WANDA FILM(002739) Guoxin Securities·2024-11-05 11:16Investment Rating - The report maintains an "Outperform the Market" rating for the company [2][4][10]. Core Views - The company's performance has been impacted by the overall domestic box office downturn, with a 23.8% year-on-year decline in box office revenue for the first three quarters of 2024 [2][5]. - The company is exploring new cinema operation models and has seen a steady recovery in box office performance since October 2024, indicating potential for revenue rebound [2][7]. - The report highlights the company's strong content production capabilities and anticipates a recovery in box office performance in 2025, which could enhance earnings elasticity [2][10]. Financial Performance Summary - For the first three quarters of 2024, the company reported revenues of 9.85 billion, a decrease of 13.2% year-on-year, and a net profit of 170 million, down 84.9% [2][5]. - The third quarter alone saw revenues of 3.63 billion, a decline of 19.0%, and a net profit of 60 million, down 92.0% [2][5]. - The gross margin for the third quarter was 20.4%, down 10.8 percentage points year-on-year, primarily due to high fixed costs [2][6]. Revenue and Profit Forecast - The company expects net profits for 2024, 2025, and 2026 to be 340 million, 1.58 billion, and 1.76 billion respectively, reflecting a downward revision from previous estimates [2][10]. - Revenue projections indicate a decline of 13.1% in 2024, followed by a recovery with increases of 31.2% in 2025 and 10.4% in 2026 [10][11]. Market Position and Strategy - The company maintains a market share of approximately 15% and is actively enhancing its business model through initiatives like specialized popcorn stores and collaborations with popular games [2][8]. - The report notes that the company has a robust pipeline of films scheduled for release, which is expected to contribute positively to future revenues [2][9]. Cost Structure and Margins - The report indicates an increase in overall expense ratios, with sales, management, financial, and R&D expense ratios rising by 1.3, 1.9, 0.8, and 0.04 percentage points respectively [2][6]. - The gross margin is projected to recover to 29% by 2026, following a low of 23.5% in 2024 due to the anticipated improvement in box office performance [11].