Summary of Damai Entertainment Holdings Ltd Conference Call Company Overview - **Company**: Damai Entertainment Holdings Ltd - **Industry**: Greater China Media - **Stock Rating**: Overweight - **Price Target**: HK$1.20 - **Market Capitalization**: US$3.435 billion - **Current Share Price**: HK$0.90 Key Financial Highlights - **F1H26 Total Revenue**: Rmb4.0 billion, up 33% year-over-year (YoY) and 11% half-over-half (HoH) [2][10] - **GAAP Net Profit**: Rmb520 million, exceeding profit alert of >Rmb500 million [2] - **IP Revenue Growth**: +105% YoY, surpassing forecasts by 2% and 6% [2] - **Live Content Business Revenue Growth**: +13%, beating forecasts by 1% and consensus by 10% [2] Core Insights - **IP Expansion**: Damai is positioned as a key gateway for global IPs entering the Chinese market, with a solid multiyear growth outlook [2][4] - **Sanrio's Performance**: Sanrio's brand demand remains strong in China, ranking second only to Disney, with a purchase interest of 35% and a repurchase rate of 61% [9][14] - **Alifish's Diversification**: Alifish's reliance on Sanrio is decreasing, with Sanrio expected to contribute about 30% of FY26 IP revenue [9][17] - **China's Sub-Licensing Market**: The market is under-penetrated but projected to double to Rmb280 billion by 2030, with licensing spending currently at only 0.1% of consumer spending [9][24] Financial Projections - **Revenue Forecasts**: F2026-27 IP revenue forecasts increased by 5% due to strong growth momentum, while film-related revenue forecasts decreased by 2% [36] - **Normalized Net Profit Forecasts**: Expected to fall by 11-13% for F2026-28 [37] Valuation Metrics - **SOTP Valuation**: 15x EV/EBITDA for Damai business and 30x EV/EBITDA for Alifish business [4][40] - **Implied P/E**: 25x for F2027e, with a PEG ratio of 0.8 [4][40] Market Trends - **Consumer Behavior**: 83% of consumers plan to expand purchases across various categories, indicating sustained demand for IP products [30] - **Growth Drivers**: The growth of China's IP derivative market is supported by young consumers seeking uniqueness rather than brand premiums [26] Risks and Considerations - **Concentration Risks**: While Alifish's revenue concentration on Sanrio is manageable, the company is diversifying its IP portfolio to mitigate risks [19][21] - **Market Penetration**: The potential for growth in the sub-licensing market is significant, but current spending levels are low compared to global averages [24][34] Conclusion Damai Entertainment Holdings Ltd is well-positioned for growth in the expanding Chinese IP market, supported by strong financial performance and a diversified IP portfolio. The company’s strategic partnerships and market positioning as a gateway for global IPs enhance its investment appeal.