the sale of products with online features. Besides, the Group introduced “Haichang Young Traveller” and other branding and marketing events. Leveraging on the above effective marketing campaigns and well-targeted channel distribution, the number of ticket attendance in the first half year of the Group’s eight theme parks grew by 14.48% to approximately 3,298,000.

Enrich tourist experience via creative products and quality services
The Group continued to upgrade the existing theme parks, added on amusement facilities like 5D theaters, night parks, themed parades and other new entertainment products and contents to improve and enrich the product mix within the theme park. Meanwhile, the Group improved the planning of performance shows, created self-developed cartoon images and promoted various innovative entertainment facilities to enhance visitors’ experience and their willing to further consume in parks. Besides, the Group enhanced the quality of services and overall quality of parks through building intelligent theme parks, creating more attractive in park retail store image and optimizing the in-park tour routes.

Strengthen the core competency on animal collection and animal care expertise
In the areas of animal welfare, conservation and scientific research, the Group has been advocating the philosophy of animal protection. In the first half year, the Group succeeded to breed 21 large polar animals and topped China in terms of breeding quantity. As a corporate citizen, the Group also played an active role in fulfilling its corporate social responsibility, and voluntarily res c ued wild marine animals. Furthermore, the Group constantly held training assessments together with international peers to enhance the animal conservation related core competitiveness, and actively transforming scientific research results into productive forces.

Asset light innovative business right on track
In order to promote the strategy of “Marine related Innovation on business model” proposed in early 2015, the Group completed registration of two new platform companies in the first half of the year, which will be used to develop consultancy and management services as well as marine-featured indoor children’s entertainment programs. During the period, the Group has signed agreements with Guangzhou Zhengjia, Qinhuangdao Saintland and Zhejiang Hengdian respectively on the provision of consultancy and techniques management services. Such agreements has already entered into fulfilling stage. In addition, the Group has completed the development of certain products relating to the children’s entertainment area which has further enriched the product mix. In the future, the Group can therefore put forth those products to the market flexibly according to demands.

Future Outlook
Looking ahead, the Group continues to focus on the comprehensive development and construction of two flagship projects: Shanghai Haichang Polar Ocean Park and Sanya Haichang Dream World in order to elevate the Group’s operation scale and profitability.

The Group plans to implement the children’s entertainment business through a combination of different product mix based on different business segments and market needs so as to attract more customers. The Group will also continue to standardize its relevant products and services, and explore investment and business models that can be quickly replicated, eventually achiev ing a scaled development.

In order to continuously improve the capacity for production of entertainment programs which focusing on the marine culture theme, the Group has already set up specialized teams and actively cooperated with international entertainment and multimedia technology companies to develop 4D and 5D marine culture films with self-developed cartoon images. The film will be screened inside existing theme parks. The process of idolizing self-developed cartoon images could therefore be significantly shortened and extend the “Haichang Ocean Park” brand’s cultural connotation.

Mr. Wang concluded, “Looking forward, the Group will seize the opportunities brought by the growth of Chinese tourism industry. Firstly, secure the organic growth of our existing business. Secondly, build up two new flagship projects in Shanghai and Sanya on schedule. As well as actively explore the industrial consolidation opportunities, to accelerate its epitaxial growth. Lastly, we will constantly explore new business model, to propel the asset light innovative business and create new profit growth drivers. We have confidence that we can build the Haichang Ocean Park as the No.1 marine tourism and leisure brand in China by realizing sustainable growth and rewarding our shareholders with sizeable returns.”

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Theodore is the Co-Founder and Managing Editor of TravelDailyNews Media Network; his responsibilities include business development and planning for TravelDailyNews long-term opportunities.

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