We initiate with a "Buy" rating and a TP of HK$2.50. According to our relative　valuation based on EV/EBITDA ratio, we assign China Ruyi a 2023 EV/EBITDA ratio of 15x with a target market value of HK$25 bn.
　　We expect that the recovery of the film and television industry will be supported by the resumption of film shooting schedules, as well as the continuous improvement of construction of China's film facilities in recent years. China Ruyi（the "Company"）， as a film producer with a streaming media platform, is well-positioned to benefit from this growth. Additionally, the Company's　recent exceptional performance in its new games business has laid a solid foundation for future collaborations between content IP and games.
　　We believe that the Company's unique ad-free platform and its characteristics as a pure producer enable its film and television creations to achieve better-than-expected market performance. Currently, the　long-term profitability of major long-form video platforms in China is uncertain.
　　However, Pumpkin Film operates profitably without relying on any advertising income. The Company's central producer system and ability to distribute and broadcast ensure creative independence, while benefitting from user data to aid content creation. Its ability to produce blockbuster hits makes Pumpkin Film highly valuable beyond just revenue generation.
　　Catalysts: Ongoing recovery at the box office; the release of the Company’s films or TV dramas; announcement of new regulations and policies for the film and television industry.
　　Risks: Production projects may not progress as expected; uncertainties in development of games business.