Huatze Film and Television disclosed three quarterly results in 2023: (1) 2023Q1-Q3, the company's revenue was 1.464 billion yuan, down 0.02% from the same period last year; the net profit from its mother was 327 million yuan, up 8.72% from the same period last year; and its non-net profit was 257 million yuan, up 6.08% from the same period last year. (2) 23Q3, the company achieved revenue of 328 million yuan, an increase of 17.96% over the same period last year, a net profit of 87 million yuan, an increase of 42.05% over the same period last year, and a non-net profit of 64 million yuan, an increase of 62.19%. (3) as of the end of the 23Q3 period, the company has monetary funds of 2.933 billion yuan and transactional financial assets of 2.337 billion yuan.
The film and TV drama project is progressing smoothly. 23Q3, the company has a total of 3 film and TV drama projects (including 1 platform customized short play) and 3 film and TV dramas, including major revolutionary TV series "Kun Peng hitting the waves", ancient costume legendary drama "Beautiful Peace", and urban emotional drama "Cheng Huan Ji" (Huatze Film and Television official account). Broadcast three films and TV dramas, namely, the TV series "Chaoyang all the way", the main casting film "Burning Winter", and the participating film "ex 4: early Marriage" (Cat's Eye Professional version). In the follow-up, the company's reserve projects include the TV series "Seven Nights Snow", "one centimeter of Sunshine", "National Beauty", and the film "the Wild Age" (directed by Bi Gan and starring Yi Qianxi / Shu Qi).
Deepen copyright and AIGC layout. The company acquired Senlian Film and Television, a domestic head film and television drama copyright company, with its own capital of 485 million yuan. since July 2023, the copyright base has expanded from 30,000 + hours to 50,000 + hours. The "Film and Television script Intelligent Writing system" developed by the company's AIGC Application Research Institute was launched in September for use by the company's business team. Based on the vertical model of self-developed screenplay, the system provides the functions of "evaluation assistant" and "screenwriter assistant".
Profit forecast and investment advice. We estimate that from 2023 to 2025, the company will achieve an operating income of 28.44cm, a net profit of RMB 50,000,000, and a net profit of RMB 70,000,000. As the industry warms up, the company accelerates the landing of film and TV drama projects, and actively develops new business of copyright operation and new AIGC technology. With reference to similar listed companies, we give the company a 23-year PE valuation of 30 times, with a corresponding fair value of 7.88 yuan per share, maintaining a "buy" rating.
Risk hint. Policy changes; growth below expectations; short video impact; slow landing of AIGC.