Incident: On the evening of April 12, 2023, Baina Qiancheng issued an announcement. The wholly-owned subsidiary Bainer Jinghua plans to transfer 51% of the shares held in Hunan Bainagini to Liu Hangge at a price of RMB 27.7 million; the company plans to purchase 60 million yuan of Shen Jianpeng's shares in Yongxingfang Cultural and Commercial Tourism for 90 million yuan.

The transfer of shares in Bernardini will have limited impact on net profit, and cross-border e-commerce business will be jointly explored in the future.

The company transferred 51% of Hunan's shares. After this transfer is completed, Hunan Bernardini will no longer be included in the scope of the company's consolidated financial statements. According to the company's preliminary estimates, the impact of this transaction on the company's net profit in 2023 is estimated to be about -400,000 yuan. In the future, the company will launch a new cooperation with the Kennedy team on the cross-border e-commerce overseas live streaming business to jointly incubate a matrix of cross-border e-commerce overseas live streaming accounts. We believe that in the exclusive operation of celebrity Cao Ying's Douyin Live, Bernardini showed excellent live e-commerce operation capabilities. Bainer Qiancheng has abundant resources in terms of IP, creativity, and artists. The collaboration between the two to explore the cross-border live e-commerce business is expected to replicate the advantages of both parties into new business exploration.

Focusing on the core content business, the operating capacity of the entire IP industry chain has been enhanced. The company purchased 60% of Yongxingfang Cultural and Commercial Tourism. After the transaction is completed, it will add related businesses such as cultural tourism, film and television IP offline planning and operation. Yongxingfang Cultural and Commercial Tourism has rich experience in cultural tourism project operation and commercialization of film and television IP. It has now completed the planning and operation of many famous cultural tourism projects such as the Sheng Jin Tower in Nanchang, Luoyang, the ancient city of Dabujiao in Datong, and the Dongchangdu intangdu intangible heritage cultural district in Liaocheng, as well as the investment planning and operation of Xi'an's “The 12th Hour of Changan” project. In the past, on the cultural tourism side, Baina Qiancheng also explored the IP+ cultural tourism business through the creation of projects including the “Dramas Burn the Tide Festival” and the “Jiuding Tianwen · Canglang” immersive script killing. Baina Qiancheng's rich IP reserves and content creative abilities were combined with Yongxingfang Cultural and Commercial Tourism's practical experience in film and television IP cultural tourism. Subsequent integration between the two parties in corporate culture, organizational structure, financial management, team building, business cooperation, etc., is expected to help the company diversify and improve its IP value.

Investment advice: Looking ahead to 2023, the company's series and film business have a rich product line, and AIGC will help innovate the efficiency of the content business. We expect the company's net profit to be 17 million yuan, 301 million yuan, and 405 million yuan respectively in 2022-2024. Corresponding to the current stock price PE is 457X, 26X, and 19X respectively, maintaining the “increase in holdings” rating.

Risk warning: The progress of the project fell short of expectations, the box office of film productions fell short of expectations, the strong regulatory policies of the film and television industry exceeded expectations, technological progress such as AIGC fell short of expectations, and there was a risk of loss of marketing business customers.