Event: the company released its mid-2023 results.

The income of the company's 1H23 is 651 million yuan, and the net profit of yoy+34.54%; is-37 million yuan (- 60 million yuan in the same period last year). The income of 2Q23 is 363 million yuan, and the net profit of yoy+43.45%; is 163800 yuan, yoy+100.37%.

The content has been continuously improved and commercialization has been continuously deepened.

In terms of content, the company has accumulated more than 5.5 million kinds of digital content resources, with 4.5 million original network authors; no more than 2000 copyright agencies have cooperated and signed more than 2000 well-known writers and best-selling authors. Commercially speaking:

1) the company continues to deepen inter-industry channel cooperation, covering Wechat Reading, QQ Book, QQ Browser, Seven Cat novels and other platforms. 2) continue to make efforts to protect intellectual property rights, the company launched "power whistle" and "no copy" two major platforms, actively provide convenient services for all kinds of power people to report.

Continue to deepen and diversify the development of IP value.

1) Audio business, the subsidiary Hongda Ethernet has more than 48,000 hours of audio resources, and a new live-action anchor has recorded 60 works such as "chaos Sword God (Guangdong surprise)" in 23 years. 2) in the animation business, the company does not cooperate with Tencent, Bailey, iQIYI, Inc. and other platforms, and the first trailer of "Shura Wu Shen", co-produced by Penguin Film and Television and animated by the Force, has been released and is expected to be broadcast exclusively in Tencent video in September. 3) Film and television business, the company's April Day Fiction Network and 17K Fiction Network platform IP adapted works have begun to take shape. At present, dozens of works such as "Yueshang Donggong", "Xianjun robbing" and "Zuozhu" have been filmed and are in the post-production stage and will land on various major video platforms one after another this year.

Actively embrace AI multi-mode, there have been AIGC content to try to commercialize.

Actively embrace AI multimode. 1) in terms of audio, the company has been using AI anchors to produce high-quality content since 21 years, and "AI anchors" have recorded audio books for more than 180000 hours. 2) Animation, the current company has initially used AI to generate comics, anime, in which AI cartoons have not been comic sea platform MangaToon reached more than ten countries and regions of cooperation, the first batch of works "provoke", "after activating talent, I dominated the Reiki recovery" is being translated into 7 kinds of surprise. 3) in terms of large models, the company has more legitimate data than 60TB and has signed data content cooperation contracts with a number of model companies.

Investment suggestion: at present, the market has high expectations for the future development of AIGC, and the company will continue to expand IP resources. We are optimistic about the company's determination and confidence in the field of AIGC. After years of performance fluctuations, it has been actively adjusted to a new starting point. We expect the company to achieve a net profit of 126 million yuan, 176 million yuan and 235 million yuan from 2023 to 2025, an increase of 135%, 40% and 34% over the same period last year, corresponding to PE83x, 59x and 44x, respectively.

Risk tips: AIGC technology development is not as expected, the risk of increased competition in the industry, product testing results and launch time is not as expected risk.