Summary of Conference Call Notes Industry Overview - The report focuses on the **SMID (small-mid cap) Internet/Media sector in China** and reflects recent secular changes in the industry [2][4]. Key Companies and Ratings - **Damai**: Maintained an Overweight (OW) rating; price target raised from HK$0.58 to HK$1.20, reflecting a 107% increase [3][15]. - **37 Interactive Entertainment (37IE)**: Maintained OW rating; price target increased from RMB 23.00 to RMB 25.90, a 13% rise [4][15]. - **Maoyan**: Downgraded from OW to Equal-weight (EW); price target adjusted from HK$7.50 to HK$8.00, a 7% increase [6][15]. - **JOYY**: Maintained EW rating; price target raised from US$40.00 to US$62.00, a 55% increase [4][15]. - **IQIYI**: Maintained EW rating; price target increased from US$2.10 to US$2.30, a 10% rise [4][15]. - **Focus Media**: Preferred over Weibo due to expected growth from self-help initiatives [6]. Core Insights - **IP Derivatives Demand**: There is a growing demand for IP derivatives in China, with Damai positioned to benefit from its domestic sub-licensing business [3]. - **Long Video and Live-Streaming**: These sectors are entering a more favorable policy environment, with valuations currently below historical levels. Price targets for JOYY and HUYA have been lifted due to improving trends [4]. - **Gaming Sector**: Smaller game companies are experiencing a re-rating due to successful new titles, leading to raised earnings forecasts for 2025/26 [5]. - **Film Industry Challenges**: Film companies may face difficulties in re-rating due to muted industry growth and weaker visibility for fundamentals, leading to downgrades for Maoyan and others [6]. Additional Insights - **Branding Advertising**: The branding advertising industry is not expected to recover immediately, but Focus Media is seen as a better investment compared to Weibo due to its strategic initiatives [6]. - **Valuation Adjustments**: The report includes various valuation adjustments for companies based on earnings revisions and shifts to sum-of-the-parts (SOTP) valuation methods [15]. Market Performance - The report provides a detailed analysis of stock price performance over different time frames, indicating significant variances in performance among the companies covered [12]. Conclusion - The SMID Internet/Media sector in China is undergoing significant changes, with varying growth prospects across different segments. Companies like Damai and 37IE are favored for their growth potential, while challenges remain for the film industry and certain live-streaming platforms.

Summary of Key Points from the Conference Call Industry Overview - **Pharmacy/Drugstore Industry in China and Japan**: The industry is currently undervalued, with China's pharmacies in a critical transitional phase. The low valuations may represent a cyclical trough as leading companies manage prescription outflow and category expansion effectively. Concerns regarding profitability in Japan's dispensing business due to drug price reductions are considered overblown, suggesting potential for a re-rating in the sector [3][11]. Company Insights - **Pop Mart (9992.HK)**: The company is viewed neutrally due to a less favorable risk/reward profile, despite a solid long-term investment thesis. Key factors influencing Pop Mart include the necessity of licensing renewals, the importance of owning retail stores during downturns, and the need for appealing design and rapid market response. Significant share price weakness could present a good entry point, with a price target of HK$300 driven by strong sales of new products and upcoming animations [4][11]. - **China Oil E&C and OFS Sector**: Companies like SEG and COSL are highlighted for their strong backlog expansion and expected earnings growth. COSL is projected to deliver a 20% year-over-year growth in net profit for FY25. The sector is characterized by high conviction in record backlogs and stable capital expenditures from major Chinese oil companies. Price targets for several companies in this sector have been lifted, reflecting positive sentiment [6][10][13]. - **China Medtech Industry**: The potential exit of GE HealthCare from the Chinese market underscores a trend of consolidation within the Medtech sector. Domestic companies are expected to gain market share as they are better positioned to navigate local challenges. This shift indicates a rapidly changing competitive landscape [8][11]. Financial Metrics and Projections - **Hong Kong Property Market**: Following a recent rate cut, the effective mortgage rate is now 3.375%, which is still higher than the net rental yield of 3.1%. The expectation is for a positive carry to be achieved by 2026, supporting a forecast of 3-5% home price growth. Key developers to watch include Henderson and Sino Land, with a preference for Swire Properties among landlords [7][12]. - **Earnings and Dividend Projections**: - Offshore Oil Engineering and Yantai Jereh are expected to see significant increases in earnings and dividends, while COSL and Sinopec Oilfield Service Corp are projected to experience declines in earnings estimates [14][16]. Additional Insights - **Market Sentiment**: The overall sentiment in the sectors discussed is cautiously optimistic, with potential for growth in the pharmacy and oil sectors, while the Medtech industry faces challenges from multinational exits. The property market in Hong Kong is also expected to stabilize with future rate cuts [3][6][8][7]. This summary encapsulates the critical insights and projections from the conference call, providing a comprehensive overview of the discussed industries and companies.

