FY2024 results are in line with market expectations
The company announced FY2024 results (for the full year ended March 31, 2024): revenue of 5,036 billion yuan, up 43.9%; net profit to mother of 285 million yuan, turning a loss into profit, no less than 260 million yuan in line with the previous forecast; non-GAAP EBITDA of 504 million yuan, up 60.9%; non-GAAP net profit of 479 million yuan, up 112.8%. The performance was in line with our previous expectations, mainly due to higher sales and management expenses than expected. When considering the full fiscal year of barley, the company's FY2024 revenue was 5.904 billion yuan, an increase of 72.5%; non-GAAP EBITDA was 1,163 billion yuan, a significant increase over the previous year.
Development trends
“Content+Technology” two-wheel drive, actively arranging key schedules and leading projects. Investment in film production and promotion: Revenue of $2,072 billion, up 68.6% from the same period. The FY2024 company participated in more than 60 films (including nearly 30 in the main promotion and production of 6). We believe that by obtaining more investment and main promotion projects to cover key schedules and leading projects, and actively expand production and production capabilities, the company will gradually develop brand capabilities. The company's performance will mention that it is actively seeking high-quality film and television content production companies, and may consider acquisitions and other methods to supplement its content production capabilities. Movie ticketing and technology platforms: Revenue of $920 million, an increase of 76.3%. The company mentioned in the announcement that the number of Taomai VIP members is rising steadily, and Yunzhi continues to rank first in the number of ticketed theaters and number one in the number of ticketed theaters. Series production: Revenue also fell 23.7% to 596 million yuan due to the impact of when the series was released. IP derivatives and innovation business: Revenue also increased 8.7% to $1,053 billion. Among them, revenue from Aliyu's licensing business increased 77% year over year, achieving resilient growth.
Optimistic about the growth potential of the offline entertainment industry, Barley's revenue increased sharply year over year. FY2024 barley revenue was 1,482 billion yuan, a significant year-on-year increase, and its GMV increased by more than 500%. The company mentioned at the results meeting that barley contributed more than half of the EBITDA (if barley's full fiscal year is taken into account). Barley has a leading market advantage in the field of ticketing agencies, especially in the core concert category, with a coverage rate of nearly 100% of leading projects; the company is also gradually exploring the field of performance content planning, production and investment. We believe that the performance industry benefits from strong supply and demand, and Damai is expected to form an ecological closed loop of content, venues, and ticketing in the future, opening up room for growth.
Looking ahead to 2024, the film reserves are rich and diverse, and keep an eye on the progress of key films in the summer program. In 2024, the company's main production and distribution of “Hot and Hot” won the Spring Festival box office title; follow-up film reserves include “Fengshen Part 2” (main production, main distribution), “When the Stars Shine” (self-produced, main publication), and “Customs Front” (co-produced, main distribution). According to the company's official WeChat account, the company has invested in the production of more than 50 projects to be screened, more than 30 copyright and development projects, and has rich and diverse reserves. We recommend continuing to monitor the company's progress in coverage of key films and the box office performance of related projects.
Profit forecasting and valuation
Considering the increase in sales management expenses, we lowered FY2025 non-GAAP net profit by 27.9% to $1,066 million, and introduced a new FY2026 non-GAAP net profit forecast of $1,241 billion. The current price corresponds to 12/9.7 times FY2025/2026 non-GAAP P/E. Maintaining the outperforming industry rating, taking into account profit forecasts and barley's development potential, the target price was lowered by 9.1% to HK$0.6, corresponding to 15/12 times FY2025/FY2026 non-GAAP P/E, respectively, with 25% upside compared to the current price.
risks
The quality and quantity of content supply fell short of expectations, competition intensified, regulations were tightened, and there was a risk of impairment of goodwill.