The company released its 2024 semi-annual report. 2024H1's revenue was 1.334 billion yuan, up 120.43% year on year; net profit to mother was 0.473 billion yuan, up 133.14% year on year; net profit after deduction was 0.461 billion yuan, up 143.90% year on year. Q2 revenue was 0.264 billion yuan, up 36.99% year on year and 75.37% month on month; net profit to mother was 48.2 million yuan, down 40.33% year on year and 88.65% month on month; net profit after deduction was 45.08 million yuan, down 36.41% year on year and 89.17% month on month.
Key points of investment:
The main slideshow for the Spring Festival program led to a sharp increase in the film business in the first half of the year. 2024H1's film and related derivative business revenue was 0.974 billion yuan, up 84.34% year on year, gross profit margin was 47.36%, up 12.72 pct year on year. The films the company participated in the investment and distribution in the first half of the year include “Heavy Rain,” “Article 20,” “Sweep the Grass, Never Give Up,” and the films “Lighting Store”, “Fury”, and “Your Wedding” (replay), which were released in 2023 but had a total box office gross of about 2.813 billion yuan. According to data from CatEye Pro, the main investment+ distribution films “Article 20” and “Never Give Up” had box office sales of 2.454 billion yuan and 192 million yuan respectively. “Safe Evacuation from the 21st Century” was screened on August 2 and currently grossed $0.111 billion. The company also has film projects such as “Jo-yeon's Heart”, “The Winning Ticket in Hand”, “Little” Characters, “Her Little Pear Vortex”, “The Invisible Man”, and “The Mysterious Adventures of Mo Duo.”
The TV series business and profits have grown dramatically. The 2024H1 TV series business revenue was 0.234 billion yuan, and the gross profit margin was 37.72%. The company's comic book series “Dali Temple Shaoqing Tour” was launched on iQiyi on February 20, 2024, and the costume light comedy “The Saddle of the Saddle” was launched on Tencent Video and Mango TV on July 31, 2024. “Mountain and River Pillow” has entered the post-production stage, and series such as “Spring Dinner” and “My Date List” are in progress.
The animation business is progressing in an orderly manner, and AI technology is deeply integrated. “Xiao Qian”, the first light animation film under the company's animated film brand, has been produced and is awaiting scheduled screening, and the contemporary fantasy animated film “Go to Your Island” is in full swing. Animated film projects such as “The Demon Boy in the Three Kingdoms”, “Starry Sky in the Three Kingdoms”, “Big Fish Begonia 2”, “Shuo Feng”, “Inhuman”, “Zhuolu”, “Journey to the West: Daisheng Haunting Tiangong”, “Jiang Ziya 2”, and “Yesterday's Blue Sky 2” are underway
The company combines all aspects of animation production with AI technology, especially in image design, scene design, and split camera scripts in pre-animation production. Although AI technology is currently not perfect enough, it is expected to effectively reduce costs and increase efficiency with the improvement of AI technology functions and effects. The company will continue to lead the industry in terms of AI applications.
Profit forecast and investment evaluation criteria: The overall performance of the previous domestic film market and the progress of the company's film and TV series project launch were adjusted to adjust the company's profit forecast. EPS is expected to be 0.23 yuan, 0.37 yuan, and 0.37 yuan in 2024-2026. According to the closing price of 6.93 yuan on August 29, the corresponding PE is 29.57 times, 18.82 times, and 18.58 times, respectively. Maintain an “overweight” investment rating.
Risk warning: demand for movie viewing in the movie market has declined, and the box office of company films has fallen short of expectations; the company's film scheduling progress has fallen short of expectations