Jinwu Financial News | J.P. Morgan Chase released a research report saying that ticket distribution for offline shows will become the next growth engine for Alibaba Pictures (01060) and Maoyan Entertainment (01896). Alibaba Pictures will have a stronger competitive position after acquiring Damai.com. Therefore, the recent fall in stock prices has made Alibaba Pictures more attractive than Cat's Eye.
According to the bank, China's entertainment industry, which recovered strongly in 2023, is still showing a growth trend this year. In the first quarter of 2024, movie box office increased 4% year on year, and performance ticket revenue increased 117% year on year. Looking ahead, industry growth will be mainly driven by offline ticket distribution (not movies) due to unbalanced supply and demand in concert and other performance markets.
The bank continued that thanks to the industry's growth momentum, the bank is still optimistic about the long-term financial prospects of the two companies at the same time, but it has become more cautious about their short-term financial situation because its movie box office hit rate this year was lower than expected and the film market growth rate was slower than expected. The bank lowered Alibaba Pictures' projected revenue/profit for the 2025 fiscal year and Cat Eye's revenue and profit forecast for the 2024 calendar year by 9%/8% and 1%/6%, respectively.
The bank predicts that in view of the long-term prospects of the industry, the bank is also optimistic about Alibaba Pictures and Cat Eye, and gives them the same valuation ratio: 13 times the price-earnings ratio for fiscal year 2025, which is 12 times higher than the previous one. The reason is that the performance ticketing business grew stronger than expected this year. The bank gave Alibaba Pictures a new target price of HK$0.59 (previously HK$0.55) as of December 2024, and the target price for Cat Eye is still HK$12 as of December 2024, with upside of 28% and 39% respectively.