Ling Meng Film and Television recently announced its 2023 annual results. The company achieved operating income of 1,222 million yuan for the full year of 2023, +28.41% year on year; adjusted net profit of 227 million yuan, +60.40% year over year.
Copyright dramas and movies continue to break through, and 2024 is expected to be a year of high production capacity. The company's annual revenue in 2023 was 1.22 billion yuan, up 28.4% year on year, with adjusted net profit of 227 million yuan, +60.40% year over year. Revenue was mainly contributed by long dramas (1.17 billion): 1) In '23, the company broadcast the boutique urban romantic drama “Just Love” (Douban rating 8.2), the medical drama “Inquire” (Douban rating 8.5), and the costume drama “One Mind Guanshan”. The average sales price of broadcasting rights was significantly higher than the industry level, which also provided strong support for the company's high gross margin of 39.4%. In addition, the company has a rolling stock of over 1,000 episodes of the long-running drama project. It is expected that 16 films will be screened in 24, and the full track layout will usher in a year of explosive production capacity. 2) The company accelerated the creation of a full-link marketing model. The artist business linked its own IP and drama resources, and the annual contract amount exceeded 40 million in '23, an increase of more than 2.5 times over the previous year. 3) Revenue from overseas distribution of long dramas in 2023 continued to show a rapid growth trend, increasing by about 89.1% over 2022 to RMB 38.8 million.
Furthermore, the company has achieved a new breakthrough in the film sector. The company mainly invests and controls the film “Qiao Yeon's Heart” (starring Zhao Liying and Xin Zhilei), which is expected to be released in 24 years, which is expected to contribute flexibility to the performance.
Successful through the short drama business model, performance is expected to improve rapidly. New businesses such as skits continued to contribute to revenue growth in 2023: The company produced many popular skits such as the annual phenomenal skit “29” and “Behind the Traffic”, with a total broadcast volume of over 2.4 billion times, and achieved cumulative revenue of 32.23 million yuan through multiple dimensions such as business cooperation and user payments, an increase of more than 12 times over the previous year, and the gross margin reached a high level of 25.2%.
In 2023, the company accelerated the production and distribution of overseas skits. At the same time, it applied new technologies such as AI to production processes such as script development and character selection, and has launched 2 overseas skits.
The overseas distribution sector has been broadened, and there is a strong trend of movies, TV, and short dramas going overseas. The company built the overseas business platform “Ning Meng International” to explore new overseas business segments. Popular dramas have been broadcast overseas, and many series such as “Just Love”, “Ask Your Heart”, and “One Mind Guanshan” are popular on overseas first-tier platforms, and their distribution prices have reached the leading level in the industry. The company also co-develops and produces new local dramas with groups such as Thailand's GDH and Indonesia's MNC. Furthermore, based on the advantages of conceptual planning and combining overseas local resources, the short drama business has also gradually expanded overseas.
Considering that the company's main long drama business is expected to expand significantly in 2024, the short drama business is also expected to develop more rapidly, and the combined investment in movies is expected to contribute to performance flexibility. We predict that the company will achieve revenue of 15.71/17.59/19.25 billion yuan in 2024/2025/2026, respectively, and an adjusted net profit of 2.47/2.81/307 million yuan.
Risk warning: the risk of increased competition in the main business; the risk of uncertainty about the launch of the series, etc.