An analysis report expresses a positive outlook on DAMAI ENT (01060), anticipating rapid growth in its IP derivative business and a gradual recovery in its film investment operations. The forecast for FY27-29 total operating revenue is 9.45/10.944/12.311 billion yuan, representing year-on-year growth of +18%/16%/13%. Net profit attributable to shareholders is projected to be 1.025/1.167/1.328 billion yuan, with year-on-year growth of +45%/14%/14%. Using an SOTP valuation method, the analysis arrives at a target market capitalization of HK$29.1 billion for FY2027, corresponding to a target price of HK$0.97.

Core Business Performance and Growth Drivers

Examining the business segments: Performance Content & Technology: Revenue reached 2.276 billion yuan (yoy+11%). In ticketing, the GMV for performances on the DAMAI platform has grown for three consecutive years, with FY2026 services covering over 400,000 ticketed events and providing on-site services for approximately 5,800 large-scale performances. In live entertainment content, DAMAI has cultivated six major content brands, successfully hosted numerous large concerts and music festivals, and actively participated in producing and operating diverse content like stand-up comedy and immersive experiences. The company is advancing its international strategy, launching the overseas ticketing platform MAISEAT, which has seen rapid growth in listed events and ticket-buying users. It is also developing overseas performance promotion and investment, facilitating global tours for artists like GAI and Zhao Lusi, and establishing deep collaborations with key partners and venues in target markets to secure more promotion and ticketing opportunities.

IP Derivative Business: Revenue was 2.170 billion yuan (yoy+60%), with segment profit of 400 million yuan (yoy+11%). The sub-licensing business has secured agreements with several top-tier global IPs including Sanrio characters, Chiikawa, and Pokémon, and has collaborated with brands like Beast, MINISO, and Pop Mart on various licensing projects. In IP brand retailing, it has opened multiple Chiikawa city flagship stores and pop-up stores with partner copyright holders.

Film Content & Technology: Revenue was 2.178 billion yuan (yoy-20%), while segment profit was 310 million yuan (yoy+325%), primarily due to a shift in business strategy. Films produced and primarily distributed by the company, such as "Catching Shadows" and "Awakening Silence," achieved the third-highest box office in the summer season and the second-highest in the Lunar New Year season, respectively.

Series Production: Revenue was 1.401 billion yuan (yoy+142%), with segment profit of 151 million yuan (yoy+221%). Several well-received series including "In the Name of Law" and "Blazing Youth" were broadcast, with a pipeline of over 20 projects in reserve. On the expense side, administrative expenses were 1.502 billion yuan (yoy+21%), with the administrative expense ratio stable at 19%; the absolute increase was mainly due to higher personnel and operational costs from business growth. Net financial income was 246 million yuan, including interest and exchange gains.

Strategic Focus and Future Outlook

The company adheres to its core "Content + Technology" strategy, aiming to build a globally leading full-industry entertainment ecosystem platform. For Performance Content & Technology, it plans to integrate ticketing market resources to increase penetration, leverage ecosystem advantages to connect upstream and downstream entertainment industry chains, and deepen collaborations with venues, cultural tourism, and other parties to build competitive barriers. Content investment will focus on category expansion, value chain extension, and commercialization enablement. It will strengthen vertical content layouts, deepen presence in segments like stand-up comedy, sports, and esports, solidifying DAMAI's position as the preferred platform in these verticals. DAMAI International will gradually explore larger markets like the US and Australia, evolving into a global live entertainment service platform connecting content, artists, promoters, venues, ticketing, and users.

For the IP Derivative Business, the dual-strategy of sub-licensing and direct-to-consumer retail will continue. The sub-licensing business will scale up, relying on accumulated resources and systematic capabilities to secure top-tier, exclusive, diverse, and proprietary upstream IPs, thereby building a solid moat for the midstream B2B sub-licensing and new B2C retail businesses.

For the Film Business, the strategy remains focused on low-cost, high-return, and high-quality content investment, actively navigating current market pressures. The significant success of "A Letter to Grandma" is expected to contribute incremental performance in FY2027.

Key Risk Factors

Potential risks include changes in content regulations, box office performance falling short of expectations, delays in film scheduling, slower-than-expected progress in live performances, and underperformance of the IP business.