广播电视行业电影产业中场休息

1、June 26, 2019 09:00 PM GMTMORGAN STANLEY ASIA LIMITED+Qianlei Fan, CFAEQUITY ANALYSTQianlei.FanGary YuEQUITY ANALYSTGary.YuSara WangRESEARCH ASSOCIATESara.WangChinas Film Industry | Asia PacificA Break In The ActionRecent share price weakness has factored in this years soft box office. However, we d

2、o not expect a meaningful turnaround soon, and are cautious on Chinas film industry over the next 6-12 months.Asia Pacific IndustryViewCautiousWe expect Chinas box office sales to grow at a 10.2% CAGR in 2019-21, downfrom 11.4% in 2016-18. Box office receipts were off 5% YoY in the year through May,

3、 and the outlook remains uncertain due to macro headwinds, an unfavorable regulatory environment, and US-China trade tensions. Over the long term, though, our constructive view is unchanged. In 2018, Chinas domestic box office was US$8.5bn, 72% of the US and Canadian domestic box office.Potential st

4、ructural changes. We expect to see 1) further consolidation in the exhibition segment; 2) continued vertical integration along the value chain, led by exhibitors, producers, and distributors; and 3) online ticketing platforms gaining distribution share from offline distributors.Exhibit 1: Chinas fil

5、m industry: Ratings and price targets*Wanda Film002739.SZOW20.2018.718%Shanghai Film601595.SSEW12.3014.54-15%Guangzhou Jinyi002905.SZUW13.4018.99-29%Source: Thomson Reuters, Morgan Stanley Research. Share prices as of June25, 2019.Potential disruptions. These include 1)*With this report, Morgan Stan

6、ley Research resumesstreaming, although our base case iscoverage ofEnlight Media. In addition, Qianleifor limited box office dilution from streaming players, and 2) internet players,which we expect to increasingly participate in distribution & promotion, production, and financing.Effects of US-China

7、 trade tensions. If imports of Hollywood movies decrease, it would hurt theatre operators and distributors but have a neutral to positive impact on domestic studios. If China increases imports of Hollywood movies, distributors and theatre operators should benefit slightly. However, film distributors

8、 would be negatively impacted if the take rates for foreign studios are hiked under a new import agreement.Stock preferences:We prefer theatre operators to distributors and studiosFan assumes primary coverage ofEnlightMedia, Wanda Film, and Huayi Brothers.Theatre operators: We prefer larger players

9、to smaller ones. We are OWWanda and initiate coverage of Shanghai Film at EW and Hengdian and Jinyi at UWMorgan Stanley does and seeks to do business with companies covered in Morgan Stanley Research. As a result, investors should be aware that the firm may have aof interest that could affect the ob

10、jectivity of Morgan Stanley Research. Investors should consider Morgan Stanley Research as only a single factor in making their investment decision.For analyst certification and other important disclosures, refer to the Disclosure Section, located at the end of this report.+= Analysts employed by no

11、n-U.S. affiliates are not registered withDistributors: We prefer distributors of foreign films (China Film; initiate atEW) to offline domestic film distributors (Enlight; UW)Studios: We are UW Huayi due to earnings uncertainty and highvaluations.What could make us more optimistic: 1) A turnaround in

12、 consumption growth; 2) favorable policy shifts, such as less strict content controls and tax incentives; and3) a higher import quota for Hollywood movies.FINRA, may not be associateds of the member and may notbe subject to NASD/NYSE restrictions on communications with a subject company, public appe

13、arances and trading securities held by a research analyst account.1NameTickerRating Price target CurrentImplied(Rmb)pricereturnChina Film600977.SSEW14.9015.13-2%Hengdian Entertainment603103.SSUW13.8016.83-18%Huayi Brothers300027.SZUW4.205.46-23%Enlight300251.SZUW5.106.86-26%Average-15%Greater China

