Incidents:
Recently, the National Development and Reform Commission and others issued a notice on the “Implementation Plan for Promoting Equipment Renewal in the Field of Culture and Tourism”, which aims to guide and promote the upgrading of a number of facilities and equipment in the national culture and tourism sector by 2027, maintain a steady increase in the scale of related investments, comprehensively improve service quality, and promote high-quality development of culture and tourism.
Comment:
By promoting the upgrading of cultural tourism equipment, high-definition equipment manufacturers are expected to benefit. In order to promote equipment renewal in the field of culture and tourism and strongly support the development of new quality productivity, the key tasks of the plan include implementing actions to upgrade performing arts equipment, implementing smart cultural tourism transformation and upgrading actions, implementing high-tech promotion actions in the film industry, and implementing high-definition ultra-high-definition equipment renewal and upgrading actions. All regions will coordinate multi-channel funding, and eligible key projects will be included in the scope of financial support such as ultra-long-term special treasury bonds, while guiding policy and commercial financial institutions to strengthen their support for equipment renewal in the field of culture and tourism.
Expanding multiple application scenarios, cinema LED screens are expected to penetrate quickly. As an intelligent video solution provider, the company has a one-stop solution of “hardware+software+content”. The company expands diversified application scenarios around “AI+ video”. In the film and television industry, with the development of the domestic LED movie screen market, technology and equipment such as LED cinema screens are expected to gradually penetrate the cinema market and become one of the mainstream projection methods. The company launched LED cinema solutions earlier. China Film CINITY LED movie screen projection systems have already been implemented in many provinces and cities, and more projects are gradually being implemented, which is expected to become an important growth point for performance.
Self-developed AI+XR virtual production solutions to open up a new blue ocean market for LED applications. In the field of virtual live streaming, the subsidiary Creative Digital has developed and launched a comprehensive AI+XR virtual production solution, including the Metabox digital live broadcast room, Coruscant star core rendering and synthesis service system, and the Vormir source generation tool platform. Among them, the Vormir source line generation tool platform is a one-stop AIGC digital content creation tool, specially used for Metabox digital live broadcast rooms, and can quickly generate high-quality digital content that meets Metabox's needs. The platform is expected to be promoted and tested in 2024Q3 to provide one-stop virtual live streaming and content generation solutions in the fields of live short video, advertising, radio and television.
Profit prediction and investment rating: The company establishes a “hardware+software+content” program to promote intelligent video information management, publishing and interaction solutions. Revenue for 2024-2026 is expected to be 802, 10.85, and 1,290 million yuan, and net profit attributable to mother is 0.64, 1.12, and 132 million yuan, corresponding PE is 60, 34, and 29 times, respectively, giving it an “increase in holdings” rating.
Risk warning: downstream demand, new product development progress, profit forecast and valuation fall short of expectations