Performance preview
The estimated net profit to mother was 900 to 1.2 billion yuan, reversing the year-on-year loss
The company announced its 2023 performance forecast. The company expects net profit to be 900 to 1.2 billion yuan, turning a year-on-year loss into a profit; it is estimated that net profit without return to mother will be 700 to 1 billion yuan, turning a year-on-year loss into a profit. Among them, the company expects a net loss of 215 million yuan to profit of 85 million yuan in 4Q23, a net loss of 1,390 million yuan to mother for the same period of the previous year; net loss of 104 to 404 million yuan after deducting net loss from non-mother; and a net loss of 1,416 million yuan from non-return to mother for the same period of the previous year. The performance forecast is generally in line with our expectations.
Key points of interest
The film industry recovered steadily in 2023, and the company's screening business resumed. Industry: In 2023, the national movie box office was 54.915 billion yuan, up 83.4% year on year, and recovered to 85.6% in 2019, recovering steadily. Screening business: On the domestic side, the company's domestic cinemas achieved box office of 7.56 billion yuan (excluding service fees) in 2023, returning to 96.4% in 2019. The company's market share was 16.7%, maintaining the top position in the industry. Overseas, the company's Australian Cinema Line achieved box office revenue of about 1,401 billion yuan in 2023, an increase of 13% over the same period. We believe that the company has an outstanding leading position in the film industry. As the industry recovers, business performance has steadily recovered. It is recommended to pay attention to the subsequent Spring Festival program and the box office performance for the full year of 2024.
The movie “The Three Teams” performed well at the box office, and the content section blossomed a bit. Movies: In 4Q23, the company's main investment and control film “The Three Teams” achieved a total box office of about 700 million yuan. At the same time, the company co-produced many films with good box office performance. TV series: Series such as “Who Is He”, “The Most Brilliant Us”, “Thrush”, and “The Three Teams”, which the company invested and produced, were broadcast in 2023 and received good reviews and ratings. Games:
The company's newly released product “Qin Shimingyue: Changhai” and the long-term product “Saint Seiya: Legend of Justice” all achieved good results, driving steady growth in game revenue.
The new chairman passed a board resolution to focus on the potential for collaboration between Ruyi Pictures and Wanda Film in the film and television business. On December 12, 2023, the company announced that its indirect controlling shareholder, Wanda Culture Group, its wholly-owned subsidiary, Beijing Hengrun, and Mr. Wang Jianlin, the actual controller of the company, intend to transfer their total 51% stake in Wanda Investment to Ruyi Investment. The registration procedure for industrial and commercial changes was completed on January 12, 2024. The company also announced on January 29, 2024. The 15th meeting of the sixth board of directors passed a resolution agreeing to elect Ms. Chen Xi (president of Shanghai Ruyi Film and Television Production Co., Ltd. and executive director of China Ruyi Holdings Co., Ltd. since 2015) as the chairman of the company. We believe that China's Ruyi and the company are expected to cooperate in the film and television business, and it is recommended to focus on the potential of the subsequent content sector.
Profit forecasting and valuation
Keep the net profit forecast unchanged. Maintaining an outperforming industry rating, considering the downward trend in the industry valuation center, the target price was lowered by 9.3% to 14.7 yuan, corresponding 7.5/6.8 times 2024/2025 EV/EBITDA, with a potential for 27.6% upward space. The current stock price corresponds to 5.8/4.8 times 2024/2025 EV/EBITDA.
risks
The box office performance of the general market fell short of expectations, the pace of release of key content was uncertain and the box office was uncertain, and competition intensified.