Al Hokair Group to make SAR 756 mln in revenue from new cinemas JV: Aljazira Capital

Al Hokair Group is expected to generate SAR 756 million in revenue from its agreement with Cinepolis International and Al-Tayer group to establish around 300 cinemas in Saudi Arabia, Aljazira Capital predicted in a note.

Al Hokair’s share in revenue will depend on the revenue share agreement, and its 31 percent share of the joint venture.

The Saudi-listed Development and Investment Entertainment Company recently signed a JV agreement with Cinepolis and Al-Tayer to open up around 300 screens across 15 cities in the Kingdom, where there is high-demand for movie theaters and entertainment venues. The capital city of Riyadh currently has one cinema operating in Riyadh Park, under the VOX Cinemas brand. The three companies in total will invest $500 million over five years.

According to Al Hokair Group, the financial impact is expected to reflect in Q2 2019, Aljazira Cap said.

During 3Q18, Al Hokair group was granted the fourth license to operate in the Lingdom.

“Our outlook is positive on the Cinema business, given the limited entertainment avenues for the masses,” Aljazira said, adding that the major risk to the sector is the high number of screens that are expected to launch in the coming years, which poses the risk of market saturation.