24H1 net profit of 0.473 billion yuan, an increase of about 133%. Maintaining the “buy” rating, the company published a semi-annual report: 24 H1 revenue of 1.334 billion yuan (yoy +120.43%), net profit to mother of 0.473 billion yuan (yoy +133.14%), deducting non-net profit of 0.461 billion yuan (yoy +143.90%). Among them, Q2 revenue was 0.264 billion yuan (yoy +36.99%, qoq -75.37%), and net profit to mother was 48.2021 million yuan (yoy -40.33%, qoq -88.65%). Considering the overall weakness of the movie market in '24 and the fact that the key film “The Demon Boy in the Sea” is still unscheduled, we adjusted the net profit to the mother in 24-26 to 0.834/1.13/1.212 billion yuan (previous value 1.173/1.248/1.342 billion yuan). Comparable to the company Wind, which is expected to have an average PE of 23X in 24, considering the company's leading animated films, and is exploring AI-enabled animation production, giving the 24-year PE 30X, the target price of 8.4 yuan (previous value 13.6).” “Buy” rating.

H1's high performance was mainly due to the outstanding “Article 20” box office performance. The 24H1 film business revenue was 0.974 billion yuan, an increase of 84.34%, mainly due to the outstanding box office of the Spring Festival “Article 20” box office. According to Cat's Eye Pro, the film grossed 2.454 billion yuan, ranking fourth in the box office of the movie in '24. The company then focused on realist-themed films, showing that “Section 3”, which shows that there are no principles for criminal justice and “Article 17,” which focuses on juvenile delinquency; in the first half of the year, the company also produced and released films such as “Grass Trees” and “Eradicate Blackmail: Never Give Up”; the 24H1 TV series business revenue was 0.234 billion yuan, an increase of 100%, mainly due to the online drama “Dali Temple Shaoqing Tour”, which was adapted from the popular comic “Dali Temple Journal” and aired in February.

The film business led to an increase in comprehensive gross margin. The overall gross profit margin of 24H1 decreased by 44.41% during the period, with the same increase of 9.23pct. Among them, the gross profit margin of the film business was 47.36%, and the gross profit margin of the film business increased by 12.72 pcts, mainly due to the high box office of “Article 20”; the gross profit margin of the TV series business was 37.72%.

Sales/management/ R&D/ finance ratio 0.13%/3.56%/0.95%/-1.32%, year-on-year, -0.1/-1.89/-0.64/+1.97pct. The decline in sales/management/R&D expenses was mainly due to high revenue growth.

There are many follow-up reserve projects, and “Nezha 2” is in production; actively exploring the AI-enabled animation production aspect, the company has many projects such as “Xiao Qian,” “Holding the Winning Ticket,” “The “Little” People, “Her Little Pear Vortex,” and “The Invisible Man.” Light Animation is making every effort to promote animated films such as “Go to Your Island,” the first fantasy animated film “Go to Your Island,” “The Demon Boy in the Three Kingdoms,” “Starry Sky in the Three Kingdoms,” “Journey to the West: Daisheng Haunted Tiangong,” and “Jiang Ziya 2,” and “Jiang Ziya 2,” the first animated film with a fantasy theme produced and produced entirely within the company.

In terms of TV dramas, the costume light comedy “Jade Saddle” was broadcast on Tencent Video and Mango TV in July '24; “Mountain and River Pillow” is in post-production; development of series projects such as “Spring Dinner” and “My Date List” is also continuing. In addition, the company has combined all aspects of animation production with AI technology, such as image design, scene design, and split camera scripts, and is actively exploring AI to enable animation production.

Risk warning: Movie release time falls short of expectations, movie box office falls short of expectations, etc.