中國電影與電視：內(nèi)容為王

1、25February2019ChinaEQUITIESContents HYPERLINK l _bookmark0 Keycharts2 HYPERLINK l _bookmark1 Investmentsummary3 HYPERLINK l _bookmark2 China Movie: Key watch pointsin20195 HYPERLINK l _bookmark3 TV/online drama: turning more regulated and HYPERLINK l _bookmark3 disciplined HYPERLINK l _bookmark4 App

2、endix19ChinaFilm (A-Share)22IMAXChinaHoldings30Zhejiang Huace Film &TV(A-Share)38WandaFilm (A-Share)46China media sector underperformed SH-A share index by 16%China Internet & MediaMovies and TV: Content is kingKey pointsKey points Blockbuster content and premium experience are primary growthdrivers

3、. Regulation leads to ST industry consolidation but raises LTsustainability. Reiterate OP on China Film; upgrade IMAX China to Outperform.We launch our second media series with a focus on Chinas movie and TV sector HYPERLINK /rp/d/r/publication.do?f=E&pub_id=7366520&file_name=ChinaInternetMedia12021

4、9e330110.pdf&pid=f7ca72d3-10a9-48f5-b5b0-a8601c4044d9 (see our music report here). The China media sector has underperformed theSH-A share index by 16% since the beginning of 2018, especially with soft box office growth and a regulatory overhang in 2H18. We revisited some key events, and identified

5、potential drivers in the movie and TV industries in 2019.Quality over quantity to be the main driverChinas media sector has turned more disciplined, with content the most powerful9509008508007507006506005505004505002018-01-312018-02-282018-01-312018-02-282018-03-312018-04-302018-05-312018-06-302018-

6、07-312018-08-312018-09-302018-10-312018-11-302018-12-312019-01-31China mediasectorindexSH-A shareindexgrowth driver for downstream and upstream players alike. While Chinese audience seem open to trying different genres, they have been selective in picking quality over IP/cast, leading to a close cor

7、relation between reviews and final turnout of media content. We expect the top 10 films in China to contribute over 40% of total BO in 2019, vs a corresponding 62% share in the US in 2018.Movie: premiumization is the key watch pointThe movie sector has entered a period of steady growth, with the box

8、 office set for 10% CAGR on the number of total screens rising to 78k in the next two years, per our estimate. Yet, we expect a gradual easing in per-screen-average revenueSource: Wind, Macquarie Research, February 2019China media stock picksCompany TickerMQUpsideTP PE(x) China Film 600977 CH OP28%2

9、0.00 22 18first to recover from the PSA decline as premium large-format (PLF) tickets are 2-China Film 600977 CH OP28%20.00 22 18first to recover from the PSA decline as premium large-format (PLF) tickets are 2-IMAX China 1970HKOP24%25.50 18 17Huace300133 CH OP20%9.00 21 16Wanda Film 002739 CH N3%22

10、.00 27 24*Bloomberg data as of Feb 22, 2019.Source: Bloomberg, Macquarie Research, February 2019AnalystsMacquarie Capital Limited HYPERLINK /directory/people/details?analystId=5374 Ellie Jiang +852 3922 4110 HYPERLINK mailto:ellie.jiang ellie.jiang HYPERLINK /directory/people/details?analystId=4444

11、Wendy Huang, CFA +852 3922 3378 HYPERLINK mailto:wendy.huang wendy.huang HYPERLINK /directory/people/details?analystId=5409 John Wang +852 3922 3578 HYPERLINK mailto:john.wang john.wang HYPERLINK /directory/people/details?analystId=5211 Frank Chen +852 3922 1433 HYPERLINK mailto:frank.chen frank.che

12、n(PSA)a 4% yoy decline in 2019E after an 8% decline in 2018, driven by increasing ticket price and rising demand for premium movie-going. With increased blockbuster films embedded with special effects and action sequences, as well as rising quality from domestic films, we remain optimistic in premiu

13、m players such as IMAX and Giant Screen (China Film) and expect them to be the4 times the average.TV Drama: leading content providers to gain shareRegulation has heavily impacted the TV drama sector and will continue to this year, especially on licensing costs and online content. We see a mixed impa

14、ct from regulations to content providers: better margin with lower production costs, but topline pressure from potentially lower licensing prices, a roughly 20% decline on our estimate. The licensing price for top content, however, should remain high, given more premium production quality. We believ

15、e industry consolidation will benefit top players like Huace in gaining bargaining power with quality content supply and accumulating more market share, especially with a lack of quality pipeline for distribution channels resulting from low production volume in 2H18.Stock picks: Top pick China Film;

16、 upgrade IMAX China to OPWe believe its a good time to revisit the media sector as we believe audience in China are increasingly selective in content quality, and we prefer IP-centric upstream over asset-heavy downstream. We also like premium over mass, as we are optimistic on the prospects of premi

