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华策影视(300133):新质生产力下优质内容价值有望持续凸显

Huace Film & Television (300133): The value of high-quality content is expected to continue to be prominent under new quality productivity

華鑫證券 ·  Apr 25

Huace Film and Television released the 2023 Annual Report and 2024 Quarterly Report: Total revenue of 2023 was 2.267 billion yuan (yoy -8.4%), with net income of 3.82 billion yuan and 292 million yuan (yoy -5.08% and -3.24%), gross sales margin and net profit margin of 28.5% and 17.5%, net operating cash flow of RMB 390 million (yoy +35.8%); cash dividend of RMB 0.41 (tax included) for every 10 shares to all shareholders in 2023. Looking at a single quarter, the company's total revenue for the first quarter of 2024 was 177 million yuan (yoy -81.7%), and the amount of net profit due to mother and deducted non-profits was 0.3 billion yuan and 0.014 billion yuan (yoy -79.58% and -98.8%), respectively.

Key points of investment

In 2023, the pre-sale contract for improving quality and internal skills was signed for 1.98 billion yuan. In 2023, the company welcomed the younger generation management team and proposed the development goal of building an “international integrated media group”. The core business focuses on creativity, improving quality, and strengthening the management of the entire life cycle of film and television IP. On the main business side, the company's film and television business revenue in 2023 was 2,246 billion yuan (yoy -9,61%); in 2023, the company's top five film and television productions earned 1.25 billion yuan (accounting for 55.6% of main revenue); by category, TV drama production and distribution revenue was 1.59 billion yuan (yoy +3.68%, accounting for 70.1% of revenue), TV series copyright distribution revenue of 407 million yuan (yoy +19.3%, accounting for 17.95% of revenue), due to movies Due to the decline in revenue growth, the overall revenue growth rate of the film and television business declined slightly; in 2023, the company signed pre-sale projects of 1.98 billion yuan, with a cumulative pre-sale of 3,798 billion yuan, laying a solid foundation for long-term performance.

On the drama side, it was launched and gradually resumed in 2024. The series “National Color Fanghua” is being filmed in an orderly manner. Among them, the short drama “My Way Home Is Windy” has achieved good results. Capital investment in skits will be increased in 2024, and it is proposed to develop mechanisms to produce boutique short dramas such as “The Man Who Saved Time” and “My Way Home Has Wind 2”; the film series IP project “Assassination of the Novelist 2” has been set up, and 6 movies are scheduled to be screened in 2024; the copyright business is steadily improving. Purchases, the number of film and television copyrights increased to 50,000 hours; The animation business rose to a division in 2024 and explored derivative business formats such as animated movies and cards; on the overseas business side, the overseas new media communication matrix has built more than 100 channels, expanded innovative content such as skits, short dramas, etc., and the number of overseas user subscriptions has grown to more than 20 million; Huace has more than 4.5 million Facebook fans, ranking first on the official account of Chinese film and television companies; the new highlight of content going overseas is the output of the creative script model.

Internal and external efforts to strengthen the “content+technology” strategy and use AI to reshape the workflow of the film and television content industry

The development of the content industry is inseparable from the power of new technology. Under AI-driven new productivity, in 2023, the company promoted the AI strategy from the top down, established the AIGC Application Research Institute, and established links with leading technology companies and AI startups. The company launched a self-developed “wind” industry vertical model, involving literary and cultural functions such as “AI screenwriter assistant” and “AI script evaluation assistant”; it has launched the “AIGC multi-language intelligent translation workflow”, “AI video analysis and search function”, etc. At the same time, it has built a cumulative 3D digital asset library. Currently, there are 700 3D digital asset scenarios that can be used in the filming and production of commercials, movies and TV series. The tool value of technology will continue to iterate. As one of the leading companies in the content industry, the company's high-quality professional content innovation and production capacity will also be scarce in the AI generation era.

Launch of the 2024 Incentive Plan

In April 2024, the company launched an incentive plan. The total amount of restricted shares to be granted is no more than 12.8,157 million shares (0.67% of total share capital), with an assessment period of 3.65 yuan/customer. The assessment period is 2024 to 2026, based on 2023 revenue, the company's revenue growth rate from 2024 to 2026 is not less than 10%, 21%, 33%, or based on net profit. The net profit growth rate from 2024 to 2026 is not less than 10%, 21%, and 33%; one of the core competitiveness components of cultural enterprises is talent, The company launched an incentive plan to help motivate the company's employees and improve the long-term incentive mechanism.

Profit forecasting

Maintain a “buy” investment rating. The company's revenue for 2024-2026 is 25.1, 27.5, and 3.03 billion yuan, respectively, and EPS is 0.22, 0.25, and 0.27 yuan respectively. The current stock price is 33.4, 30.2, and 27.1 times PE, respectively. As a leading content creation company, the company positions itself as a producer of quality content and an enabler in the film and television industry, embraces new technologies such as AI, and new productivity-empowering content can be expected, and the supply of high-quality content will continue in the short term (performance fluctuates in the medium to long term). Driven by both a cultural powerhouse and a copyright powerhouse, the company's strong strategy is expected to bring both economic and social effects. The company will accelerate the launch of AI vertical applications in the future, and make full use of the dominant position of listed companies to give full play to the functions and value of capital empowering businesses through various capital methods such as investment and mergers and acquisitions, thereby maintaining a “buy” investment rating.

Risk warning

The risk that the application of new technology AI falls short of expectations; risk of equity incentives falling short of expectations; risk of slowing the growth rate of the film and TV series industry; risk of piracy; risk of performance fluctuations due to delays in film and other projects; intellectual property risks such as piracy and piracy of original works; risk of intellectual property disputes, arbitration and litigation risks, risk of uncertainty in diversified content business development, risk of public health emergencies, and risk of macroeconomic fluctuations.

The translation is provided by third-party software.


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