Incident: Lightline Media's 2024H1 revenue was 1.334 billion yuan, up 120.43% year on year; net profit to mother was 0.473 billion yuan, up 133.14% year on year, and net profit after deducting non-return to mother was 0.461 billion yuan, up 143.90% year on year. Among them, 2024Q2 achieved revenue of 0.264 billion yuan, a year-on-year increase of 36.99%, and realized net profit of 0.048 billion yuan, a year-on-year decrease of 40.29%, after deducting non-return net profit of 0.045 billion yuan, a year-on-year decrease of 36.41%.

Comment: Maintaining a new pace in content, the profitability of small-volume films in the off-season is steady. 2024H1 screened a total of 4 films, 2 each in Q1/Q2. The new pace of product development was stable. Among them, “Article 20” received 2.454 billion yuan in box office, which was the core driver of performance growth in the first half of the year. Q2 In the off-season, the company launched 2 small-volume films “Grass and Trees” and “Eradicate Blackmail: Never Give Up”, and maintained a stable profit situation in a single quarter. On August 2, the company's “Actual Safe Evacuation from 21” was screened, and once again achieved a good reputation in the market.

The series contributed incrementally, giving full play to the advantages of resources such as copyright and artists. 2024H1's TV series business revenue was 0.234 billion yuan, contributing incremental revenue, and the gross margin reached 37.72%, which is good at profitability. Among them, the company's online drama “Dali Temple Shaoqing Tour”, which was adapted from the popular comic “Dali Temple Diary”, was broadcast on iQiyi on February 20, 2024; the costume light comedy “The Saddle of the Flies” was broadcast live on Tencent Video and Mango TV on July 31, 2024. Among the reserve works, “Mountain and River Pillow” has now reached an intense post-production stage; development of drama projects such as “Spring Dinner” and “My Date List” is also continuing.

Develop multiple genres, have a rich reserve of movies, and focus on the scheduled rhythm of key works. The company's reserves are rich in content. The current film development direction mainly includes realist themes, animation, and others. The realistic theme plan includes “Article X” series of films, including “Article 3,” “Article 17,” and “People's Justice”; the animation “Xiao Qian” is currently being screened, and “Go to Your Island”, “The Demon Boy in the Three Kingdoms”, “Starry Sky of the Three Kingdoms”, etc. are all in production; others include “Qiao Yan's Heart”, “The Winning Ticket”, “Little” Characters”, “Her Little Pear Vortex”, “The Invisible Man” and “The Mysteries of the Three Kingdoms” Multi-genre films such as “Adventure”, “Mordogga”, and “Forty-four Bitter Persimmons” .

Investment advice: The company is expected to achieve revenue of 1.862/2.73/3.248 billion yuan in 2024-2026, up 20%/47%/19% year on year, and net profit of 0.64/1.193/1.324 billion yuan, up 53%/86%/11% year on year. Corresponding PE is 32x/17x/15x, maintaining a “buy” rating.

Risk warning: risk that the project progress falls short of expectations, risk that the box office falls short of expectations