14、Media获取报告1、2、3、每周群内7+报告；当日华尔街日报、4、行研报告均为公开利归原作者所有，起点财经仅分发做内部学习。扫一扫 关注公号回复：加入“起点财经”群。Order of PreferenceExhibit 2: Chinas film industry: Order of preferenceRatingTrading Currency Price Target Current PriceUpside/(Downside) (%)Market Cap (in USD mm)Avg Daily Traded Vol (in USD mm)Overweight HKD 25.001

15、2.5100%1,807.54.2Equal-Weight HKD 1.601.7-6%5,692.68.1Overweight CNY 20.2018.78%5,653.064.5Equal-Weight CNY 14.9015.1-1%4,106.322.3Equal-Weight CNY 12.3014.5-15%789.43.1Underweight CNY 13.4019.0-29%742.012.6Underweight CNY 13.8016.8-18%1,551.610.0Underweight CNY 4.205.5-24%2,218.422.4Underweight CNY

16、 5.106.9-26%2,925.532.7Bull Case ValueUpside (%)Bear Case Value Downside (%) Risk/Reward Skew33.0164%12.0-4%41.02.124%0.9-47%0.532.272%9.1-51%1.422.247%9.9-34%1.421.146%8.3-43%1.131.164%5.1-73%0.927.966%5.4-68%1.013.0136%1.3-76%1.810.349%2.8-59%0.8FY19 MSe vs. Consensus MeanSales EBITDA EBIT EPSFY20

17、 MSe vs. Consensus MeanSales EBITDA EBIT EPS4.5%40.5%39.0%19.0%2.4%2.4%2.4%-19.4%14.4%22.0%23.3%-5.8%-0.5%-14.2%-18.5%-31.3%-6.1%-34.3%-64.9%-58.1%-3.2%-10.7% NA-53.0%-3.7%-21.7%-30.5%-60.6%-3.6%-11.3%-7.8%-40.7%-25.6%-48.7%-51.3%-51.7%4.1%32.1%30.0%11.7%0.1%0.1%0.1%-0.4%18.5%22.7%28.0%-10.1%-2.2%-1

18、3.1%-18.4%-28.7%-7.6%-36.8%-64.9%-57.6%-3.0%-4.8% NA-56.4%0.1%-25.3%-21.0%-58.2%-9.8%-13.0%-11.3%-40.6%-37.8%-50.1%-53.6%-52.5%Implied Multiples on MS Price Target FY19eP/E EV/EBIT EV/EBITDAEV/SalesFY20eP/E EV/EBIT EV/EBITDAEV/Sales23.8x19.2x16.7x4.7x-185.8x-46.4x-52.2x 10.6x24.5x19.0x12.3x2.5x29.1x

19、16.0x10.6x2.0x41.3x28.3x13.0x2.7x43.2x26.7x8.4x1.6x42.8x32.8x14.4x2.9x28.2x18.8x15.8x3.5x38.6x34.4x33.2x8.3x15.1x14.3x13.0x4.7x69.9x87.8x76.0x11.2x22.5x17.6x11.4x2.4x25.3x21.1x14.3x2.7x36.9x42.2x20.1x4.1x34.7x28.6x9.2x1.8x36.4x33.5x14.9x3.0x24.0x15.1x12.8x2.9x29.9x34.5x33.5x10.6xSource: Morgan Stanl

20、ey Research, Thomson Reuters (consensus mean). e = Morgan Stanley Research estimates. Share prices as of June 25, 2019.2Stock Price Performance1 Month(1.4%)8.4%3 Month(21.6%)20.1%1 Year(14.3%)87.6%YTD26.5%0.9%4.2%12.5%(33.9%)5.3%4.4%1.9%(16.2%)(14.7%)(6.0%)10.9%(4.8%)(2.2%)(22.1%)(9.8%)(3.0%)(7.7%)(

21、7.8%)(20.2%)(8.4%)(28.8%)(14.3%)5.7%18.9%45.7%5.7%16.4%(9.7%)22.7x29.6x48.8x61.2x52.1x36.7x52.0x17.7x16.4x35.7x38.1x40.2x23.1x47.4x11.4x10.8x16.4x12.1x17.6x19.4x45.7x2.4x2.0x3.3x2.3x3.6x4.3x11.5x1.5%2.8%2.4%-8.3%1.0%0.7%1.6%20.8x25.7x43.7x49.2x44.3x31.1x40.2x15.3x14.0x30.8x32.5x33.6x20.4x36.0x9.9x9.

