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Nov. 17 (NBD) -- Shanghai Film Co., Ltd put up for sale the 100 percent of stake and debt it holds for Dalian Shangying Cinema, according to the information released Wednesday on the website of Shanghai United Assets and Equity Exchange.

An insider of Shanghai Film told NBD that cinemas nationwide are experiencing single-screen box office decline and projects that the Shanghai Film runs are not risk-free. The insider further explained that the deal is to optimize assets, increasing the net income of the listed company and recollecting the money to invest in better target by selling the asset that is losing money.

The listing price of the deal stand at 21.9 million yuan (3.3 million U.S. dollars), including 15.4 million yuan (2.3 million U.S. dollars) worth of debt and 6.5 million yuan (0.9 million U.S. dollars) for the 100 percent stake.

According to disclosure information, Dalian Shangying Cinema suffered a loss of approximately 3.98 million yuan (600,510.0 U.S. dollars) in 2016 and 620,000 yuan (93,546.8 U.S. dollars) in 2015. Profits in 2017 didn't seem to be improved.

Dalian Shangying Cinema, located in the Parkland Bay Outlets, is well equipped with 8 screens and IMAX.

But an experienced industry insider said to NBD that popularity of a cinema depends strongly on the popularity of the shopping mall which is influenced by its location. The Parkland Bay Outlets still needs time to mature and attract people there, which is why the Dalian Shangying Cinema doesn't do well currently, added the industry insider.

This the not the first time that Shanghai Film shed off assets of low profits. In September, Shanghai Film announced the plan to sell its 100 percent stake in a film management company in Changsha and the New-Mart Paradise Cinema in Liaoning.

The deal is to adjust and optimize the cinema assets and to trim losses, Shanghai Film said in a statement in September. Money from the sales will be put into new cinema projects with better returns, the company stated.

Film companies have been through a tough time in recent years, struggling with cost raise caused by rent, manpower and equipment upgrading and low attendance rate. Last year, the growth rate of box office in cinemas across China shrunk and the box office of both a single cinema and a single screen dropped sharply.

The above-mentioned cinema industry insider said to NBD that the average box office of each film each time has been lowered to 600 yuan (90.5 U.S. dollars).

Over the past several years, about 1000 new cinemas are built every year, creating fierce competition. There even existed the case that a number of cinemas crowded along some-hundred-meter street, competing for limited customers.

With regard to it, the industry insider pointed out that movie companies should evaluate their assets, selecting the better ones and shedding off the bad ones in their development. It's very important to choose the location scientifically and professionally when it comes to build new cinemas, the insider added.

Email: gaohan@nbd.com.cn