Overview of events
On the evening of October 26, 2023, Jiecheng shares disclosed three quarterly reports that the company's operating income in the first three quarters of 2023 was 2.008 billion yuan, down 12.39 percent from the same period last year, and the net profit belonging to shareholders of listed companies was 432 million yuan, down 11.49 percent from the same period last year.
Investment in R & D has increased, and gross profit margin is basically flat.
According to the three-quarter report, the company's Q3 achieved operating income of 520 million yuan in a single quarter, down 9.13% from the same period last year, realized net profit of 80 million yuan, down 5.72% from the same period last year, and deducted 77 million yuan from non-net profit, down 2.05% from the same period last year. In terms of expense rate, the company's sales expense rate in the first three quarters was 3.41%, compared with the same period last year, the sales expense rate was increased by 0.24pct, and the management expense rate was 8.59%. Compared with the same period last year, the 0.62pct was increased, and the R & D expense rate was 0.87%. The increase in 0.57pct over the same period last year was mainly due to the increase in R & D investment according to the company's R & D plan during the reporting period. The financial expense rate was 2.38%, which decreased 0.09pct compared with the same period last year. The company's overall gross profit margin in the first three quarters was 35.60%, a slight drop of 0.17pct compared with the same period last year.
Q3 launched a number of high-quality films, partnered with Huawei Pangu Exploration AIGC, according to three quarterly reports, the company launched a number of high-quality cinema films in new media in the third quarter of 2023, including "octagonal Cage", "Giant Tooth Shark 2", "Super Family", "I've been through the Storm" and so on. A number of prime-time TV series have been launched, including "Hope", "under the Lighting", "Ice and Snow knife Company", "Fuchun Mountain House", "Fire on the Avenue", "Love between the Green Mountains and Green Rivers", "her Life" and so on; under the layout of industrialization and internationalization, we have introduced high-quality overseas films and overseas high-quality children's content. At the same time, we export a number of excellent domestic dramas to overseas countries and regions, and operate multilingual zones on overseas platforms. The company's film and television project "he comes from the Fire" will be broadcast in the third quarter of 2023. At the same time, combined with the development of AI technology and the layout of intelligent media asset management system, the company continues to increase technology development and application in the field of AIGC, promote the in-depth application of AIGC-related technology in content creativity, film and TV drama content production, short video creation and other fields, and enhance the multi-channel and multi-mode operation value of the company's copyright. According to the easy disclosure of the company's interaction, the company and Huawei Pangu have signed a cooperation agreement to become Pangu model ecological partners, and the two sides will carry out in-depth cooperation in the field of AIGC.
Cinema market continues to recover, multiple policies of the cultural industry are favorable, according to the data of the State Film Administration, the box office in the summer of 2023 is 20.619 billion yuan, the box office, the number of moviegoers and the number of shows have all set a new summer record in Chinese film history, and the cinema market continues to recover. In recent years, policy documents such as the outline of intellectual property Power, the 14th five-year Plan for the Film Industry, the detailed rules for the examination and approval of short Video content, the Industrial Plan for the Development of Digital economy in the 14th five-year Plan, and the Development Plan for Chinese TV dramas during the 14th five-year Plan are significantly beneficial to the long-term development of the company's film and television copyright business. In recent years, Douyin, Kuaishou Technology, Bilibili Inc., HUYA Inc. and other short video platforms and live streaming platforms have a growing demand for long video content, which has further stimulated the vitality of the film and television copyright market. As multiple short and long video platforms join hands to carry out short video mass innovation cooperation, the company has significantly benefited from the scarcity of high-quality film and television copyrights. We believe that the company's copyright assets are expected to be revalued and the room for realisation of copyright assets is expected to be further improved.
Investment advice: maintain a "buy" rating
According to the results of the three quarterly reports, we adjust the company's profit forecast: adjust the forecast of revenue for 2023-2025 from 40.64 yuan to 4.530 billion yuan, and adjust the forecast of 2023-2025 net profit from home to 751 million yuan to 888 million yuan, to 8.25 billion yuan per 923 million yuan. Adjust the forecast of EPS 0.29Compact 0.34Compact 0.39 yuan to 0.260.31 CPM 0.35yuan, corresponding to the closing price of 4.68yuan per share on October 27th, 2023, PE is 18,15,13 times respectively. At present, the company has high barriers to film and television copyright business and high prosperity in the industry. at the same time, it continues to explore AIGC new business type. We believe that its overall valuation level is low and maintains a "buy" rating.
Risk hint
The macro environment adds uncertainty to the release of new films in the film and television industry; the progress of the implementation of film and television copyright contracts is not as expected; and the market competition for high-quality copyright content is likely to increase.