Event: the company released its three-quarter report in 2023, Q3 realized operating income of 328 million yuan, up 17.96% from the same period last year, and its mother's net profit was 87 million yuan, up 42.05% from the same period last year. In the first three quarters, the operating income was 1.464 billion yuan, down 0.02% from the same period last year, and the net profit was 327 million yuan, up 8.72% from the same period last year.

The production and broadcast rhythm of the series is normal, and the project reserve is rich. According to the company announcement, in the third quarter of this year, the company's film and TV drama project started 3 (including 1 platform customized short play), killed 3, broadcast 3, the drama production, broadcast rhythm is in line with expectations. "Chaoyang all the way" premiered on August 14. According to Yunhe statistics, the episode has an average of 1701 million effective broadcasts in 30 days, ranking as the TOP11 of the new series on Q3, and was rated as the 2023 Beijing audio-visual masterpiece. Looking forward to the rich reserves of Q4 and next year, including "Please fall in love with me like this", "our translator", "Beautiful Peace", "Chenghuan Ji" and so on have entered the post-production stage, and nearly 30 projects have yet to be produced.

The influence of the film business has gradually expanded, and the film single system operation has been started. The company has gradually expanded its influence in the film field and actively participated in the leading projects in the industry. In the follow-up film project strategy, the company will plan to produce an S-level film every year and participate in important film projects through the combination of main investment and participation, so as to continuously build a single film production system. Key reserve items include "misjudgment" (starring and producing by Donnie yen), "assassination of the novelist 2" (directed by Lu Yang, the previous work grossed more than 1 billion yuan), "the Wild Age" (directed by Bi Gan, starring Yi Qianxi and Shu Qi), and so on.

Forward-looking layout, actively embrace AI technology. The company set up the AIGC Application Research Institute, and self-developed "Film and Television script Intelligent Writing system" was launched in September. Based on the self-developed script vertical model, the system provides "evaluation assistant" and "screenwriter assistant" tools to effectively improve content production efficiency and help reduce cost and increase efficiency. For example, the evaluation of a 200,000-500000-word novel script can be completed in 5 minutes with the help of the Evaluation Assistant, which used to take 3 days.

Profit Forecast: we expect the company's 23-25 net profit to be 463, 606, 713 million yuan, respectively, and YoY+15.1%/+30.7%/+17.7%, maintains a "buy" rating.

Risk hint: policy supervision risk, market competition aggravating risk, star artist immoral risk