Investment Rating - The report assigns a "Buy" rating for the company, marking its first coverage [2][12]. Core Insights - The company has shown strong revenue growth in FY26H1, with a total revenue of 4.047 billion RMB, representing a year-over-year increase of 32.7% and a half-year increase of 10.8% [5]. - The company is positioned as a leader in the domestic offline ticketing market, with significant IP licensing capabilities, including partnerships with major brands like Sanrio and Chiikawa [12]. - The report highlights the robust growth potential in the live performance and IP sectors, driven by a stable supply of top-tier artists and successful events [6][12]. Financial Performance Summary - **Revenue and Profitability**: In FY26H1, the company achieved a gross profit margin of 35.7%, with a net profit of 520 million RMB, reflecting a year-over-year increase of 54.3% [5]. - **Segment Performance**: The live performance and technology segment generated 1.339 billion RMB in revenue, up 14.5% year-over-year, while the IP derivatives segment saw a remarkable 105.2% increase in revenue, reaching 1.16 billion RMB [6][7]. - **Cost Management**: The company has effectively reduced both sales and management expenses, leading to improved operational efficiency [10]. Future Projections - The company is projected to achieve revenues of 8.107 billion RMB in FY2026, with a net profit forecast of 996 million RMB, indicating a significant growth trajectory [11][12]. - The expected growth rates for revenue and net profit are 21% and 174% respectively for FY2026, showcasing strong financial health and operational performance [12][13].

Core Insights - The Chinese entertainment industry is experiencing a divergence, with Damai Entertainment's stock price rising by 91% year-to-date, while Maoyan Entertainment's stock price has fallen by 10% [1][5]. Company Performance - Damai Entertainment has successfully diversified its business by shifting focus from movie ticketing to IP derivatives and offline entertainment activities, projecting a revenue growth of 33% to 6.7 billion RMB for FY2025 [4][13]. - In contrast, Maoyan Entertainment is heavily reliant on the domestic film market, expecting a revenue decline of 14% to 4.1 billion RMB for 2024 due to a 23% drop in movie box office revenue [4][15]. Strategic Differences - The divergence in stock performance is attributed to the fundamental differences in strategic direction between the two companies. Damai's transformation has allowed it to capture the benefits of consumer upgrades and post-pandemic entertainment demand, while Maoyan's reliance on the film market has left it vulnerable [6][15]. - Damai's revenue from movie-related activities is expected to constitute only 37% of its total revenue by FY2026, whereas Maoyan's movie-related revenue will account for over 80% [6][15]. Market Growth and Projections - The offline performance market in China is projected to grow at a compound annual growth rate (CAGR) of 81% from 2022 to 2024, with market revenue expected to reach 80 billion RMB in 2024 [7][8]. - Damai is estimated to achieve 2.1 billion RMB in event ticketing revenue in 2024, with expectations of further growth to 2.5 billion RMB and 3 billion RMB in FY2026 and FY2027, respectively [8][10]. Financial Outlook - Damai's adjusted EBITA is projected to grow by 61% to 809 million RMB for FY2025, with revenues expected to reach 8 billion RMB in FY2026 and 9.3 billion RMB in FY2027, exceeding market consensus by 4% and 7% [13][14]. - Conversely, Maoyan's adjusted EBITA is forecasted to plummet by 70% to 328 million RMB for 2024, with revenues expected to grow only 8% and 4% in FY2025 and FY2026, respectively, falling short of market consensus by 9% and 13% [15][18]. Valuation and Market Sentiment - Morgan Stanley maintains an "overweight" rating for Damai with a target price of 1.2 HKD, while downgrading Maoyan to "neutral" with a target price of 6.8 HKD, reflecting cautious expectations for Maoyan's future performance [6][19].