Incident Overview
According to Jebsen's latest 2022 annual report and 2023 quarterly report, the company achieved revenue of 670 million yuan in the first quarter of 2023, an increase of -32.19% over the previous year, and achieved net profit of 158 million yuan, an increase of -45.51% over the previous year; the company achieved revenue of 3,907 million yuan in 2022, an increase of 4.83% over the previous year, and achieved net profit of 521 million yuan, an increase of 20.66% over the previous year.
The distribution of copyright film libraries has been strengthened, and gross margin has increased significantly
In 2022, the company's film and television copyright business achieved revenue of 3.695 billion yuan, an increase of 19.68% over the previous year, and the net profit of the mother was 834 million yuan, an increase of 56.41% over the previous year. In 2022, the company signed a 1.8 billion yuan “Film and Television Program License Contract” with Tencent, continuing to dig deeper into existing customer needs and cooperation, increase the distribution efforts of the film library, and enhance the monetization capacity of the film library. Due to the low marginal cost of film library distribution, the gross margin of the copyright distribution business increased 8.30pct to 32.44% year on year in 2022, and the overall gross margin increased 8.83 pct to 31.79% year on year.
Invest in AIGC project research and development, strategically lay out cutting-edge digital technology
On the basis of the steady development of the copyright business, the company further implemented AI technology development and application in the field of related content production technology, combined with the company's layout of the smart media asset management system, increased technology development and application efforts in the AIGC field, promoted the in-depth application of AIGC-related technology in the fields of content creativity, film and television content production, short video creation, etc., thereby enhancing the efficiency of the company's film and television filming and secondary creation of related film and television content, and enhanced the multi-channel and multi-modal operation value of the company's copyright; according to the annual report, the company added a number of digital technology research and development projects. These include the “ChatGPT intelligent voice response robot” that has been launched, the completed “intelligent digital human voice driver based on ChatGPT”, and the “AIGC assisted creation tool” under development.
With favorable support from multiple industries, two film and television companies revalued copyright assets
Since the second half of 2021, policy documents such as the “Outline of a Strong Intellectual Property Country”, “Film Industry 14th Five-Year Plan”, “Short Video Content Review Rules”, “14th Five-Year Plan” Digital Economic Development Industry Plan, and “14th Five-Year Plan” China TV Drama Development Plan have significantly favored the long-term development of the company's film and television copyright operation business. As multiple short and long video platforms join hands to carry out creative cooperation for short videos, the scarcity of high-quality film and television copyright has greatly benefited the company. We believe that the company's copyright assets are expected to be re-valued, and the space for monetizing copyright assets is expected to increase further.
Investment advice: Maintaining a “buy” rating
Based on the latest financial results, we adjusted the company's profit forecast: 2023-2025 revenue forecast of 40.30/46.28/ (unforecast) million yuan to 44.61/49.71/5.447 billion yuan, adjusted the 2023-2025 net profit of 802/9.49/ (unpredicted) to 704/882/1,036 million yuan, adjusted the forecast of EPS 0.31/0.37/ (unpredicted) yuan to 0.27/0.33/0.40 yuan, corresponding to 2023 At the closing price of 6.95 yuan/share on April 28, PE was 26, 21, 18 times, respectively. The company currently has high barriers in the film and television copyright business, and the industry is booming. At the same time, it continues to explore new forms of digital technology. We believe that its overall valuation level is low and maintains a “buy” rating.
Risk warning
The macro environment has increased uncertainty about the distribution of new films in the film and television industry; the execution progress of film and television copyright contracts fell short of expectations; Shiyou Technology is small and currently will not have a significant impact on the company's revenue and profits, and there is still uncertainty about the impact on the company's performance and operating results in subsequent years.