Introduction to this report:

In 2023, the company plans a large amount of depreciation to affect performance. It is expected that many movies will hit theaters in 2024 and later. The participating film “Life at Speed 2” has already been screened during the 2024 Spring Festival.

Key points of investment:

It will be reinstalled and launched in 2024 to maintain the “gain” rating. The company participated in the 2024Q1 film “Flying Spur Life 2”, which was screened during the Spring Festival and received 3.4 billion yuan in box office. The films to be screened include “Legend” and “Red Mansion Dream: The Golden Jade Love”. The highly anticipated “Operation Jiaolong” is currently being filmed.

Considering film schedule adjustments, the 2024 EPS forecast was lowered to 0.20 yuan (-26%), the 2025 EPS forecast was kept unchanged at 0.38 yuan, and the 2026 EPS forecast was added at 0.46 yuan. Referring to comparable company valuations, the target price was maintained at 10.66 yuan, and the “increase” rating was maintained.

Incident: The company announced its 2023 annual report and 2024 quarterly report. In 2023, it achieved operating income of 1,608 million yuan (-20%) and net profit of 553 million yuan (year-on-year loss); 2024Q1 achieved operating income of 404 million yuan (-16%) and net profit to mother of 06 million yuan (turning a loss into a profit).

The 24Q1 performance is in line with expectations, and we are actively exploring new topics and types. The company's strength lies in its deep exploration of new mainstream genres of movies, but as demand for movie viewing diversified, the company began exploring new types of movies. The projects already in reserve include the animated film “Human Warfare”, the spy film “Princess of Kashmir”, the sci-fi film “Sanxingdui: Future Apocalypse”, the comedy film “Running Wild Dad”, and the finance-themed film “The Wolf of the Stock Market”. Through the diversification of project types, the continuity of film distribution in various stages is guaranteed through echelon-style production.

The cinema business ranking is stable. By the end of 2023, the company had a total of 108 cinemas of its own and joined 16 cinemas. The cinema has a total of 892 screens, including 32 IMAX screens, 17 BONA ONE screens, 3 CINITY screens, and 20 Chinese blockbusters. In 2023, the in-house cinema achieved a box office of 1,137 billion yuan, ranking 7th among all cinematographers.

Risk warning: The movie's box office fell short of expectations, and the release date of the film is uncertain.