The net profit of 3Q23 home has increased significantly, and all businesses have continued to recover.

In 2023, the company's Q1-Q3 realized revenue of 4.21 billion yuan (yoy+88.65%) and net profit of 471 million yuan (yoy+79104.10%). Q3 realized revenue of 1.353 billion yuan (yoy+90.13%, qoq-4.2%) and net profit of 111 million yuan (yoy+664.8%,qoq-38.0%). Considering that the box office of "volunteers" controlled by the company is lower than expected, we reduce the company's 23-25 net profit from 23-25 to 877 million (previous value: 958 million 1.108 million). Comparable company's 23-year Wind unanimously expected the average PE to be 30 times, taking into account the company's outstanding creative ability, giving the company 38 times PE for 23 years, with a target price of 13.90 yuan (the previous value was 18.36 yuan), maintaining the "buy" rating.

Taking into account that the impairment of bad debt assets affects profits, the expense rate is reduced to reduce costs and increase efficiency significantly. Based on the changes in customer credit in the first three quarters of 2023, the total provision for impairment is RMB 84.23 million, of which the provision for bad debts is 77.93 million yuan and the provision for inventory price decline is 6.3 million yuan. The company's 23Q1-Q3 gross profit margin was 26.39%, an increase in 7.75pct compared with the same period last year and exceeding the level of 21.59% in 2019 before the epidemic.

At the same time, the sales / management (including R & D) / financial expense rates are 2.95%, 8.76% and 1.05%, respectively, reducing 1.43/6.47/0.45pct compared with the same period last year.

The film market continues to recover, and the company's operating data are improving.

According to the company announcement, the 23Q1-Q3 film market continues to recover, with a total box office of 44.528 billion yuan, an increase of 74.87%-1.43pct over the same period last year. The company's operating data are good, including: 1) in terms of production, the company led or participated in the production of a total of 28 films, accounting for 61.44% of the total box office of domestic films in the same period, a year-on-year increase in 4.63pct. 2) in terms of distribution, the cumulative box office of domestic films led by the company and participated in the distribution accounted for 88.09% of the total box office of domestic films in the same period, up 8.12pct over the same period last year, while the box office of imported films accounted for 70.17% of the total box office of imported films in the same period, increasing 10.5pct. 3) in terms of screenings, according to Maoyan data, the Q1-Q3 of the voting room of China Film Picture was 893 million yuan, an increase of 73.4% over the same period last year.

Summer and National Day archives companies have participated in the film, the main production of "volunteers" according to the professional version of Maoyan, 23 summer box office about 20.6 billion yuan, the highest in the history of the stalls. The company participated in the production of six films during the period, including "Changan 30,000 miles" (box office 1.79 billion), "all eggs in one basket" (box office 3.52 billion) and so on. The 23-year National Day film "volunteers: male soldiers" was released and grossed 710 million yuan at the box office as of October 27. At present, the company is waiting for release and creative development projects of nearly 60, including "The Legend of the Condor Heroes: chivalrous Master" and so on, the follow-up is expected to continue to contribute performance flexibility.

Risk hint: the film box office is not as expected, the content regulatory risk, and the supply of imported films is not as expected.