Hengdian Film and Television (603103): Box office growth slightly underperformed, but new business expansion improves theater operation efficiency

Financial performance: In 19Q1, due to poor overall box office performance, Hengdian’s film and television revenue and net profit improved, but basically met expectations.

Hengdian film and television 19Q1 achieved operating income8.

74 ‰, ten years ago 6.

2%, net profit attributable to mother 1.

59 ppm, a 15-year average of 15.

8%, net profit after deduction is 1

40 ppm, a ten-year average of 22.

8%, of which, non-recurring gains and losses mainly include 16.91 million government subsidies and 8.88 million yuan in wealth management product income.

In terms of gross profit margin, the poor performance of cinema box office revenue in 19Q1 and the continuous and rapid development of the cinema have 武汉夜生活网 gradually reduced the overall gross profit margin.

57pct to 28.

44%, but the cost increase is much lower than the growth rate of the theater (the operating cost growth rate is 0.

2% vs cinema growth rate 14.

5%), we expect the company’s new high-margin business to expand smoothly and improve its operating capacity.

The cost control is better, and the three costs can be supplemented, especially the management costs have improved significantly.

19Q1 Hengdian film and television management costs 10.94 million yuan, every other year 26.

14%, the management expense rate temporarily reduced to 0.

34 points to 1.

25%, mainly due to the reduction in headquarters budget; expenditure and sales expenses decreased by at least 5.

8%, sales expense ratio 1.

65%, unchanged from the same period last year; financial 杭州桑拿网 costs are at least 44 per year.

1%, financial expense rate once every six months.

04pct to 0.

07%.

Operating cash flow is healthy and book capital is abundant.

Hengdian Film’s 19Q1 net cash flow from operating activities was 1.

93 ‰, 33 years ago.

24%, but continued to be higher than the net profit level, reflecting the company’s restructuring of its operating capabilities, conversion and termination. At the end of the first quarter, the company’s cash and cash equivalents exceeded 1 billion U.S. dollars and annualized wealth management products generated approximately 30 million yuan in revenue.

Operational performance: Hengdian Film’s 19Q1 box office growth slightly underperformed the market, but the single screen continued to be higher than the national average; the construction speed of its own movie theaters was slightly inclined, and the speed of signing theaters increased slightly.

In 19Q1, due to the Spring Festival stalls, the time at which the overall box office interval was lowered9.

2%, Hengdian Cinema Line 19Q1 achieved 7 box office.

880,000 yuan, a ten-year average of 9.

8%, of which, the own theater achieved box office 6.

71 ppm, 10-year average of 10.

0%, underperformed the market slightly.

However, a single screen of its own theater was built32.

10,000 / block, still higher than the national 27.

50,000 / block average.

Hengdian Film & TV had 332 own cinemas as of the end of 19Q1, and then increased by 14.5%, 16 new quarters in the first quarter, about 24 in the same period last year, the speed of new construction has improved; eventually at the end of 19Q1, there were 91 franchised theaters, an increase of about 19.

7%, adding 5 in the first quarter, compared with 2 in the same period last year, and the speed of cinema signing has improved since 2018Q3.

Investment suggestion: Due to the performance of the Spring Festival stalls beyond expectations, the overall performance of Studio City in 19Q1 was poor, and the Hengdian film and television box office growth slightly underperformed the market; the recent release of “Reunion 4” has greatly boosted the studio ‘s mood and is expected to boost the 19Q2 box officeThe growth rate forms strength support.

Hengdian Film and Television is our long-term optimistic benefit from sinking high-quality cinema line assets. Financial data shows that their respective theater operation efficiency is gradually improving.

Based on the assumption that the national box office growth rate will be 10% in 2019, we will temporarily maintain the company’s 19/20 net profit forecast3.

51/3.

920,000 yuan, an increase of 9 each year.

45% / 11.

67%, corresponding to PE of 27x / 24x, EV / EBITDA of 13x / 11x, follow-up needs to pay attention to the overall and third-tier cities box office growth recovery situation.

Risk reminder: the risk of new cinema projects; the risk of box office fluctuations; the expansion is slower than expected.