Q3 performance is higher than the same period last year. 1) the company disclosed its quarterly report for 23 years. In the first three quarters, the company achieved operating income of 1.464 billion yuan and net profit of 327 million yuan, an increase of-0.02% and 8.72% respectively over the same period last year, corresponding to fully diluted EPS of 0.18 yuan. 2) Q3 achieved operating income of 327 million yuan and net profit of 87 million yuan in a single quarter, an increase of 17.96% and 42.05% respectively over the same period last year, corresponding to a fully diluted EPS of 0.05 yuan.

The profitability is good. 1) the company's gross profit margin reached 30.5% in the first three quarters and remained at a high level (22.9% and 33.7% for 21 and 22 respectively), while the net profit rate reached 23.1%, which is at the higher level in recent years. 2) from a quarterly point of view, Q3 single-quarter gross profit margin and net profit margin are 39.0% and 27.4% respectively, continuing to maintain a high level.

The film, television and film business has developed steadily, and the copyright operation has continued to advance. 1) in the third quarter of Q3, the company's film and TV drama projects started 3 (including 1 platform customized short play), killed 3, and broadcast 3; in terms of films, it continued to promote the development strategy of "1x N", planning a number of commercial film projects with themes such as fantasy adventure, diplomacy, reality, suspense, etc.; 2) in terms of copyright operation, complete the consolidation of Morrison Film and Television and incorporate it into the company's management system. The copyright library has been expanded to 50,000 hours, which has laid a good foundation for building a diversified business ecology based on the core copyright resources of film and television.

New technologies such as AIGC continue to advance. 1) the company has set up an AIGC Application Research Institute to create an AIGC experience platform and integrate useful tools to enhance the ability of the company to use AIGC tools, and to promote the landing of key projects such as "novel and script efficient Evaluation system Project", "Top screenwriter Assistant system Project", "Digital assets Intelligent Generation Project" and "Video Intelligent upgrade Project" 2) centering on the improvement of IP development efficiency and the deepening of IP value, through the layout of the whole industry, the company has initially formed the platform ability of "gathering, supporting, integrating and digesting" multi-industry coordinated development, and will realize the transformation from a content production platform to a full-format media group driven by science and technology. 3) 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 large model of self-developed screenplay, the system provides tools of "evaluation assistant" and "screenwriter assistant". The evaluation assistant's evaluation content of 200,000-500000 word novel script has been increased from the past 3 days to 5 minutes now, while the screenwriter assistant improves the inefficiency of multiple rounds of dialogue in the form of efficient workflow.

Risk tips: film and TV series sales risk; regulatory policy risk; box office lower than expected risk and so on.

Investment suggestion: we maintain the profit forecast. The estimated return net profit for 2023-25 is RMB 5.21max 6.36 / 719 million, a year-on-year growth rate of 29x22x13%; diluted EPS=0.27/0.33/0.38 yuan, the current share price corresponds to PE=19/16/14x. The company's leading position in the film and television industry is solid, the operation quality continues to improve, the film and copyright operation has come to the fore, and the value of AIGC and IP in the Yuan Universe is expected to continue to be revalued to maintain the "buy" rating.