Event: the company disclosed its mid-2023 report. In the first half of 2023, the company achieved a total operating income of 1.172 billion yuan, an increase of 40.69% over the same period last year, and its net profit was 113 million yuan, 265.38% last year, with a basic EPS of 0.18 yuan and an average ROE of 9.17%.

In the first half of the year, the company's box office revenue increased by 50.20% compared with the same period last year, and the market share of asset-linked cinemas was stable.

In the first half of 2023, the company achieved box office revenue of 1.006 billion yuan, an increase of 50.20% over the same period last year, of which asset-linked cinemas grossed 867 million yuan, with a market share of 3.65% (3.64% in the 2022 annual report) and 23.5703 million cinemas; joined cinemas grossed 138.5553 million yuan, with a market share of 0.58%, and 349.10 moviegoers. By the end of the reporting period, the company had invested in the construction of 421 asset-linked cinemas across the country, with 2686 screens, covering 29 provinces, autonomous regions and municipalities directly under the Central Government, and radiating 197 cities. the box office of asset-linked cinemas ranks second among cinema investment companies in the country.

Participate in a number of head movies to strengthen the coordination between the content section and the cinema section. In the first half of 2023, the company continued to strengthen the synergy between the content plate and the cinema sector. With the help of the advantages of cinema channels, it invested in a number of high-quality projects. The revenue of the film and television production and distribution sector reached 896.894 billion yuan, an increase of 27.80% over the same period last year. In the first half of the year, Hengdian Pictures, a wholly owned subsidiary of the company, participated in the production of "wandering Earth 2" and "Bear's presence with me", ranked second and third at the box office during the Spring Festival, respectively, "off the net", "keep you safe", "Dragon Horse Spirit", "Slam Dunk Master", "Love is delicious", "Life is not familiar", "I love you"! "and other films have achieved better social and economic benefits, and the films" Anti-Drug 3: people in the Tianya "," the Super Family "," warm "," missing each other "and" Burning Winter "were released in the summer. According to the company's business plan for the second half of the year, the company will enhance the investment and output of the main control film while steadily recovering at the cinema end, so as to achieve the two-way coordinated development of "content + channel".

Diversified marketing + multi-channel expansion, vigorously develop non-ticket business. The company carries out accurate marketing according to the characteristics of the film, plans and shoots original videos during important holidays, uses Douyin and other Internet promotion tools, vigorously develops Douyin live streaming, Douyin group buying, online store sales channels, and arranges national got talent store promotion. In the first half of the year, the company's Douyin got Talent visited 6500 people, and the number of video views exceeded 1 billion times. Through social marketing to expand the private domain traffic pool, community channel revenue increased by 166% compared with 2022. Vigorously carry out free movie viewing activities with their own copyright, effectively drive the increment of passenger flow and increase the revenue of selling goods. At the same time, the company enriches the categories of cinema sales, introduces new products such as creative ice cream, card cards, derivatives and creative products, and sets up a professional water bar company. The company also carries on the independent assessment and incentive to the advertising business, unifies the investment resources. In addition, the company innovates the form of venue rental cooperation, organizes cooperation in games and ball activities, carries out various forms of venue activities, focuses on expanding drama business, enriching entertainment formats, new leisure and entertainment consumption, and pilot live screenplays. Children's entertainment interactive projects have been launched one after another.

Give full play to the advantages of Hengdian cultural industry, promote the integration of culture and tourism, and vigorously develop non-ticket business. The company gives full play to the unique advantages of Hengdian film and television culture industry and comprehensively promotes the integration of culture and tourism. In the first half of the year, marketing activities such as joint rights and interests cards for film talent, offline running of Hengma Movie City, watching movies and signing in to Hengdian Film City were carried out, and cultural and travel packages such as tickets to Hengdian Film City were launched on the Hengdian film self-operating platform. to promote the mutual transformation between movie-watching customers and tourist customers. Actively promote research projects, with film and television entertainment training, cultural industry exchanges, culture and tourism activities as the elements to create Hengdian research platform to form the company's culture and tourism economic increment.

Investment suggestion: the company's operating income from 2023 to 2025 is expected to be 30.18cm 3.192 billion yuan, an increase of 111.5%, 5.8%, 5.3%, respectively, with a net profit of 2.78 pm, 325%, 2.3%, corresponding to a PE of 41-35-34, which is covered for the first time and given a "buy" rating.

Risk hints: macroeconomic recovery is not as expected, user growth is not as expected, competition in digital reading is intensified, and technological progress is not as expected.