Incident: An investor conference held by Wanda Film on March 22. The company's actual controller Ke Liming, Chairman and CEO Chen Xi, Chen Hongtao, director and executive president, Wang Huiwu, director and board secretary, Gong Qiao, director, and Huang Shuo, vice president and financial director, attended the meeting. Chen Xi, the chairman and president, made the main speeches.
Comment:
Wanda Film said: (1) It will continue to expand its market share in the cinema sector and continuously improve the output capacity of the content sector. (2) The company plans to use the TimeNet platform to focus on developing derivatives business. (3) The company now insists on promoting a producer-centered system, which is equivalent to at every end of the entire process. In addition to meeting the director's creative needs, the company strictly controls everything from product establishment, content quality, artistic creation, and aesthetics, so that the quality of every work can be guaranteed.
In recent years, the movie viewing preferences of Chinese viewers have gradually changed, and high-quality domestic films are more suited to the Chinese market. (4) At a time when AI technology was developing rapidly, movies ended up watching original content. The company hopes to use AI to produce heroic images in traditional Chinese animation to first satisfy the preferences of the Chinese audience, and then promote the content they are interested in to the world.
The actual controller of the company changed, opening a new chapter. Currently, China Ruyi, the controlling shareholder, is a leading domestic film and television content leader. Through business collaboration and complementary advantages between the two sides, we believe that Wanda Film will usher in new development opportunities in content production, film promotion, derivative products, and theater development. Regarding the issue of business collaboration and competition with Confucius in China, the company stated that it will continue to take active and effective measures to properly resolve relevant matters within 3 years from the completion of the equity transfer in accordance with the regulations of the supervisory authorities. Currently, the two companies are developing more collaboratively. For movies and TV series produced by Confucius, Wanda Film can prioritize investment and promotion, which helps enhance the company's upstream strength.
The company's annual results are in line with expectations. The company announced its 2023 performance forecast. In 2023, the company drastically turned a loss into a profit. The net profit range was between 900 million yuan and 1.2 billion yuan, and the loss was 1.92 billion yuan in 2022; net profit after deducting non-return to mother is estimated to be between 700 million yuan and 1 billion yuan, and a loss of 2.08 billion yuan in 2022.
China's film industry is expected to recover, with significant increases in box office and moviegoers in 2023.
The total annual box office reached 54.915 billion yuan, and the number of movie viewers reached 129.9 billion, a record high in the past four years. Based on this, the company is confident about the future development of the film industry. Wanda Cinemas' theatrical segment achieved significant growth in box office revenue and non-box office revenue in 2023. The company's domestic cinemas achieved box office of 7.56 billion yuan, with 186 million viewers, and a market share of 16.7%. In terms of content, the film “The Three Teams”, which the company invests and controls, and many co-produced films performed well at the box office.
Investment advice: With the restoration of the movie market and the change of actual controllers, the company is expected to usher in both market-side and content-side catalysis. At the same time, the company has abundant cinema reserves, so it is recommended to focus on it.
Risk factors: Film box office falls short of expectations; risk of performance fluctuations due to delays in the release of movies and other projects; risk of increased operating expenses of cinemas; risk of macroeconomic fluctuations, etc.