The company's recent situation
Recently, we organized a special CEO survey of Alibaba Pictures Damai. The company said that the current performance industry in China is characterized by strong supply and demand. The market size in 2023 will increase dramatically compared to 2019, and that Damai is in a relatively leading position within the industry and is expected to benefit from the development of the industry.
reviews
The box office revenue of music genres such as concerts has increased significantly compared to 2019, and young users account for a relatively high proportion. According to the “2023 National Performance Market Development Report” issued by the China Performance Industry Association, the national performance box office revenue in 2023 reached 33.596 billion yuan, an increase of 482.8% over the previous year, and an increase of 165.3% over 2019 (statistics do not include rural performances, entertainment venue performances, and travel entertainment, same below). By type: According to the China Performance Industry Association, the box office revenue of large and medium-sized concerts and music festivals with more than 2,000 people nationwide in 2023 was 20.071 billion yuan, an increase of 373.6% over 2019; box office revenue of small theaters and new performing arts spaces (including small live music live LiveHouse) increased 463.1% compared to 2019; box office revenue for professional theater performances increased 14.2% compared to 2019. Audience portrait: According to a report jointly published by the China Performance Industry Association, Damai, Weibo, and Lighthouse Professional Edition, in 2023, the box office revenue for large-scale concerts with more than 5,000 people nationwide was nearly 14.6 billion yuan, a record high. The proportion of ticketed spectators under 24 was 38% and the female audience accounted for 65%; the distribution of concert projects was average, the concentration of host cities declined, and the market continued to sink. The company said that the audience has strong preferences for music genres such as concerts, and the audience coverage in 2023 expanded compared to 2019. We believe that the performance industry is rich and diverse, with strong demand, and is expected to continue to flourish in the medium to long term as content supply grows.
The performance industry is expected to continue to prosper, with box office revenue of 36.6 billion yuan in 2024, an increase of 9% over the same period.
We believe that as the supply of artist tour plans increases, the enthusiasm for watching shows may continue. Driven by strong supply and demand, the size of the performance industry is expected to grow year-on-year in 2024. The company expects the 2024 concert box office revenue to grow by 10% year-on-year. We raised performance box office revenue of 35.5%/33.8%/32.8% to 351/366/38.3 billion yuan in 2024, up 4.5%/9.0%/14.0%, respectively. Among them, the year-on-year growth rate of concert box office revenue was 5%/10%/15%, respectively.
Barley is expected to benefit from industry recovery and focus on medium- to long-term industrial chain value expansion. On November 30, 2023, the company announced that it had completed the delivery of barley acquisition. FY1H24 barley's revenue was 728 million yuan, a significant increase over the previous year. Damai is also speeding up the layout of the performance content sector. The company's FY1H24 results will indicate that investment revenue accounts for more than 20% of barley revenue in the medium to long term. We believe that in the future, barley is expected to form an ecological closed loop of content, venues and ticketing, focusing on the potential to expand the value of the medium- to long-term industrial chain.
Profit forecasting and valuation
Keep profit forecasts unchanged. Maintaining an outperforming industry rating and target price of HK$0.66, corresponding to 23/11 times FY2024/2025 non-GAAP P/E, with 43.5% upside compared to the current price. The current price corresponds to 15.8/7.8 times FY2024/2025 non-GAAP P/E.
risks
The quality and quantity of content supply fell short of expectations, competition intensified, regulations were tightened, and there was a risk of impairment of goodwill.