Key points of investment:

Incident: The company's 24H1 achieved operating income of 2.17 billion yuan, down 1.2% year on year; adjusted net profit to mother was 0.35 billion yuan, down 22.8% year on year, lower than our previous forecast.

Key points of investment:

Performance ticketing led to a slight increase in the ticketing business. According to the company's financial report, Online Entertainment Ticketing 24H1's revenue was 1.05 billion yuan, up 3.0% year over year. The competitive pattern and business model of movie ticketing is basically stable. The key variable is the large box office; according to the company's financial report, the 24H1 domestic box office including service fees was 23.9 billion yuan, down 9% from the previous year; as a result, the Cat Eye movie ticketing business also declined in the first half of the year. Performance ticketing increased and market share increased; GMV for the Maogan 24H1 concert and music festival increased about 3 times year on year, outperforming the industry (according to data from the China Performance Industry Association, concert and music festival box office revenue increased 135% year on year in the first half of the year); local performance coverage exceeded 95%.

The number of entertainment content businesses increased, but revenue was affected by the decline in box office. According to the company's financial report, Entertainment Content 24H1's revenue was 1.02 billion yuan, down 7% year on year. In the first half of the year, it participated in the distribution/production of 32 domestic films, with 15 main releases (23H1 was 24 and 13, respectively). The success rate is still high. The main release film is at the top of the schedule. “Flying for Life 2” was the runner-up in the Spring Festival program, “Crazy Money at the End” was the May 1st winner, and “I Don't Want to Be Friends with You” was the Dragon Boat Festival winner. Among the films that Cat Eye participated in the distribution, those that have already been scheduled include “Crisis Line” and “Safe Entry and Exit”. Reserve films also include “Sauce Garden Alley” and “Queen of Dumplings.”

Expense side: According to the company's financial report, sales and marketing expenses of 24H1 were 0.51 billion yuan, an increase of 0.15 billion yuan over the previous year. The increase was mainly due to single-side ticket compensation, and revenue costs were leveled out (revenue side recorded in the entertainment content business), which had no impact on the profit side.

First repurchase. The company announced on July 19 that it plans to repurchase no more than HK$0.3 billion of the company's shares.

Looking ahead to the second half of the year, there is still some pressure on the movie market. According to Cat's Eye Pro, the summer program grossed 11.4 billion with service fees as of August 29 (20.6 billion in 23), but there are still plenty of film reserves to keep an eye on changes in the boom. The performance boom is still high. According to Lighthouse Pro, the year-on-year growth rate of the box office as of 8.28 in July/August was 65%/96%, respectively. Performance ticketing platforms are still scarce and relatively concentrated listings in the performance industry chain.

The profit forecast was lowered. Considering the short-term pressure on the film market, we lowered our 24-26 adjusted net profit forecast to 0.668/0.951/1.118 billion yuan (the previous forecast was 0.901/1.027/1.165 billion yuan).

Maintain a buy rating. The 24-year target PE12x (closing on August 29, comparable to the company's 24-year average PE was 15x), corresponding to the target price of HK$7.59, there is still room for 25% increase, maintaining the purchase rating.

Risk warning: The movie market performance fell short of expectations, and competition for tickets for shows intensified.