Downgrade to “Accumulate” and increase TP to HK$8.20, based on a 10x 2025 price/adjusted-earnings ratio. Maoyan Entertaiment’s ( “the Company” or “Maoyan” ) primary revenue driver continues to be the total box office in mainland China. The quality of domestic blockbuster films (about 80% of the box office) has been increasing due to improvements in AI graphics generation technology, but has only become noticeable until late 2024. As a result, 2025’s spring festival season has had a historical high box office, at RMB16.05 bn. Due to these developments, we expect China’s film industry to recover significantly in 2025 and maintain steady growth thereafter. The Company has also announced its first ever dividend payment, reflecting its optimism about their future cash flows. Therefore, we increase our forecasts for the Company’s shareholders' net profit in 2025-2027 to RMB751 mn / RMB976 mn / RMB1,066 mn, respectively. Similarly, we increase our forecasts for adjusted shareholders’ net profit in 2025-2027 to RMB870 mn / RMB1,095 mn / RMB1,185 mn, respectively. We forecast the Company’s dividend payout to be roughly 35% of earnings over the next three years, with a yield of approximately 4-5%. Current TP represents 10x 2025 price/adj-earnings ratio and a 0.86 x 2025 PBR.
　　The Company’s online entertainment ticketing services was weaker in 2024 than in 2023, posting revenue of RMB1,932 mn, representing a YoY decline of 14.4%. However, with the improvement in the domestic movie roster and the greater influx of foreign pop-artists in 2025, we expect the segment to recover significantly. On the positive side, Maoyan achieved record revenue and GMV growth in 2024 - including a 90% year-on-year increase in concerts GMV - while serving top domestic and international artists like Jacky Cheung, Kanye West, and Mariah Carey. Additionally, Maoyan strengthened its presence in Hong Kong, China and Macau, China via its self-operated platform UUTIX and established partnerships in regions like Southeast Asia, the Middle East, and Latin America, which paves its way for further overseas expansion.
　　Similarly, the Company’s entertainment content services experienced a similar decline, posting revenue of RMB1,949 mn, representing a YoY decline of 15.3%. However, as Maoyan was continuously involved in the production and distribution of domestic blockbuster films, it will benefit from the recovery of the domestic film industry. Specifically, the Company mentioned in its earnings report that both Honey Money Phony and Detective Chinatown 1900, in which the Company participated in the production, achieved outstanding box office performance in 2025. Currently, other movies that Maoyan has acted as producer/ distributor are expected to perform well at the box office in 2025, including Endless Journey of Love, Nobody: Lang Lang Ago, A Gilded Game, The Dumpling Queen.
　　Risks: Poor performance of the domestic box office.