Incident: In 2023, Wanda Film achieved revenue of 14.620 billion yuan, a year-on-year increase of 50.79%, a year-on-year net profit of 912 million yuan, a loss of 1.923 billion yuan in the same period last year, Q1 achieved revenue of 3.821 billion yuan, an increase of 1.70% over the previous year, and a net profit of 326 million yuan, an increase of 3.25% over the previous year.
Domestic box office market share has steadily ranked first, and overseas cinema box office is gradually recovering. In 2023, the company's domestic direct-run cinemas achieved box office of 7.56 billion yuan (excluding service fees, same below), recovering to 96.4% of the box office in '19, up from 12.5 pcts and 186 million movie viewers, recovering to 92.7% of the 2019 market, higher than 17.5 pcts; the company's cumulative market share was 16.7%, ranking first in the industry for 15 consecutive years. Overseas, the company's Australian cinema line grew steadily as the market recovered, achieving box office of 1,401 billion yuan in 23, an increase of 13% over the previous year. In Q1, the company's cinema screening business maintained a steady recovery trend. Domestic cinemas achieved a year-on-year decline of 2.6% to 2.1 billion yuan, and the cumulative market share increased by 0.2 pct to 16.5%, maintaining a leading edge; overseas Australian theaters achieved a 9% year-on-year increase in box office to 315 million yuan (tax included).
High-quality, asset-light cinemas are rapidly expanding in scale. As of March 31, '24, the company had 929 cinemas and 7,720 screens, including 708 direct-run cinemas, 6,145 screens, 221 asset-light cinemas, and 1,575 screens. The company is actively developing high-quality asset-light cinemas, 79/25 new asset-light cinemas opened in 2023/Q24; in overseas markets, the company has 61 cinemas with 529 screens.
Promote content creation, and long-term space can be expected. In 2014, Q1 increased its investment in film and television projects. According to Cat Eye, the company participated in the production of the films “Peace and Riot Force” and “Journey Through the Moon” scheduled for May 1st, and “White Snake: Floating”. In terms of TV dramas, it is expected to broadcast a total of 6 TV series during the year, including “From South to North” and “Misplaced Position,” and series projects such as “Zheng Qingchun” and “Accidental Murder 3” are being produced as planned.
The company's new management has extensive experience in film and television production. It is hoped that on the basis of the company's business covering the entire film industry chain, they will further enhance their quality content production capabilities and launch quality projects one after another to unleash value.
Profit forecast: The company's net profit for 24/25/26 is expected to be 1,315/16.73/1,894 billion yuan, respectively, up 44%/27%/13% year over year. Maintain a “buy” rating.
Risk warning: policy regulation risk; box office falling short of expectations; risk of impairment of goodwill.