Key points of investment
Incident: The company released a positive profit forecast for FY2022: The company expects to turn a loss into a profit in FY2022, recording a net profit attributable to the company's owners of no less than 40 million yuan, mainly due to accumulation in the fields of content, technology, IP derivatives and commercialization to drive steady growth in the company's performance; revenue growth of more than 20% was mainly due to factors such as one-time income from other equity investments.
Word-of-mouth masterpieces continue to iterate, and are expected to continue to contribute to performance growth. The company has launched a number of high-quality works, and the market response has been good. 1) In terms of online dramas, the suspense drama “The Door to Rebirth” has been very popular since it first aired. As of May 10, it had a cumulative total of 9 times on YouTube, with the highest popularity reaching 9883; 2) On the movie side: “Shuimen Bridge in Changjin Lake,” “Miracle, Dumb Kids,” and “All Seas” lead the Spring Festival program. Among them, “The Watergate Bridge of Changjin Lake” has a cumulative box office of 4.06 billion yuan and Douban ratings of 7.6 billion yuan; “Miracle, Dumb Kid” has a cumulative box office rating of 1.38 billion. Douban. As word-of-mouth masterpieces continue to be launched, the content business is expected to continue to boost performance growth.
The derivatives layout continues to deepen, and a third growth engine has appeared. According to the interim report, FY22H1, derivatives revenue was about 230 million yuan, an increase of 47% over the previous year. The company upgraded its IP derivation and commercialization system. In the first half of FY22, the number of newly opened stores in the Tmall gaming category operated by Aliyu increased by more than 120, and the number of new purchasers increased by 71% year-on-year. At the same time, it also launched the trendy game brand “Koi Fun” and the trendy IP and household goods brand “Alternative”, with sales of over 50 million yuan in GMV. The company continues to deepen its derivatives racetrack layout, and the new growth engine has strong momentum.
The technology sector is expected to usher in a recovery along with the improvement of the epidemic. The company's “Ticketing+Digital Intelligence Platform” consolidates the basic market; the Amoy Ticket market position remains stable, and the “Taomai VIP” membership system has been introduced to support performances and movie scenes; the Lighthouse promotion platform and the “Amoy Ticket” movie viewing decision platform are expected to improve the accuracy of forecasting popularity. Good mutual feeding between the “Content+Technology” sectors is already showing results.
Profit forecasts and investment recommendations. According to the company's FY22 pre-profit announcement, it is estimated that FY22-FY24 sales will be 37.6/46.2/5.48 billion yuan, and net profit will be 0.4/13/210 million yuan. The company is an entertainment platform for the entire Internet industry chain. The technology business is expected to return to steady growth. Continued output of word-of-mouth masterpieces is worth looking forward to. The superimposed IP derivatives business has great potential for growth. Maintaining a “buy” rating, it is recommended to pay active attention.
Risk warning: There is a risk of policy changes in the film and television industry, the risk that content production results will fall short of expectations, the risk of increased market competition, and other business developments falling short of expectations.