Performance summary:

On October 20, the company released its results for the third quarter of 2023. Revenue in the single quarter increased 99% to 781 million yuan compared with the same period last year, with a net profit of 123 million yuan, deducting 98 million yuan from non-profit.

Core points:

First, focus 1: the domestic film market has been repaired rapidly, and Q3 has exceeded the level of the same period in 19 years.

In the third quarter, the trend of film market restoration has become more clear. driven by a number of excellent domestic summer films such as "put all your eggs in one basket", "Octagonal Cage" and "she who disappears", the domestic box office reached 19.3 billion yuan in the whole third quarter. compared with 61-8.5 billion in the past three years, it recovered significantly, compared with 16.8 billion in 2019, an increase of 14.7%, regaining the growth momentum.

Second, point 2: the market share of projection business is stable, pay attention to the results of follow-up film production.

The market share of the company is stable in the forefront of the market. In the single quarter of Q3, the market share of direct operating cinemas is 3.62%, and that of joining Movie City is 0.55%, a year-on-year fluctuation of less than 0.1 percentage points. By the end of the third quarter of 2023, the company had 512 opened cinemas with 3203 screens, including 429 directly operated cinemas, 2735 screens, 83 cinemas and 468 screens, compared with the end of the second quarter.

The company will also produce or co-produce films in 2023, including "Save the suspect" (November 3, starring Zhang Xiaofei), "across the Sea of anger" (November 25, starring Huang Bo and Zhou Xun), and "defiant 2" (a sequel to the popular online movie).

Profit forecast: we forecast that the revenue in 2023-2025 will be 100 million yuan in 25-30-34, and the net profit in home will be 427,000,000 yuan. Compared with the last forecast, we have slightly reduced the profit scale in 2024 and 2025. This is mainly because some non-main business related income forecasts have been lowered, reflecting more conservative assumptions. Maintain the recommended rating.

Risk hint: the company's new film box office is lower than expected; the box office growth rate of the film market is slowing down; the company is losing money on investment projects.