17、um movie-going demand. We upgrade IMAX China from Neutral to Outperform on its faster box-office growth outlook in 2019 (14% vs 11% industry growth). Reiterate Outperform on China Film as we think it is the most resilient player among all with its authorized distribution business, prudent theatre ex

18、pansion, and least PSA dilution impact.Please refer to page HYPERLINK l _bookmark5 54 for important disclosures and analyst certification, or on our website HYPERLINK /research/disclosures /research/disclosures.Key chartsFig 1 Expect China BO to register 10% CAGRover18-20EFig 2 with movie screens gr

19、owing faster (14%CAGR)($bn)65%43% 65%43% 45%45%40%34%29% 30%10%11%10%8%9%8.06.02.0-Chinaboxofficeyoy%70%60%50%40%30%20%10%0%80,00070,00060,00050,00040,00030,00020,00010,000-201420152016201720182019E ChinascreennumberYoY%40%78,11369,69678,11369,69660,07950,77641,17931,62723,59230%25%20%15%10%5%0%Sour

20、ce: Wind, Macquarie Research,February2019Source: Wind, Macquarie Research, February2019Fig 3 We expect PSA pressure to continue but ease gradually on the potential ban on ticket subsidiesFig 4 while prudent/premium players will likely recover first from PSA dilution(Rmb 1.00.211%-14%-8%-8%-2%15%10%5

21、%0%-5%-10%-15%50%40%30%20%10%-10%-20%-30%-40%PSA yoy% comparison-20%20152016201720182019E2020E201420152016201720182019E 2020E ChinaaverageWandaFilmPSAyoy%ChinaFilmIMAX ChinaSource: Company data, Macquarie Research,February2019Source: Source: SARFT, Company data, Macquarie Research, Feb2019Fig 5 Chin

22、a media sector underperformed SH-A shareindex, especially under tightened regulationsin2H18Fig 6 Prudent and premium players are moredefensive95090085080075070065060055050045035003000250020001500100050000.20-0.2-0.4-0.6-0.820142015201620172018EChina mediasectorindexSH-A shareindexSource: Wind, Macqu

23、arie Research, February 2019ChinaFilmIMAXChinaHuaceWanda Film*2018 data is based on our forecasts. China Films earnings for 2018 excludes one-off gain from acquiring Barco (Rmb454m).Source: Company data, Macquarie Research, February 2019Investment summaryGood time to revisit under trough valuationTh

24、e China media sector underperformed the SH-A share index by 16% in 2018, impacted primarily by a slowdown in the box office and a regulatory overhang in TV and online drama. The sector is currently trading at its historical low of 21x 19E PER vs the 5-yr historical average of 33x, with many quality

25、players are trading at historical low levels of valuation, given earnings deterioration.However, we believe it is a good time to revisit the sector, given the fact that changes in regulation should potentially ease production costs and lead to higher-quality content overall. We remain positive on Ch

26、inas movie-going demand, especially with rising content quality and growing demand for premium technology. We forecast China BO to grow at a 10% CAGR over 2019-2021, and believe premium players will outperform the mass market with growing demand and less PSA dilution.Stock ideasChina Film steady mov

27、ie play, Reiterate Outperform. We like the companys solid authorized duopoly in imported film distribution (60% of total revenue in 2017), growing presence in premium large format technology, and its relatively prudent theatre expansion, which should bode well amid PSA pressure in the China movie se

28、ctor. We are also pleased to see sound progress in the companys film production business, after observing the outstanding performance of The Wandering Earth, which will contribute Rmb180m in revenue to China Film, per ourestimate.IMAX China the best premium player in China; Upgrade to Outperform. We

29、 upgrade IMAXChina from Neutral to Outperform on its fast BO growth outlook (14% yoy vs. 11% for industry in 2019E). The companys PSA nearly quadrupled the industry average due to a larger exhibitor space and premium pricing. With consumers willingness to pay higher for better, we expect IMAX Chinas

30、 PSA to stabilize vs. a 4% decline for the industry in2019.Huace quality content provider to recover in 2H19. We maintain our Outperform rating on Huace while cutting FY19 earnings by 37% to reflect increased OPEX and tax. We forecast Huaces 4Q18 revenue to decline 16% yoy to Rmb2.3bn, impacted by a

31、 revenue decrease of 20% yoy from TV drama and 85% yoy from variety shows, as these are main segments impacted by the actors salary cap and tax control. However, we believe the lack of quality pipeline will bring pressure to distribution channels, and thus help Huace regain bargaining power in2H19.W

