The company released the 24H1 report, achieving operating income of 1.334 billion, up 120.43% year on year; achieving net profit of 0.473 billion, up 133.14% year on year; achieving 0.461 billion non-net profit deducted from mother, up 143.90% year on year; achieving net operating cash flow of 0.582 billion, up 406.46% year on year; and achieving a weighted average ROE of 5.34%, up 2.91 pcts year on year.

Revenue and profit increased significantly in the first half of the year. During the reporting period, the company's film business revenue and profit both achieved significant growth compared to the same period last year. The films that the company participated in the investment, distribution, and included in the box office during the reporting period include “Heavy Rain,” “Article 20,” “Clean Up, Never Give Up”. The films released in 2023 and some of the films carried over to the reporting period included “Lighting Store”, “Rage”, and “Your Wedding” (replay), which grossed about 2.813 billion yuan. By business, the film and related derivatives business achieved revenue of 0.974 billion yuan, up 84.37% year on year, gross profit margin of 47.36%, up 12.72 pct year on year; TV drama business achieved revenue of 0.234 billion yuan, up 100% year on year, gross profit margin of 37.72%; brokerage business and others achieved revenue of 0.126 billion yuan, up 64.16% year on year and gross profit margin of 34.08% year on year, down 4.78 pct year on year.

There are plenty of movies and TV series ready to be broadcast. In terms of live-action movies, the film “Safe Evacuation from the 21st Century”, which was invested and distributed by the company, was screened on August 2, 2024, and is still being screened nationwide; the company still has many film projects such as “Jo-yeon's Heart”, “Holding the Ticket”, “Little”, “Her Little Pear Vortex”, “Invisible Man”, “Mordogga”, and “44 Bitter Persimmons.” In terms of TV dramas, 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 “Fidget Saddle” was broadcast online on July 31, 2024 on Tencent Video and Mango TV; “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.

The animated film “Xiao Qian” has been produced and is yet to be scheduled, and the popular film “Nacha 2” is well stocked. The two animation brands, Color Strip House and Light Animation, collaborated on a division of labor and collaboration to promote the planning and production of responsible animated films. At present, the first work of the company's animated film brand, “Xiao Qian”, has been produced, and can be scheduled to be screened once the appropriate schedule is determined; Light Animation is making every effort to promote the first contemporary fantasy animated film “Go to Your Island”, “The Demon Boy in the Three Kingdoms”, “Starry Sky in the Three Kingdoms”, “Big Fish Begonia 2”, “Acacia”, “Shuo Feng”, “Inhuman”, “Zhuolu”, “Journey to the West”, “Journey to the West: Haunted Tiangong”, “Jiang Ziya 2”, “Tea Ai 2, China 2”, “Yesterday Sky 2”” and other animated film projects are progressing at their own pace. The company is currently planning to produce 2-3 animated films every year, and with the help of AI and other technologies, there is an opportunity to reach a production scale of 4-5 per year in the future.

The internal talent training system is mature, and the success rate of training new hires is high. During the reporting period, the company's artist brokerage and content-related business progressed steadily, and still contributed a good profit. In recent years, the company's artists have stood out and have played major roles in many outstanding film and television projects. On the other hand, the company has accumulated some very mature experience in finding and supporting new directors, and the success rate is relatively high. In addition to actors, there are many screenwriters, cinematographers, and even company employees who have the potential and opportunity to be directors. The company has formulated the “321 Plan”: training 30 producers, 20 screenwriters, and 10 directors internally, while also continuously searching for and signing external directors and screenwriters. Currently, the plan is progressing smoothly.

Maintain a “Highly Recommended” investment rating. Taking into account the company's business development and the pace of new product launches, we lowered our profit forecast. The company's revenue for 24-26 is 1.947/2.726/2.999 billion yuan, respectively, with year-on-year growth rates of 26%/40%/10% respectively; net profit to mother is expected to be 0.657/1.069/1.182 billion yuan respectively for 24-26, with year-on-year growth rates of 57%/63%/11%, respectively, corresponding to current stock price-earnings ratios of 31.8/19.5/17.7 times, respectively.” Highly recommended” Investment rating risk tips: risk of film release falling short of expectations, risk of offline scene recovery falling short of expectations, risk of AI enabling film production falling short of expectations, etc.