Incident: The company released its 2024 three-quarter report. In Q3, revenue was 0.108 billion yuan, a year-on-year decrease of 67.85%; net loss to mother was 0.012 billion yuan. In the first three quarters, revenue was 1.442 billion yuan, up 53.37% year on year; net profit to mother was 0.461 billion yuan, up 25.08% year on year.

The overall performance of the summer film market is lackluster. According to Cat's Eye Movie Pro, the total box office for the 2024 summer program was 11.643 billion yuan, down 44% year on year. The cumulative box office for the company's main film “Safe Evacuation from the 21st Century” was 0.112 billion yuan, which was lower than the summer program in the same period last year. Affected by the overall film market, the company's revenue in the third quarter declined year on year.

The investment business dragged down profit performance. During the reporting period, some of the funds invested by the company were affected by market fluctuations, and their performance was weak. Investment income for the third quarter was -24.44 million yuan compared to 68.13 million yuan in the same period last year, which had a certain impact on the company's profit side performance. Without considering the negative impact on investment income, the company's main business in the third quarter was profitable.

The content reserve is rich, so keep an eye on the progress of the schedule of “Nezha: The Devil Waves the Sea”. Looking ahead to the fourth quarter and next year, in terms of the film business, the investment+distribution film “Jo Yeon's Heart” was screened in October. As of October 30, Cat Eye predicts that the total box office in the mainland will be about 0.149 billion yuan. The invested film “The Winning Ticket” is scheduled for November 15. Other reserves include “Little” People, “Her Little Pear Vortex”, “The Invisible Man”, etc.; in terms of the animation business, “The Magic Boy in the Three Kingdoms”, “The Starry Sky in the Three Kingdoms”, and “Big Fish and Fish” Animated movies such as “Tang Tang 2”, “Acacia”, and “Shuo Feng” The project is progressing steadily. Among them, the sequel to “The Demon Boy of Nacha” is expected to be screened next year. According to the professional version of Cat's Eye, the previous film's total box office reached 5.035 billion yuan, focusing on the progress of “Nacha's Magic Boy Naohai”.

Profit forecast: The company's net profit for 24/25/26 is expected to be 0.574/1.002/1.107 billion yuan, YoY +37%/75%/10%, respectively. The investment business is dragging down profit performance. Follow the progress of the “Nacha Demon Boy” schedule and maintain a “buy” rating.

Risk warning: Film production progress falls short of expectations; box office performance falls short of expectations; market competition intensifies