Summary of Damai Entertainment Holdings (1060.HK) Conference Call Company Overview - **Company**: Damai Entertainment Holdings (1060.HK) - **Market Cap**: HK$34.7 billion / $4.4 billion - **Enterprise Value**: HK$31.4 billion / $4.0 billion - **Current Price**: HK$1.17 - **12-Month Price Target**: HK$1.38, implying an upside of 17.9% [1][5][16] Core Business Segments - **Live Entertainment**: Damai is the largest live show ticketing platform in China, holding an 80% market share in event ticketing. The live concert segment has seen a 6X increase in total addressable market (TAM) over the past five years, driven by younger demographics' demand for experiential consumption [2][22]. - **IP Licensing**: AliFish, the licensing agent under Damai, is the largest IP agent in China, with a strong portfolio including brands like Sanrio. The IP merchandising market in China is significantly under-penetrated compared to Japan and the US, indicating substantial growth potential [3][22]. Financial Performance and Projections - **Revenue Growth**: Expected revenue growth of 18% and net profit growth of 58% over the next two years, primarily driven by the growth of Damai and AliFish [4][28]. - **Financial Metrics**: - Revenue (FY25): Rmb 6,702.3 million - EBITDA (FY25): Rmb 756.2 million - EPS (FY25): Rmb 0.02 - Projected EBITDA growth of 108% in FY26 [4][14]. - **Valuation**: The company is valued at a forward P/E of 23X for FY27E, with a target price implying a P/E of 27X [16][28]. Growth Drivers - **Live Events**: Anticipated mid-teen CAGR in the live shows industry, with Damai expected to outpace this growth through expansion into non-concert events and overseas markets [25][41]. - **IP Business**: AliFish projected to achieve over 35% sales and EBITDA CAGR, driven by an expanding IP portfolio and better monetization strategies [26][28]. - **Margin Expansion**: Overall EBITA margin expected to increase from 12% in FY25 to 18% in FY28 due to a favorable revenue mix and reduced losses from the movie segment [27][28]. Competitive Advantages - **Market Position**: Damai's established network effect and strong relationships with top celebrities and agencies provide a competitive moat in the live entertainment sector [23][60]. - **Membership Program**: The TaoMai VIP program has over 20 million users, enhancing customer loyalty and engagement [61]. Risks and Challenges - **Supply Constraints**: Potential limitations in the supply of quality venues for live events could impact growth [31]. - **IP Contract Adjustments**: Risks associated with the renewal of IP licensing contracts, which typically last five years [31]. - **Volatility in Movie Business**: The company's movie segment has historically been volatile, posing risks for future earnings [31]. Conclusion Damai Entertainment Holdings is well-positioned in the rapidly growing live entertainment and IP licensing markets in China. With strong projected growth rates and a solid market share, the company presents a compelling investment opportunity despite certain risks associated with supply constraints and market volatility.