Core Viewpoint - The company reported a decline in revenue and net profit for Q2 and H1 of 2025, falling short of expectations, indicating challenges in its business operations and market conditions [1][2]. Group 1: Financial Performance - In Q2 2025, the company achieved revenue of 3.06 billion yuan, a year-on-year decrease of 16%, and a net profit of 385 million yuan, down 35% [1]. - For H1 2025, the company reported revenue of 5.96 billion yuan, a decline of 14% year-on-year, with a net profit of 760 million yuan, down 28% [1]. - Membership revenue showed slight growth in H1 2025, reaching 2.5 billion yuan, but faced a decline in Q2 due to content scheduling issues [2]. - Advertising revenue in H1 2025 was 1.6 billion yuan, down 8% year-on-year, indicating ongoing pressure in this segment [2]. - The operator business stabilized with revenue of 800 million yuan in H1 2025, reflecting a growth of approximately 7% [2]. - E-commerce revenue fell significantly by 67% to 450 million yuan in H1 2025, although gross margin improved by 16 percentage points to 19% [2]. Group 2: Operational Insights - Increased content investment has led to higher costs, with operating expenses rising by 3% year-on-year, while the company maintains control over expenses [2]. - The long video business saw a slight revenue decline of 1.5% year-on-year, with operating costs increasing by 12%, primarily due to content production and traffic costs [2]. Group 3: Market Outlook and Strategic Initiatives - The short-term market expectations for the video industry are pessimistic, but there are signs of improvement in content cycles and regulatory environments [3]. - Upcoming projects include the talent show "Voice of the Future" and several new series, indicating a focus on content development [3]. - Recent regulatory measures aim to enhance content supply and address core issues in domestic series production, which could positively impact long video platforms [3]. - The company is exploring IP development and international expansion, with potential for improved advertising performance if macroeconomic conditions recover [3]. Group 4: Investment Rating - The company maintains a buy rating despite challenges in advertising and increased content investment, with revised net profit forecasts for 2025-2027 [4]. - The target price is set at a PE ratio of 35x for 2025, suggesting a potential market value of 66.6 billion yuan, representing a 31% upside from the current price [4].

Core Viewpoint - The company has a substantial reserve of series projects and has signed multiple cultural tourism contracts, with several major films expected to be released during the summer season, leading to a continued rapid growth in revenue [1] Group 1: Investment Highlights - The company is building a foundation with series and cultural tourism, while films provide performance elasticity. In 2025, the company has a large number of series in reserve, with some top series already recommended by major video platforms like Mango TV. The cultural tourism business, based on three operational scenic spots, has signed multiple new projects, which are expected to bring stable revenue growth. However, the film business, which began to ramp up in 2021, has underperformed, with several films like "Lion Boy 2" failing to achieve expected box office results, negatively impacting the company's performance. As a result, the EPS forecast for 2025-2027 has been revised down to 0.15/0.19/0.22 yuan, compared to the previous forecast of 0.47/0.55 yuan for 2025/2026. The target price has been adjusted to 6.90 yuan from 7.84 yuan, while maintaining a "buy" rating [2][3][4] Group 2: Series and Film Releases - 2025 is expected to be a significant year for the company in terms of series, with nearly ten series anticipated to be aired. According to the company's 2024 annual report, series expected to be released in 2025 include "Criminal Scene" (aired on February 20, 2025), "Silent Echo," "Ordinary Heroes," "Synthesis Order," "Happy," "Mars Orphan," "City Builders," "Hunting Heart," and "Salted Fish Ascension." The company has also announced a change in funding allocation, redirecting 85.44 million yuan initially intended for the film "Space Spring Transportation" to the series "Salted Fish Ascension," indicating its importance. The revenue from confirmed series in 2024 exceeded 400 million yuan, and if the aforementioned series are released in 2025, the company’s series revenue is expected to achieve year-on-year growth [3][4] Group 3: Cultural Tourism Business - Major films are expected to be released within the year, and the cultural tourism business is progressing steadily. According to the company's 2024 annual report, the main films in reserve include "Dunhuang Heroes," "Gate of the Desert," "Bright Future," "Lying Flat Club," and "Story of X," which have completed filming and are in post-production and review stages, suggesting they are likely to be released in 2025. In addition to the three operational districts "Yongxing Fang," "Chang'an Twelve Hours," and "Xiangyang Guanjia Lane," new contracts have been signed for projects in Jiangsu Zhouzhuang, Guilin Lashan, Xiangyang Tiefo Temple, Daliang Qinghui Garden, and Anyang Kuixing Pavilion, which are expected to become important growth points for the company outside of its film and television content [4]