3Q23 创作板块参投比例或较低，进口影片票房表现平淡。创作：1~3Q23公司主导或参与出品影片28 部，累计实现票房约231.02 亿元，占同期国产影片票房总额的61.4%。3Q23 公司参与出品的《流浪地球》《长安三万里》《孤注一掷》等影片进入今年以来国产片票房前十，但我们预计公司参投比例或相对较低。放映：3Q23 截末，公司共有营业控股影院128 家，同比减少9 家。我们判断电影行业稳健复苏过程中，公司持续推进影院的优化调整。发行：公司3Q23 主导或参与发行国产片113 部、同比持平；发行进口片16 部，同比增加6 部。根据艺恩，3Q23 进口影片含服务费票房14.65 亿元，同比增长126.4%，较2019 年同期下降63.8%，3Q23 进口影片占总票房比重7.6%，同比持平，较2019 年同期下降16.4ppt。我们认为，国内观众对进口影片偏好仍相对较弱，公司进口影片发行业务或承压。3Q23 performance is lower than we expected.
The company announced 3Q23 performance: revenue of 1.353 billion yuan, with an increase of 90.1%; net profit attributable to parent of 111 million yuan, year-on-year turnaround into profit; net profit deducted from non-parent of 81 million yuan, performance lower than our expectations. We believe that revenue was lower than expected mainly due to the lower proportion of corporate participation in slides, while selling and administrative expenses were higher than expected.
Trend of development
3Q23 creative plate participation ratio or low, imported film box office performance flat. Creation: 1~ 3Q23 Company led or participated in the production of 28 films, with a cumulative box office of about 23.102 billion yuan, accounting for 61.4% of the total box office of domestic films in the same period. 3Q23 participated in the production of "Wandering Earth,""Chang 'an 30,000 miles,""desperate" and other films into this year's domestic film box office top 10, but we expect the company to participate in the investment ratio or relatively low. Screening: At the end of 3Q23, the company had 128 operating holding cinemas, a year-on-year decrease of 9 cinemas. We judge that during the steady recovery of the film industry, the Company continues to promote the optimization and adjustment of cinemas. Distribution: The company 3Q23 led or participated in the distribution of 113 domestic films, which was flat year-on-year; 16 imported films were issued, with a year-on-year increase of 6. According to Yien, the box office of 3Q23 imported films including service fees was RMB 1.465 billion yuan, with a year-on-year growth of 126.4% and a decrease of 63.8% compared with the same period in 2019. The proportion of 3Q23 imported films in the total box office was 7.6%, flat year-on-year and 16.4ppt lower than the same period in 2019. We believe that domestic audience preference for imported films is still relatively weak, and the company's import film distribution business may be under pressure.
Gross profit margin improved year-on-year and operating expenses were higher than expected. The gross profit margin of 3Q23 Company was 23.9%, up 4.5ppt year-on-year. We think it is mainly due to the improvement of gross profit margin of projection business along with the recovery of film market. 3Q23 Company sales/management/R & D expense ratio was 4.5%/9.6%/0.2% respectively, sales and management expense ratio were significantly increased month-on-month, R & D expense ratio was relatively stable, we believe that it was mainly due to the company's film publicity efforts and salary expenses or higher than expected.
"Volunteers: Xiongbing Attack" or contribute 4Q23 performance, pay attention to the introduction rhythm of follow-up key imported films. The company's film "Volunteers: Heroes Attack" was released on September 28. According to the Cat's Eye Professional Edition, as of October 27, the box office, including service fees, exceeded 700 million yuan. Looking forward to the follow-up, the reserve projects include participating films "Priceless Treasure"(November 10),"Look at the Bridge,""Heaven Falling,""Molly's Adventure," and the release of imported film "Captain Surprise 2"(November 10). It is suggested that follow-up attention should be paid to the introduction rhythm and box office performance of key films.
Profit forecast and valuation
Due to lower-than-expected participation and weak preference for imported films, we revised down our 2023/2024 net profit by 28.3% and 24.8% to $646 million and $844 million, respectively. The current share price corresponds to 27.3 times 2024 earnings. Maintain outperforming industry rating, comprehensively consider profit forecast downgrade and industry valuation center downward movement, the company may have a more normal recovery in 2024, switch to 2024 P/E valuation, lower target price 11.8% to 15 yuan, corresponding to 32 times 2024 P/E ratio, there is 21.6% upside space.
Risk
The filing and box office of key films are not as expected, the introduction of imported films is not as expected, and the competition in the industry is intensified.
