Maogan Entertainment announced 23-year results; revenue was 4.76 billion yuan (median value of 4.75 billion yuan in the forecast range), up 105% year on year; IFRS net profit was 9.1 billion yuan (median value of 905 million yuan in the forecast range), up 766% year on year; non-IFRS net profit was 1.03 billion yuan, up 342% year on year; in line with expectations.
The ticketing business resumed in line with the market, and ticket sales for performances were the main increase. According to financial reports, the revenue of online entertainment ticketing services for 23 years was 2.26 billion yuan, which is already close to the peak revenue volume of the movie market in '19 (2.30 billion yuan). The increase mainly comes from performance ticketing. Cat's Eye has a stable ticketing share and continues to maintain its leading position in the market; performance ticketing has progressed actively since 23 years, serving over 100 concerts, e-sports events, and events; the ticketing business is also overseas. In Hong Kong, in addition to the ticketing network in the winning city, it has launched its own ticketing platform UUTIX to provide performance ticketing services.
Entertainment content performed well, and both quantity and success rate increased markedly. According to financial reports, the revenue of entertainment content services for 23 years was 2.30 billion yuan, a record high in revenue; the number of main films distributed and the share of box office sales reached record highs in the same period, and many domestic films participating in the distribution/production achieved impressive box office performance. Cat Eye participated in 54 domestic films throughout '23, and mainly distributed 30 domestic films; participation in leading films increased significantly. Of the top 10 box-office films in '23, 4 were mainly promoted, and 5 were the main producers.
Net interest rates have reached record highs, and rates have all declined. Gross profit of 2.38 billion yuan was achieved in '23, and gross margin increased to 50%; sales expenses ratio was 18% and management expense ratio was 8%, both down year on year; adjusted net profit margin was 22%, a record high. However, it should be noted that the government subsidy in '23 was 42.7 million yuan, an increase of 55% over the previous year; the net financial revenue was 75.9 million yuan, an increase of 243% over the previous year; this had a partial one-time impact on profits.
In 24 years, Cat Eye still has a rich project reserve. 1) The movie market continues to pick up. According to Maogan Professional Edition data, as of March 25, the box office has surpassed the same period last year. The supply of imported domestic films is diversified, and high-quality content is expected to further drive demand for movie viewing. 2) Cat's Eye movies are well-stocked, and some schedules have already been set. The company's lead participation is still high. Among the top ten grossing films in '24, Cat Eye has starred in 3 movies, namely “Flying Fast Life 2” and “Can't Stop the Annual Meeting!” “Golden Fingers”. Scheduled films in reserve for the future include “The Yellow Finch Is Behind!” , “The Big “Anti-Faction”, and “The Last Way to Spend Money”. 3) Supply and demand are strong in the performance market, and the peak season will begin in Q2. At present, Cat Eye has received tickets from leading entertainers, including Zhang Xueyou, Jay Chou, Chen Yixun, and Andy Lau, for some of their shows.
Maintain a buy rating. The company's main business is related to the strong movie market. The 23-year film summer program base is high. The backlog of new films has already been released. The overall supply in the second half of the year still needs to be observed, and the overall box office is expected to increase slightly throughout the year; in addition, the profit side in 23 had a one-time impact of government subsidies and net financial revenue (total of 120 million yuan); we lowered the 24-25 adjusted net profit forecast to 901/1,027 million yuan (the original forecast was 1,090/1,243 million yuan), adding a 26-year forecast of 1,165 million yuan. The 24-year target PE15x (comparable company closed on March 26, according to Bloomberg's unanimous expectation that Alibaba Pictures FY25 should have a PE of 11x, and according to Wind's unanimous expectation that Wanda Film's PE should be 23x in 24), the corresponding target price was HK$12.83, and there is still room for 36% increase, maintaining the purchase rating.
Risk warning: The movie market falls short of expectations, the performance of new films falls short of expectations, and the performance market falls short of expectations.