32、anda Film PSA pressure remains a concern; retain Neutral. We retain a Neutral on Wanda Film as we expect its PSA to drop sharper than the industry given its faster pace of expansion. The company plans to add 80-100 theatres per year, which we expect will dilute its PSA by 5.5% to Rmb1.75m in 2019. T

33、he companys latest proposal to acquire Wanda Media is pending CSRCapproval.Fig 7 Global media sector peer compsCompany NameBloomberg CodePrice (Local $)Macq Target Rating(Local 2018PE(x) 2019E2020EEV/EBITDA(x) 2018 2019E 2020E2018ROE(%) 2019E2020EDomesticAlibabaBABA US171.66Outperform224.0035.327.42

34、1.525.820.315.718.017.117.7Alibaba Pictures1060 HK1.45NRNRnmfnmf184.7nmfnmf111.4nmfnmf1.6BaiduBIDU US171.81Outperform213.0021.717.113.616.913.910.719.812.913.3Alpha Group002292 CH6.17NRNRnmf27.025.5nmf23.019.9nmf5.66.3China Literature772 HK39.35NRNR38.324.319.9Enlight Media300251 CH8.28NRNR10.122.41

35、7.923.510.011.3Ciwen Media002343 CH9.00NRNR12.38.06.89.916.616.0Huace300133 CH7.49Outperform9.0018.614.712.015.913.411.99.511.111.9Perfect World002624 CH28.29Outperform35.9020.217.014.817.314.812.619.319.118.6Huayi Brothers300027 CH5.12NRNR17.215.512.938.414.89.0Beijing Culture000802 CH13.54NRNR25.8

36、21.919.2nmfnmfnmfIMAX China1970 HK20.50Outperform25.5019.618.116.718.416.815.7Tencent700 HK344.00Outperform513.0035.029.623.724.221.016.726.724.124.5TMETME US16.90Outperform19.5051.140.028.541.332.612.7Subtotal Average25.421.817.922.717.621.614.613.012.7Emerging Markets DownstreamWanda Film002739 CH

37、21.33Neutral22.0024.621.918.713.611.511.712.712.711.9China Film600977 CH15.61Outperform20.0022.820.418.012.611.211.7Shanghai Film601595 CH13.82NRNR24.818.516.311.38.5nmf10.012.7nmfShanghai Oriental600637 CH11.32NRNR16.815.314.011.710.510.0Gehua Catv600037 CH10.13NRNR19.819.84.3Omnijoi Media300528 CH

38、8.45NRNR16.514.06.49.310.210.5Subtotal Average20.918.316.79.710.19.5Developed Markets Upstream21st Century FoxFOXA US50.72Neutral52.0025.924.422.913.914.313.6ComcastCMCSA US38.47Neutral41.0015.113.87.816.716.516.5DisneyDIS US114.29Outperform125.0016.216.316.010.810.910.626.119.717.4IMAX CorpIMAX US2

39、1.38Outperform28.0025.420.37.55.710.112.3LionsgateLGF US15.35Outperform29.0020.213.912.012.97.08.3NetflixNFLX US356.97Outperform375.00133.077.949.296.251.935.527.528.130.1Sony6758 JP5313.00Neutral5800.009.610.811.75.04.94.622.116.613.9Subtotal Average35.125.319.922.615.712.718.016.016.0Developed Mar

40、kets DownstreamVillage RoadshowVRL AU3.29Neutral2.00108.122.96.9CJ CGV079160 KS44050.00Outperform65000.00nmf21.914.5nmf9.08.1nmf30.734.7AMC EntertainmentAMC US13.70Outperform23.00nmf61.46.9nmf3.65.7CinemarkCNK US36.90Neutral41.0017.515.815.017.817.516.5Subtotal Average62.830.57.110.014.315.9Total Em

41、erging Markets23.920.725.918.514.818.012.912.111.8Total Developed Markets18.212.710.716.215.416.0Total average29.723.124.518.414.015.214.013.313.4Pricing as of Feb 22, 2019; estimates for not-rated companies are based on Bloomberg consensus. Source: Bloomberg, Macquarie Research, February2019China M

42、ovie: Key watch points in 2019Movie industry enters a steady stageOver the past 10 years, the China movie industry has realized rapid growth in both the box office and film admissions, compared to a relatively stable market for the US. In 2018, the China box office reached Rmb61bn, registering 9% yo

43、y growth from Rmb56bn the previous year. This is lower than our previous estimate of Rmb65bn primarily due to weak foreign movie BO performance, which declined 11% yoy to Rmb23bn. Meanwhile, film admissions growth during the year decelerated to 6% yoy, signalling the next stage for the China movie i

44、ndustry with steady growth and further penetration.We believe the China movie industry is entering a steady stage, in which quality exceeds quantity to become the key driver for box office performance in 2019. We expect BO performance to be driven by blockbuster content and rising movie ticket price

