CICC: Maintains a outperform rating on DAMAI ENT(01060), target price of 1.32 Hong Kong dollars.

Zhongjin has released a research report stating that it maintains its full-year revenue and profit forecast for DAMAI ENT (01060), with the current stock price trading at 21 times P/E for FY26. It maintains an outperform industry rating and a target price of 1.32 Hong Kong dollars, corresponding to 30 times P/E for FY26, representing a 40% upside potential from the current stock price. The company has announced its profit forecast for FY1H26, expecting a net profit attributable to the owner of not less than 500 million yuan for the six months ending on September 30, 2025, representing a year-on-year growth of about 48%. The company is expected to announce its FY1H26 performance on the evening of November 13. The bank predicts that the FY1H26 Non-IFRS EBITA will be 537 million yuan. Zhongjin's main points are as follows: - Alibaba's fishing business has performed well, with continued potential for IP derivatives - The company stated in its profit forecast that one of the main reasons for the increase in net profit for FY1H26 is the excellent performance of Alibaba's fishing business, with strong growth in both revenue and profit year-on-year. The bank believes that popular IPs such as Sanrio, Chiikawa, and Crayon Shin-chan are still the core drivers of current revenue and profit, and their popularity remains strong. According to Sanrio's FY03/26 first quarter report (corresponding to the second quarter of 2025), its authorized business revenue in mainland China increased by 43.9% to 194 million yuan. Since the third quarter of 2025, Alibaba's fishing has held large offline events such as Sanrio Fiesta, combined with the opening of the Chiikawa flagship store in Shanghai. The bank believes that there is still strong demand for IP economy, and the revenue growth of Alibaba's fishing business is strong. Taking into account the negative impact of the closure of the goldfish Take Fun on IP derivative business, the bank predicts that under neutral circumstances, the FY1H26 derivative income of the company will increase by 55% to 930 million yuan; and will continue to focus on the trend of IP matrix operation and the impact of business expansion. - The performance of the performance business is stable, and investment layout serves long-term healthy growth - The company stated in its profit forecast that it currently has ample cash reserves and is planning to invest in diversified entertainment industries. On October 15, Galaxy Macau announced a three-year strategic cooperation agreement with DAMAI ENT. The bank believes that based on the stable fundamental of the performance ticketing business, the company will strategically invest in exploring innovative categories such as local cultural tourism, sports events, and small and medium-sized plays, and actively expand into overseas markets. Although there may be short-term cost inputs, the company is expected to achieve sustained and healthy growth in the medium to long term. - Optimizing asset structure to reduce investment portfolio risk exposure - The company stated in its profit forecast that the increase in net profit for FY1H26 is also due to the reduction in investment portfolio risk exposure. The bank believes that in terms of film investment, the current reserve films include "Bao Water Pipe" (scheduled for release on January 23, 2026), "Capturing Spies", "Escort", "Silent Awakening", etc., and the overall risk is relatively controllable. Risk warning: Costs of new business investment exceed expectations, intensifying industry competition, and tightening regulations.