Company background: “Film distribution and screening+big IP development and operation” two-wheel drive, the main cinema business is developing steadily, and the new IP business helps increase revenue
Shanghai Film was officially established in 2012 and has a complete “distribution+theatre+high-end cinema” film industry chain.
In 2023, it acquired 51% of Shanghai Film Company's shares, obtained operating copyrights for 60 classic animation and live action films, and entered a two-wheel drive development model for film distribution and screening and big IP development and operation. Currently, Shanghai Film's main business covers film distribution, cinema line, cinema management, and big IP development.
The film distribution and screening business is developing steadily: direct management in the ticketing sector, single-screen ticket real estate far exceeds the industry average, and the distribution sector is increasing quality products and deepening IP content
In the ticketing sector, cinemas directly managed by the company are mainly distributed in high-tier cities. Relying on location advantages, the per capita ticket price is higher than the industry average; franchise cinemas have continued to expand, and Lianhe Box Office has been in the top four in the country since the company went public, and as a leading theater line, it is expected to benefit from the industry trend of concentrating on leading companies, and the market share is expected to increase. In the distribution sector, the company is deeply involved in the development and creation of IP content. In the future, the number and share of the company's participation in key films is expected to increase with the help of group resources.
The increase in monetization of the big IP development and operation business is impressive: the licensing sector is framing and increasing ARPU; the derivatives sector fills the gap in Guofeng content IP categories; online online stores are popular, and offline sales are using cinema resources; the IP beauty effect in the space sector is eye-catching, and AI technology is integrated into the cultural, commercial and tourism industry
Diversification of licensing sectors, products and marketing licensing forms helps acquire new users. The annual frame agreement binds high-value customers or effectively shortens the project implementation cycle, and is expected to further unleash the potential of IP licensing business driven by an increase in the average value of a single customer and the frequency of cooperation; game licensing brings long-term turnover, and is expected to contribute 19-49 million dollars in revenue every year. In the derivatives sector, the main online channels are leading e-commerce, with better logistics and service ratings for online stores and more room for fan growth; offline stores mainly rely on cinema stores to create shopping scenarios to save the cost of setting up special stores; and Guofeng content IP derivatives with scarce IP slots for IP content, which have high fan loyalty and a long life cycle. The space sector, large business districts, and exhibition effects during the holiday season are eye-catching and are well recognized by the market; at the same time, offline immersive exhibitions also help expand the influence of IP brands, enhance fans' sense of identity with IP, and increase their desire to consume IP. Furthermore, the company is focusing on re-incubating the track, focusing on investing in the “IP+ New Track”, and forming a synergy between new AI technology and the IP industry chain.
Profit forecasts and investment advice
The company's revenue for 2023/2024/2025 is estimated to be 791/10.22/1,216 million yuan, respectively, and net profit attributable to the parent company is 1.24/2.18/324 million yuan. We believe that the main cinema business of the company is steady, that first-tier cities have an outstanding market share advantage, and that there is a logic for potential market share increase; the addition of large IP development and operation business brings revenue growth and valuation flexibility. Covered for the first time, the company was given an “increase in weight” rating.
Risk warning: the risk of IP commercialization falling short of expectations; the risk of increased market competition; the risk of insufficient supply of high-quality content; the risk that the turnover ratio of IP licensed games falls short of expectations; the 23-year performance forecast is only a preliminary accounting result. The specific data is based on the company's official 23-year report; the calculation is subjective and is for reference only.