Introduction to this report:

The two main films invested by the company are scheduled for May 1st. More than 10 films have already been produced. 2024 is a major year for the company's projects, and it is expected that they will continue to release results.

Key points of investment:

The two movies have been released on the May 1st, and there have been more than ten popular movies. The company's two main films, “A Trip Through the Moon” and “What No Hot Pot Can Solve”, will be screened on May 1st in 2024. More than 10 films have already been released in reserve, and the results are expected to continue to be released as the film hits the big screen. We kept the 2024 and 2025 EPS forecasts unchanged, and added the 2026 forecast. The three-year forecast was 0.39/0.47/0.55 yuan, respectively, maintaining the target price of 7.84 yuan, and maintaining the “gain” rating.

Incident: The company announced the 2023 annual report and the first quarter report of 2024. In 2023, it achieved operating income of 432 million yuan (-7.93%) and realized net profit to mother of 186 million yuan (from profit to loss); 2024Q1 achieved operating income of 49.71 million yuan (+16.02%), and realized net profit of 3.52 million yuan (turning loss into profit).

2024Q1's performance has exceeded expectations, and production of several films has already been completed. The company announced the signing of a new supplementary agreement on January 17. The impact on 2024 net profit is expected to be -23 million to -5 million. As a result, the market expects a loss in performance in the first quarter, but due to matters such as the confirmation of the new drama, the performance is relatively good. It is expected that 3-4 films will be screened in the second quarter, which is expected to bring profit elasticity.

In addition, more than 10 live-action movies, such as “There's a Small Shop by the Clouds,” “Sand Sea Gate,” and “Dunhuang Heroes,” have already been released, and 2024 may become a big year for the company's movies.

The cultural tourism business opened a second growth curve. The company has already opened cultural tourism businesses such as Xi'an Yongxing Square, Chang'an 12:00 theme district, and Xiangyang Guanjia Alley. Additionally, it is promoting the implementation of cultural tourism projects such as Haikou Dongpo Old Wharf and Shunde Xinlan Road, which is expected to bring new increases in performance.

Risk warning: Movie box office falls short of expectations, tourist traffic falls short of expectations, etc.