Incidents:
The company released its 23-year performance report: operating revenue of 14.63 billion yuan in '23, up 4.7% year on year (the acquisition of Golden Eagle Cartoon was completed in '23); net profit to mother was 3.56 billion yuan, up 90.9% year on year under the same caliber; net profit after deducting non-return to mother was 1.70 billion yuan, up 5.7% year on year under the same caliber. Express revenue was slightly higher than the previous forecast (revenue increased 4.5% year-on-year under the same caliber), and net profit to mother was slightly lower than the median value of the previous forecast range (3.58 billion yuan). Without considering the one-time impact of tax rate changes, net profit returned to mother in '23 was $1.93 billion.
The company issued an announcement on the “Double Improvement of Quality and Return” action plan: proposing the main business line of “integration of culture and technology”, continuing to adhere to excellent corporate governance, and continuously optimizing the investor return mechanism, etc.
Key points of investment:
The core video business is basically the same as the forecast, and Golden Eagle Cartoon has exceeded its performance promises. According to the company announcement, membership revenue increased 10.2% year on year in '23 (forecast is 11%); advertising revenue fell 11.6% year on year (in line with forecast); and operator business revenue increased 10.3% year on year (forecast is 10%). Golden Eagle Cartoon achieved net profit of 62.78 million yuan for the whole year, exceeding its performance promise by 36%.
The performance of the series was an important highlight in '24. The company innovated the organizational structure and incentive mechanism for film and television drama teams, set up a drama evaluation and quality control center, implemented a super studio, launched the “Xinmang S Plan” and the film and TV drama super partner system; and reached a short drama cooperation with Douyin. According to the company's announcement, the company had reserves of over 80 movies and TV series and 100 short dramas in '24. Key dramas such as “River Sunrise” have been broadcast one after another.
The new direction of science and technology is being actively laid out, and it is expected to form a catalyst. The company will launch a “mango pendulum model” based on existing technical foundations such as AIGC, virtual reality, and AI multi-modal search, and build an AI Agent intelligent application platform to widely use AIGC technology in media operations, advertising, and content production. Explore AI alternatives in program production, build a site-wide AI character interactive ecosystem, seek more innovative gameplay with next-generation spatial computing devices (XR), and strengthen the integration of new technology with program shooting and production. Recently, “Mango TV-Vision” was officially launched on the AppStore, becoming the first native application for Apple Vision Pro headsets in the domestic long video industry. An AI animated comic produced by Mango TV was broadcast on Hunan TV. AI technology is rapidly iterating, and it is expected that it will continue to form catalysts.
Maintain a buy rating. The profit forecast for 23 was adjusted according to the Express Report, and the 24-25 profit forecast is maintained. The company's net profit for 23-25 is estimated to be 35.59/22.10/2,436 billion yuan (the original forecast was 36.12/22.10/2,436 billion yuan), and the corresponding PE is 13/21/19x. Maintain a buy rating.
Risk warning: The macroeconomy is declining, market competition is intensifying, content regulation is becoming more strict, and there is a loss of talent.