Introduction to this report:
The company participated in the production and distribution of many popular movies and took a position in the first echelon of content creation; online ticketing is mainly about scavenging tickets and barley, benefiting from the recovery of the offline entertainment industry; it has rich IP reserves, and innovative business continues to empower the industry.
Summary:
A leader in the domestic entertainment industry, covered for the first time, and was given an increase in holdings rating. The company's core business includes content production, promotion and distribution, live performances, IP licensing, cinema ticketing management and data services. It is a listed company in the entertainment sector of Alibaba and one of the companies with the most comprehensive coverage of the entertainment industry chain. The company's online ticketing has two leading platforms, Ticketing Ticketing and Damai, which are engaged in movie ticketing and live performance ticketing respectively, directly benefiting from the recovery of the offline entertainment industry. The content production is mainly based on film production and distribution. Relying on ticketing advantages, the company participated in the production and distribution of 15 of the 20 prehistoric films of mainland cinema. Strong alliances between IP and innovative businesses and ticketing and production businesses continue to empower the industry. Taking into account the M&A and the recovery of the offline entertainment industry, we forecast net profit of FY24-FY26 to be $687/785/952 million yuan, respectively, and adjusted EBITA of $741/88/1,055 million yuan, respectively. The company is the “number one player” in the domestic entertainment industry. It covered for the first time and gave it a “gain” rating.
Investment films are popular frequently, and there are various types of reserve films. The company's film investment is first based on covering important schedules and leading projects, then expanding joint production and homemade projects, forming a film portfolio with explosive potential and stable revenue, and thereby forming brand influence. In 2023, the film “The Girl Who Disappeared”, which was co-produced and promoted by the company, grossed more than 3.5 billion yuan, and the co-produced film “Give It All” grossed more than 3.8 billion yuan, showing that the company has strong film production and distribution capabilities. The reserve films include “Reinforcements Will Arrive Tomorrow” and “Crisis Route,” which are quite rich in subject matter.
Online ticketing is second to none, benefiting from the industry's recovery. Taobao Ticket and Barley are the leading platforms in their respective fields, and are mainly benefiting from the growth in the market size of the industry. The box office for movies is expected to reach around 55 billion yuan in 2023, and the box office for live shows has reached a record high. The steady growth of the industry has helped the company's online ticketing business become a mainstay of performance.
IP reserves are abundant, and there is plenty of potential for innovative business. The company has leading IP reserves such as Sanrio, Pokémon, Kakao, Universal Pictures, and Saint Seiya, and collaborates with other businesses to maximize IP volume. Innovative businesses, including virtual people and industry infrastructure services, will continue to empower the healthy development of the industry.
Risk warning: Movie box office falls short of expectations, and business collaboration falls short of expectations.