Incident: The company announced its annual results for the year 23, achieving revenue of RMB 4.757 billion, up 105.1% year on year; achieving gross profit of RMB 2,385 billion, up 133.8% year on year, corresponding gross margin of 50.1%, up 6.2 pct year on year; adjusted EBITDA of 1.25 billion yuan, up 290.4% year on year; achieved adjusted net profit of RMB 1,029 billion, up 342.2% year on year.
Comment: The film and performance market is picking up, and the company's performance has reached a record high. According to data from the National Film Administration, the total box office of national films reached 54.9 billion yuan in '23, an increase of 82.6% over the previous year. The annual box office of domestic films was 46 billion yuan, a record high. The offline performance market is also heating up rapidly. According to the “2023 National Performance Market Development Report”, the national performance box office revenue in '23 was 50.2 billion yuan, an increase of 150.7% compared with '19. The company's online entertainment ticketing revenue was 2,259 billion yuan (yoy +111.5%), accounting for 47.5% of total revenue. Movie ticketing maintains a leading position in the market, deeply explores the cinema scene, and continues to consolidate ticketing service capabilities; in the performance ticketing business, the company vigorously promoted leading performing arts cooperation, became the general ticketing agent for some concerts by leading artists such as Zhang Xueyou and Jay Chou, and expanded various entertainment segments such as sporting events, e-sports events, and immersive theaters. The total revenue of the company's offline performances and GMV all reached record highs in the same period in the same period.
Revenue from entertainment content services was 2.3 billion yuan (yoy +112.9%), accounting for 48.4% of total revenue. 1) The company further increased the breadth and depth of participation in the headline film. A total of 52 domestic films participated in the promotion in 23 years, of which 30 were controlled and distributed. The number of films and cumulative box office reached record highs. “Man Jiang Hong” of the Spring Festival program in '23 ranked sixth in Chinese film history with a box office of 4,544 billion, and the May 1st “Life Is Unfamiliar” had a box office of 1,184 billion yuan. The summer “Fengshen Part 1: Morning Song Fengyun” grossed 2,634 billion yuan, and “In the Octagonal Cage” also achieved outstanding results of 2,207 billion yuan; in addition, the company participated in the top three grossing films on New Year's Day in '24, “The Annual Meeting Can't Be Stopped!” “Twinkle Twinkle Twinkle Twinkle Star” and “Goldfinger”.
2) It has an industry-leading publicity system and innovates the industry's promotion and marketing service solutions. The company pioneered the New Year's Eve program marketing model. Through joint co-creation, platform co-creation, user co-creation, and co-creation of offline cinema scenes, the company created a joint promotion plan around 6 films within the schedule. Among them, the linkage between “One Twinkle, One Twinkle, One Star” and “Snow Field” sparked a buzz and broke the box office pre-sale record. 3) The 24-year Spring Festival program performed brilliantly. The company's film reserves were rich. “Flying Spur Life 2”, produced by the company and the main producer, ranked second in the 24th Spring Festival box office with a box office breaking 3.3 billion, reserve films such as “Chaoyuan Alley”, “Crisis Route”, “Improvised Murder”, and “Decryption”; 4) Exploring AI applications to empower the entire film industry. The company continues to use AI to deepen its understanding of movies, improve the accuracy of box office prediction, assist in upstream IP development and film content creation, and combine AI technology with the company's data base to provide a powerful promotion strategy for the film support.
Profit forecasting, valuation and ratings: As a leading movie ticketing company, the company has fully benefited from the growth of the movie box office, and has managed to distribute and produce outstanding box office performance. Considering the shortage of film supply in '24, the 24-25 revenue forecast was lowered to 49/5.3 billion yuan (-11%/-12% compared to the previous forecast), and the revenue forecast for 26 years was increased by 5.7 billion yuan based on conservative forecasts for the film and television market. Considering the continued improvement in operating efficiency, the 24-25 net profit forecast was slightly raised to 94/1.04 billion yuan (+6%/+5% compared to the previous forecast), and the net profit forecast for 26 years was increased by 1.2 billion yuan. Maintain a “buy” rating.
Risk warning: The box office for participating in the film fell short of expectations, demand for movies fell short of expectations, and market competition increased the risk.