ab 27 November 2025 Global Research First Read China Media Sector Expert call series: The rise of IP merchandising economy We hosted a call with an IP industry expert who has eight years of experience in the IP entertainment industry and held key roles in licensing and commercialization management of several well-known IPs. Our main takeaways are: China's IP ecosystem at early stage with a long growth runway The expert highlighted operations and monetisation potentials in leading domestic IPs from China Lit ...

Summary of Damai Entertainment Holdings Conference Call Company Overview - **Company**: Damai Entertainment Holdings - **Industry**: Entertainment and IP Merchandising Key Financial Highlights - **H1 FY26 Revenue**: Rmb4.05 billion, a 33% YoY increase, surpassing UBS-e/Visible Alpha consensus by 7%/6% [2][10] - **Gross Profit Margin (GPM)**: Decreased by 7.5 percentage points YoY to 35.7% [2][10] - **Adjusted EBITA/Net Profit**: Rmb550 million/Rmb542 million, beating consensus by 6%/11% [2][10] Segment Performance 1. **IP Merchandising** - **Revenue Growth**: Over 100% YoY, with profit doubling in H1 [3] - **Segment Margin**: Fell by 8.6 percentage points YoY to 20.2% due to one-off losses and investment in IP operations [3][10] - **Future Plans**: Management aims to scale the to-C retail business, indicating potential for further growth [3][11] 2. **Live Entertainment** - **Revenue Growth**: Increased by 12.5% YoY to Rmb1.3 billion, exceeding UBS-e/consensus by 9%/10% [3] - **Content Revenue Growth**: Over 50% YoY [3] - **Strategic Focus**: Plans to increase participation in sports event investment and operations, with a medium to long-term focus on overseas expansion [3][12] 3. **Film Segment** - **Revenue Decline**: Decreased by 12.5% YoY, but segment margin improved to 8.9% from 2.7% in FY25 [3][13] - **Investment Strategy**: Focus on medium to low-budget, high-return projects, leveraging AI to reduce production costs [13] Market Outlook and Strategy - **Overseas Expansion**: Management emphasizes a strategic focus on overseas markets, citing opportunities for domestic artists and increasing demand among domestic consumers [12] - **Asset-Light Model**: The company plans to maintain an asset-light retail business model while expanding its physical and online store presence [11] Valuation and Stock Performance - **Price Target**: Lowered from HK$1.29 to HK$1.23, maintaining a Buy rating [4][5] - **Current Trading**: Trading at 20x FY27E PE, below peers despite a projected 28% EPS CAGR from FY26-28E [14] - **Market Capitalization**: HK$27.8 billion (US$3.58 billion) [7] Important Metrics - **Revenue Projections**: Expected to grow to Rmb7.885 billion in FY26E and Rmb9.149 billion in FY27E [6] - **Net Debt**: Projected to increase from Rmb2.701 billion in FY25 to Rmb4.038 billion in FY27E [6] Conclusion - Despite margin contraction in IP merchandising, Damai Entertainment Holdings shows strong underlying business momentum and growth potential in IP commercialization and overseas expansion. The company is well-positioned to capitalize on growth opportunities in the entertainment sector, particularly in IP merchandising and live content.

