Event: on July 23, the company announced the transfer of the 49% stake in Beijing Wanda Investment Co., Ltd. Held by Wanda Culture Group at RMB 2.262 billion. After the completion of the equity transfer, the company indirectly held 9.8% of Wanda Film.
After the completion of the equity transfer, it indirectly holds 9.8% of Wanda Film and further improves the layout of the industrial chain as of July 23. Beijing Wanda Investment Co., Ltd. is 98.80% and 1.2% owned by Beijing Wanda Cultural Industry Group Co., Ltd. (referred to as "Wanda Culture Group") and Mr. Wang Jianlin respectively. The equity transfer makes China Ruyi the second largest shareholder of Beijing Wanda Investment Co., Ltd. At the same time, Beijing Wanda Investment Co., Ltd. holds 20% of Wanda Film Co., Ltd., and China Ruyi will indirectly hold 9.8% of Wanda Film after the completion of the equity transfer. As a leading cinema investment and operator in China, Wanda Film has ranked first in China in terms of box office, cinema attendance and market share for 14 years in a row. Through the scientific, standardized and standard management of cinema screenings, Wanda Film fully adopts world-class projection technology standards to provide the audience with a first-class viewing experience. We believe that China Ruyi's acquisition of shares in Wanda Investment Co., Ltd. will help it further open up the upstream and downstream industrial chain, achieve synergy and drive steady performance growth.
Chinese Ruyi: based on high-quality content, the production + streaming media + game multi-business layout company provides users with massive high-quality content and personalized viewing experience through the strong production capability of Ruyi Pictures, advanced scientific and technological algorithms of pumpkin films and the characteristic model without advertising throughout the process; at the same time, in recent years, it has actively developed the game business and effectively enhanced the company's film and television intellectual property rights realization ability through film and game linkage.
On July 4, 2023, the company announced that it would further develop and expand its film and game business by raising HK $4 billion through additional issues. after the completion of the additional offering, Tencent became the largest shareholder of the company (20.36% through its wholly-owned subsidiary Water Lily). In recent years, Tencent has repeatedly increased his confidence in the development of the company.
Ruyi Pictures, a leading film and television company in the industry, implements a producer-centered system, has many high-quality original content, leads the production of more than 50 works, and reserves hundreds of film and television rights. won Feitian Award, Golden Eagle Award, Magnolia Award, Huading Award and other important awards. Film masterpieces include "Hello, Li Huanying", "send you a Little Red Flower", "to our lost Youth", "Animal World", "keep you safe" and so on. TV masterpieces include "No War in Peiping", "Nirvana in Fire", "Legend of Miyue" and so on. The company has a wealth of reserve projects in 2023. According to the data of Cat's Eye Professional Edition as of July 24, "keep you safe" (700 million at the box office), "Exchange Life" (390 million at the box office), and "enthusiastic" (the total box office for screening and pre-sale exceeded 70 million). At the same time, the TV series "my World fireworks" received a good market response. We believe that the domestic demand for cinema is expected to continue to recover, and the company has a number of high-quality film and television works online in the summer, and is optimistic that the release of demand for cinema throughout the year and the recovery of the box office will drive the company's performance growth.
Profit forecast and investment advice: we believe that the company's production + streaming media + game multi-business layout, while has a rich intellectual property reserves, stacked with the support of shareholder Tencent, is expected to further open the IP cash space, drive performance growth, the company is expected to 23-25 revenue of 3203 shock 41.16 trillion yuan, net profit of 965 pound 1.541493 billion yuan, to maintain the "buy" rating.
Risk hints: industry policy change risk, project progress less than expected risk, market competition risk, core personnel loss risk, technology risk, acquisition uncertainty related risk.