Incident: Maogan Entertainment released a positive profit forecast for 2023. It is expected to achieve revenue of 4.7 to 4.8 billion yuan in 2023, yoy +103% to 107%, and achieve profit attributable to company owners of 88%-930,000, and YOY +740% to 787%. Among them, 2023H2 achieved revenue of 25.03 billion to 2,603 million yuan, yoy +122% to 131%, and realized profit attributable to company owners of 473 to 523 million, reversing losses over the previous year.
The performance exceeded expectations.
Comment:
The platform benefited from the good recovery of the film market, and the performance GMV reached a record high. According to data from the National Film Administration, the total box office of the film market in 2023 was 54.9 billion yuan, yoy +83%. The box office of Chinese films reached 46 billion yuan, a record high. The second half of 2023 benefited from a record high summer box office, and the company's platform business grew significantly. In addition, the popularity of the offline performance market has also led to an increase in platform business. According to data from the China Performance Industry Association, the cumulative number of spectators in the first three quarters of 2023 reached 111 million, surpassing the full year of 2019. The company actively grasped performance in the performance market and set new high GMV and revenue. In particular, it performed well at large-scale performance events. With good cooperation with leading artists, the market share is expected to increase further.
The box office performance of participating projects was outstanding, and the content had significant advantages. The company's content advantage continues to be highlighted. The number of films participating in promotion in 2023 and the proportion of box office sales reached a record high for the same period. According to Maogan Professional Edition data, the company participated in 54 film projects in 2023. The main control projects “Fengshen 1” and “In the Octagonal Cage” all grossed more than 2 billion yuan in the second half of the year, and achieved a double boom in box office. Furthermore, in the New Year's Eve program, the company also released four projects at the same time, and achieved outstanding results, proving that its distribution capacity has broken through the ceiling where one company could only control the distribution of one film in a single schedule in the past, and the market share is expected to break through in the future.
The Spring Festival “Speeding Life 2” exceeded expectations, and 2024 is rich in reserves and performance can be expected. The company's main control film for the Spring Festival program “Flying Fast Life 2” currently has a final box office of 3.3 billion, ranking runner-up in the program, exceeding previous expectations. The company achieved the top two in the Spring Festival program for four consecutive years. In addition, it also performed well in the “Hot and Hot Bears” and “Reversing Time and Space” projects. Looking ahead to 2024, the company has previously released 40 films, with plenty of follow-up reserves. Currently, “Crazy Money at the End” has been scheduled for May 1st. Among the pending projects, films such as “Crisis Line”, “P Plan”, “Declassified”, and “Chaoyuan Alley” cover various genres such as comedy, action, and suspense, and have good box office potential. Based on a solid platform business and deep content reserves, the company's performance throughout the year is worth looking forward to.
Investment advice: The company's revenue for 2023-2025 is estimated to be 47.47/52.60/5.637 billion yuan, up 105%/11%/7% year on year, net profit to mother of 9.02/10.26/1,151 billion yuan, up 758%/14%/12% year on year, EPS rating of 0.78/0.89/0.99 yuan, corresponding PE is 10x/9x/8x to maintain “buy”.
Risk warning: Project launch progress falls short of expectations, increased platform competition, etc.