Under the epidemic, cinemas across the country were closed in the first half of the year, and the short-term performance of cinema companiesHengdian Film and TelevisionIn the first half of 2020, the revenue reached 98.12 million yuan, down 92.92% from the same period last year. The net profit returned to the mother was-306 million yuan, down 277% from the same period last year. The net profit after deducting non-return to the mother was-360 million yuan, down 373% from the same period last year. In the split quarter, 20Q2 achieved revenue of 6.58 million yuan, down 98.7% from the same period last year, net profit of-169 million yuan, down 1280% from the same period last year, and deducting non-return net profit of-199 million yuan, down 2433% from the same period last year. The sharp decline in revenue and net profit is mainly due to the closure of cinemas across the country since late January due to the epidemic in the first half of the year.
With the decline of revenue and net profit, the net operating cash flow of the company 20H1 is-124 million yuan, compared with 243 million yuan in the same period last year, but the company has sufficient paper cash. By the end of June 2020, the company's paper cash and transactional financial assets totaled 942 million yuan. As cinemas resume work, the company's cash flow will also improve.
Promote the upgrading and transformation of cinemas under the epidemic situation and optimize the overall quality of cinemas
20H1 achieved box office receipts of 76.19 million yuan, a decrease of 93.8% compared with the same period last year, of which asset-linked cinemas grossed 63.44 million yuan, with a market share of 3.04%, with 2.24 million people watching movies; and joining cinemas earned 12.76 million yuan at the box office, with a market share of 0.61%, and 370000 people watching movies.
In terms of studio expansion, the company opened 9 new directly operated cinemas in the first half of the year (mainly in the first quarter), added 57 screens, and added 2 screens to the renovation of old cinemas. By the end of June 2020, the company had 459 opened cinemas with 2833 screens, including 376 asset-linked cinemas and 2365 screens, and joined 83 cinemas with 468 screens.
During the epidemic, the company made use of the opportunity that cinemas were closed without personnel flow to transform the old cinemas with better operating efficiency, and at the same time reorganized the opened cinemas and contracted projects, and evaluated the cinemas with poor operating performance in strict accordance with the cinema closure management system. We expect that with the completion of the optimization of the company, the overall quality of its cinemas will be improved.
Investment rating: the film market has been greatly affected by the epidemic, and film companies are under greater performance pressure. Since the first quarterly report, we believe that the pessimistic expectations for the performance of the sector have been fully digested. Although there is operating pressure in the short term, the medium-and long-term logic of the leader of high-quality films has not changed. At the same time, in the face of the cash flow pressure brought by the closure, small and medium-sized enterprises will accelerate clearing in the cold winter of the industry, and once the head company gets through the difficulties through financing or other strategies, then the competitive advantage and market share are expected to increase. Taking into account the impact of the epidemic on the overall box office of the industry, the net profit of our company in 2020-2021 is expected to be reduced from 124.428 billion yuan to-314 million yuan / 377 million yuan. The current market capitalization corresponds to 38 times 2021 earnings and maintains a "buy" rating.
Risk tips: tighter supervision of the industry, the impact of the epidemic, the film market recovery progress is not up to expectations.