Incidents:
The company achieved revenue of 677 million yuan in 2023, a year-on-year increase of 111.46%; net profit to mother was 134 million yuan, an increase of 813.92% over the previous year; non-net profit was deducted from mother to reverse losses, reaching 70.98 million yuan. In 2024Q1, we achieved revenue of 34.54 million yuan, an increase of 109.37% over the previous year; net profit to mother of 5.86 million yuan; deducted non-net profit from mother of 18.79 million yuan.
The 2023 performance showed restorative growth. The 2024Q1 performance was affected by the project confirmation cycle, and the company's revenue and net profit increased sharply year-on-year in 2023. It was mainly due to large-scale cultural and performing arts projects such as the opening and closing ceremony of the 19th Asian Games in Hangzhou, and the implementation of cultural tourism and performing arts projects such as “Unbounded Chang'an”. In 2024Q1, the company's net profit to mother declined year-on-year, mainly due to a decline in bank wealth management income; the growth rate of non-net profit deducted from mother was lower than the revenue growth rate. Mainly due to the 14th Winter Games being held during the Spring Festival, the gross margin of the project was lower due to rising personnel costs. In addition, the total number of labeling projects in the company during the reporting period was 379 million yuan, and as of 2024Q1, the total number of on-hand orders by the company was 900 million yuan. Although the short-term performance of the 2024Q1 company is affected by the project confirmation cycle, sufficient on-hand order reserves are expected to support full-year results.
Actively explore the C-side operation business. It is expected to smooth the company's performance in the medium to long term. The company's C-side business will start to be profitable in 2023. The Shanghai 632 project achieved revenue of 33.54 million yuan and net profit of 9.92 million yuan. Based on the experience accumulated in successful projects, the company continued to explore the C-side business in 2024. In early 2024, the original musical “One Hundred Years of Youth” produced by the company completed its premiere; in mid-April, the newly created offline entertainment space “Shang Live Space” began internal debugging; in May, the Hangzhou live performance “Xianghu · Yayun” project will be officially launched. We believe that with the gradual implementation of C-side projects this year, the share of C-side business revenue in total revenue will gradually increase, and it is expected that the pace of confirming the company's performance will be smoothed out in the medium to long term.
Low-altitude economic performing arts and virtual performing arts innovation to create new project highlights The company used drone technology in “My Most Memories Are Hangzhou”, “Zen Walk 3.0” in the town of Yunhuawan in Wuxi, and the “Spring Dance Grand Xi'an” light and film festival project to actively explore “Low Altitude+Cultural Tourism” and enrich the artistic effects of cultural tourism and performing arts projects. Furthermore, its subsidiary Fengshang Mutual Entertainment teamed up with Migu to create the metaverse bitscene J WORLD. Production methods that combine deep virtual reality are followed in space construction, and advanced virtual technology such as real-time rendering that has been proven in the constellation M has been successfully continued. Looking forward to the future, the application of new forms of artistic expression such as low-altitude economy and virtual technology will create new highlights for the company's projects, attract the audience to participate in the experience, and are expected to bring new volume to performing arts projects.
Profit Forecasts, Valuations, and Ratings
The company's sufficient on-hand order reserves are expected to support annual performance, and C-side operation business expansion will enhance medium- to long-term performance stability. Furthermore, innovative exploration of the low-altitude economy and virtual performing arts will bring new volume to performing arts projects. Therefore, we expect the company's revenue for 2024-26 to be 865/1,06/1,158 million yuan, corresponding growth rates of 27.78%/16.29%/15.13%, and net profit to mother of 2.60/3.12/350 million yuan, respectively, corresponding growth rates of 93.1%/20.2%/12.2%. Maintain the company's “gain” rating.
Risk warning
Major project execution risks, project progress, and low altitude/virtual reality-related technology developments falling short of expectations.