Summary of Damai Entertainment Holdings (1060.HK) Conference Call Company Overview - **Company**: Damai Entertainment Holdings (1060.HK) - **Market Cap**: HK$27.6 billion / $3.6 billion - **Enterprise Value**: HK$23.8 billion / $3.1 billion - **Current Price**: HK$0.93 - **12-Month Price Target**: HK$1.30 - **Upside Potential**: 39.8% [1][21] Key Industry Insights IP Business Growth Potential - **IP Segment Growth**: Expected to sustain high growth with a projected GMV doubling for 1HFY26, translating to a 44% CAGR from FY2025-28E [2][24] - **Drivers of Growth**: - Strong momentum from the Sanrio family [24] - Incremental contributions from Chiikawa, with enhanced IP rights [24][26] - Potential collaborations with new IPs [24] - Strengthened monetization of existing IPs [24] - **Market Position**: AliFish is the largest IP sub-licensing agent in China with a market share of over 30% expected in 2025E [2][27] Damai Ticketing Segment - **Revenue Growth**: Expected to slow to +7% YoY in FY26E due to moderated live music ticketing business and increasing competition [3][38] - **Future Outlook**: Anticipated return to double-digit growth from FY27E, supported by strong connections with venues and artists [19][38] - **Market Dynamics**: Competition has intensified, with peers offering lower take rates to gain market share [39][40] Financial Performance Revenue and Profitability Forecasts - **Total Revenue**: Projected to reach RMB 7,620.5 million in FY26E, up from RMB 6,702.3 million in FY25 [6][22] - **Adjusted EBITDA**: Expected to be RMB 981.8 million in FY26E, reflecting a growth of 29.8% [6][22] - **Net Profit**: Forecasted at RMB 468 million for 1HFY26, representing a 39% YoY increase [20] Margin Outlook - **EBITDA Margin**: Expected to improve from 11.3% in FY25 to 17.9% in FY28E [18] - **Net Income Margin**: Projected to increase from 5.4% in FY25 to 14.2% in FY28E [18] Investment Considerations - **Valuation**: The stock is currently trading at 21X CY26 PE, with a target price of HK$1.30, indicating a buy recommendation [1][21] - **Risks**: Concerns over profitability and competition in the ticketing segment may impact stock performance [1][21] Additional Insights - **Competitive Moat**: Damai's competitive advantages include strong venue connections, extensive operational experience, and significant user mindshare with a monthly active user base of 45 million [41][49] - **Future Growth Areas**: Non-concert events such as stand-up comedy and sports are expected to contribute to revenue growth [39][51] This summary encapsulates the key points from the conference call regarding Damai Entertainment Holdings, focusing on its growth potential, financial forecasts, and competitive landscape.

Summary of Damai Entertainment Holdings (1060.HK) Conference Call Company and Industry - **Company**: Damai Entertainment Holdings (1060.HK) - **Industry**: Licensing and Entertainment, specifically focusing on IP (Intellectual Property) merchandising and ticketing Key Points and Arguments 1. **Positive Read-through from Sanrio**: Sanrio's strong performance in the China licensing business has positive implications for Damai, with a reported 96% year-over-year growth in royalties revenue from April 2024 to March 2025, driven by enhanced cooperation with Alifish and an increase in licensees [1][11] 2. **Growth Projections for Damai**: For FY2026E, a 50% year-over-year growth in sub-licensing revenue is assumed, with some investors projecting up to 70% growth. This optimism is supported by strong existing IP momentum and contributions from new characters like Chiikawa [1][11] 3. **Sanrio's China Segment Performance**: Sanrio reported a 120% year-over-year increase in China revenue to RMB376 million, with royalties revenue up 158% to RMB251 million, significantly exceeding consensus estimates [2][11] 4. **Character Popularity**: The continued popularity of characters such as Hello Kitty and Kuromi is driving growth in the licensing business, with a broader character lineup contributing to brand visibility and sales [3][11] 5. **Revenue Breakdown**: While specific breakdowns of IP revenue were not disclosed, it is noted that sub-licensing revenue contributed over 60% of total IP revenue, with Alifish's sub-licensing revenue growing over 90% year-over-year in FY2025 [11][12] 6. **Valuation and Target Price**: The target price for Damai is set at HK$1.4, based on a sum of the parts valuation, assuming a 40% net margin and a 20x FY26E P/E ratio, reflecting Damai's market leadership [12][11] 7. **Risks Identified**: Potential risks include market share pressure in movie ticketing, softer-than-expected movie content performance, intensified competition in offline entertainment ticketing, macroeconomic softness affecting entertainment consumption, and content censorship impacting launches [15][11] Other Important but Possibly Overlooked Content - **Market Capitalization**: Damai's market cap is reported at HK$35,254 million (approximately US$4,491 million) [5][11] - **Expected Returns**: The expected share price return is 18.6%, with no expected dividend yield [5][11] - **Analyst Contact Information**: Analysts Vicky Wei and Alicia Yap are available for further inquiries, indicating a structured approach to investor relations [6][11]