45、s, and be less dependent on admissions or the number of films released. We also remain positive on strong domestic films growth with a rising standard in film production. We forecast the China BO will grow at a 10% CAGR over 2019-2021, still expanding at a faster rate than the US, with 2% CAGR durin

46、g the same period on our Macquarie house estimate.Fig 8 China box office enters asteadystageFig 9 Film admissions comparison (US vsChina)($bn)65%43% 65%43% 45%45%40%34%29% 30%10%11%10%8%8.06.02.0-70%60%50%40%30%20%10%0%(mn)1,8001,6001,4001,2001,000800600400200-1,6201,62017161,2681,3201,2601,3151,372

47、1239131083020142015201620172018Chinaboxofficeyoy%USChinaSource: Wind, Macquarie Research,February2019Source: Wind, Macquarie Research, February2019Expect gradual PSA recovery over timeWith 9.3k screens added and total movie screens growing 18% yoy to 60k in 2018, the overcapacity issue continues as

48、PSA was further diluted 8% yoy from Rmb1.1m in 2017 to Rmb1m in 2018. The average movie ticket price rose to Rmb35.5 ($5.1) per ticket in 2018, signalling a recovery from ticket subsidies through online platforms. Although Chinas movie ticket price still has a long way to go compared to $9.1 for the

49、 U.S., the potential movie ticketing subsidy ban will likely lead to an improvement in ticket pricing. We expect a 4% decline in the national average PSA in2019.While the government authorities are targeting to expand more than 10k movies screens per year, we believe the expansion will primarily tak

50、e place in lower-tier cities and new theatres should be more theme-focused(campustheatre,communitytheatre,etc).Weforecastmoviescreens togrowata14% CAGR in 2018-20, and reach 78k by2020.Among all, we think China Film will have the least PSA dilution due to its prudent theatre expansion plan. We also

51、like premium players, as PLF could fare 2-4 times more depending on the demand of individual films. We see the premium market, especially top-tier players with well-known branding including IMAX and Giant Screen (China Film), to first recover from PSA dilution (flat vs. a 4% industry decline in 2019

52、), driven by consumers willingness to pay more forpremium.Fig 10 Expect PSA pressure to ease slowlyFig 11 Avg. movie ticket price in China is still at over a 40% discount to the USs ticket price(Rmb 1.00.2-11%-14%-8%-8%-2%15%10%5%0%-5%-10%-15%-20%(US$)5.45.05.19.08.07.06.05.04.03.02.01.0-20142015201

53、6201720182019E 2020E20142015201620172018PSAyoy%US ChinaSource: SARFT, Macquarie Research,February2019Source: EntGroup, Wind, Macquarie Research, February2019Rising demand on premium movie-going experiencePremiumLargeFormat(PLF)screensaccountedfor1.9%ofmoviescreensworldwidein2017,upfrom 1% in 2016. T

54、otal PLF screens grew 21% yoy, demonstrating much stronger potential compared to overall sector growth of 8% during the same period, primarily due to uprising customer demand. While consumers have easier access to get content from the mass market nowadays, PLF screens differentiate the movie-going e

55、xperience with extra-large screens and more immersivepresentations.Many Chinese exhibitors have launched their own PLF brands to compete in this field including Giant Screen by China Film and X-Land by Wanda Film. The core PLF system includes comfort seating, large screens with high dynamic range (H

56、DR) and immersive sound systems. Average movie ticket price for PLFs can typically more than double that of industry average. Chinese audience usually are more willing to pay a premium for highly-recognized brands such as IMAX; this has enabled IMAX to enjoy a higher pricing power compare to other p

57、remium peers in China. During Chinese New Year 2019, IMAXs average ticket price reached Rmb75, vs Rmb50 for other PLF players, indicating 23% yoy growth from 2018s CNY.According to the document released by the China Film Administration in December, theatres that purchase PLF screens or laser project

58、ors are entitled to a maximum 20% of overall procurement price or Rmb500k of government subsidy as beneficial treatment. This, in our view, will boost the developmentofpremiumtechnology.WebelievePLFwillbeakeyfocusinChinasmovieindustry. We expect IMAX screens, combined with Giant Screens, to register

59、 16% CAGR over 2018-20, with penetration expanding from 1.3% in 2014 to 1.7% in2020.Fig 12 IMAX vs. China Film Giant Screen forecast5004205004203502901921607198097323462630742454412001000800600400200020142015201620172018E2019E2020EIMAXChina Film GiantScreenSource: Company data, Macquarie Research, J

60、anuary 2019Takeaways from 2018 BO performanceContent is the most powerful BO driverWhile we observed that the Chinese audience is more willing to try different film genres and story themes, they are also more rational in selecting quality content. Although aggressive marketing may be helpful in boos