occurrences
Wanda Film released an announcement: In a single quarter, the company's total revenue was 14.62 billion yuan (yoy +50.8%), with net profit due to mother and deducted non-net profit of 9.1 billion yuan and 720 million yuan (both turned loss into profit); 2023 accrued asset impairment provision and credit impairment provision of 420 million yuan; net operating cash flow of 4.42 billion yuan (yoy +270%), cash flow improved significantly; in a single quarter, 24Q1 revenue of 3.82 billion yuan (yoy +1.7%), net profit of 326 million yuan (yoy +3.25%) $307 million (yoy -15.3%).
Key points of investment
In 2023, Wanda's revenue increased by 50.8%, profit returned to mother, reversed losses, fixed the main business, and the non-ticketing business had potential for growth
The company's revenue increased in 2023, turning a loss into a profit from mother's profit, which is in line with the industry's recovery trend. In terms of box office and number of moviegoers, the company's directly-managed cinemas had a box office of 7.56 billion yuan in 2023 (recovering to 96.4% in 2019), and the number of movie viewers was 186 million (returning to 92.7% in 2019). In 2023, the company mainly invested in 5 films, and participated in investing in films such as “Wandering Earth 2,” “Passionate,” and “The Former 4,” which received good returns from the box office and word of mouth. At the same time, the leading position of the film industry continued to consolidate; the non-ticketing advertising revenue grew steadily, and the subsidiary TimeNetwork focused on itself projects to increase the commercial value of IP products and Gross profit, along with the continued supply of high-quality content in the future, the company's non-ticketing business, such as derivatives, still has great potential for growth.
▌In 2024, the cinema line market is expected to add AI+ movies, which is expected to boost industrial efficiency
In the first quarter of 2024, the company had 48 million movie viewers (yoy +4.4%), with a cumulative market share of 16.5%, an increase of 0.2 percentage points over the previous year, with direct-run cinemas having a market share of 14.2%, which started well in 2024; judging from beta, the cinema box office is gradually enriched with content supply, and the recovery in offline movie viewing demand is expected to drive a new increase in the national movie box office in 2024; judging from α, Wanda's movie list is rich, and production of its own content continues (movie side, 2024 “White Snake: Ukusheng” has been scheduled for summer vacation) File, and at the same time, the movie “Manslaughter” 3” “We Live in Nanjing”, “Deceiving You” and other films are being filmed and produced; on the drama side, “Misplaced”, “Sifangguan”, and “My Altay” will be broadcast in 2024); from the industry application side, 2024 will welcome the year of AI application implementation. From Sora to Vidu, the continuous iteration of AI technology and tools is expected to boost the efficiency of the film content industry. AI-enabled content is expected to start a new chapter, and the sector is expected to benefit first. The company's AI and commercial IP are also expected to benefit. Value has potential to be tapped.
Wanda Film welcomes a new high-rise movie content leader and is expected to reach a new level
On January 30, 2024, Wanda Film announced that the election of Ms. Chen Xi as the chairman of the company's 6th board of directors to create excellent content products requires professional ability, industry resource capacity, and sharp market insight. The new head's business capabilities are expected to continue to develop on the Wanda platform; the company's talent hierarchy is gradually improving, and the content supply continues to be rich and superimposed on new technologies. From a supply perspective, leading film content companies are expected to reach a new level.
Profit forecasting
Maintaining the “buy” investment rating, it is predicted that the company's revenue for 2024-2026 will be 15.87, 17.93 billion yuan, and 20.62 billion yuan, respectively, and the return profit will be 13.3, 16.2, and 1.98 billion yuan. The current stock price is 25.5, 20.9, and 17.1 times PE from 2024 to 2026, respectively. In terms of investment, Wanda Film is a leading movie theater content company, the basic structure of the main business is stable, and the non-ticket derivatives business with IP as a fulcrum has potential to grow; on the content side, it is expected to burst into a butterfly and shine brightly after the support of the new management With the addition, AI tools are expected to empower content efficiency, and the company is also actively embracing AI to maintain a “buy” investment rating.
Risk warning
The risk that the application of new technology falls short of expectations; the risk that the growth rate of the film industry will slow down; the risk of growth falling short of expectations; the risk of additional depreciation affecting the company's profitability; the risk of performance fluctuations due to delays in the release of movies and other projects; the risk of falling short of expectations in cinema operations; the risk of housing rental expiration; the risk of public health emergencies; the risk of macroeconomic fluctuations, etc.