22、5x14.6x10.4x15.0x17.3x34.9x2.1x1.8x3.0x2.0x3.0x4.0x11.0x3.3%3.2%2.6%2.0%2.1%2.4%2.3%Valuation Multiples at Last Close FY19eP/E11.9x-193.8xEV/EBIT8.4x-36.3xEV/EBITDA7.3x-40.8xEV/Sales2.0x8.3xFCF Yield1.9%-0.2%FY20eP/E7.6x72.9xEV/EBIT4.5x67.2xEV/EBITDA4.1x58.1xEV/Sales1.5x8.6xFCF Yield12.7%0.4%CNYCNYC

23、NYCNYCNYCNYCNY17,90210,8541,2022,1512,9374,4681,6413,7002,0102454155969834122,3941,3241131312618243970.820.510.300.310.320.150.1320,19511,8831,3122,4243,4094,7471,6914,1792,2322684756901,0905352,7061,5111281533089255190.900.590.330.390.380.180.17Morgan Stanley EstimatesFY19eCNYCNYSales4,6992,988EBIT

24、DA1,319(609)EBIT1,145(685)EPS0.93(0.01)FY20eSales5,7143,868EBITDA2,043569EBIT1,856492EPS1.450.02| 70%| 85%| 33%| 100% | 100% | 33%| 80%| 25%| 15%| 67%0%0%| 33%| 20%| 5%0%0%0%0%| 33%0%Street View: RatingsBuy/Overweight| 100%0%Hold/Equal-weight0%| 100%Sell/Underweight0%0%MaoyanAli Pictures1896.HK1060.

25、HKWandaChina FilmShanghai FilmJinyiHengdianHuayiEnlight002739.SZ600977.SS601595.SS002905.SZ603103.SS300027.SZ300251.SZInvestment SummaryIndustry overviewBox office growth to normalize in 2019-21We expect Chinas box office growth to slow to 10.2% annually in 2019-21 from 38% in 2007-15 and 11.4% in 2

26、016-18. We think the deceleration is being led by 1) a reduction in ticket subsidies, pushing up effective ticket prices; 2) Chinas box office/disposable income is already high compared with US and Canadian levels; 3) less diversified supply due to underinvestment in content, leading to demand softn

27、ess; and 4) macro headwinds causing a slowdown in consumption growth.We expect imported films to contribute about 40% of Chinas total box office in 2019-21,flat from 2018.PSA to decline in 2019 and pick up in 2020We expect the industrys per screen average box office (PSA) to drop by 5.2% in 2019 bef

28、ore rising 1.3% in 2020 and 4.7% in 2021. The decline this year is mainly due to higher supply (number of screens) growth compared with demand (total box office) growth.Potential structural changesExhibit 3: Chinas film industry: Value chainSource: Morgan Stanley ResearchExhibit 4: Chinas film indus

29、try: Typical box office splitSource: Morgan Stanley Research. Note: online service fees excluded.3TaxFilm FundStudiosDistributorsTheatre circuitsTheatre investment and management companiesfilms3.3%5.0%39.4%6.4%45.9%Imported revenue sharing films3.3%5.0%25%14.4%52.3%Distribution: Online continues to

30、take share from offlineOnline ticketing platforms like Maoyan and Ali Pictures have expanded their share of the film distribution segment from 3% in 2016 to 25% in 2018. We believe online distributors will continue to take share from offline distributors thanks to their strong data mining capabiliti

31、es, which should help improve the efficiency of exhibition resource allocationand promotions in order toize the potential box office for target movies.Consolidation in the exhibition segmentThe market share in terms of total box office for Chinas top five cinema circuits increased from 42% in 2015 t

32、o 46% in 2018. We expect segment consolidation to continue, led by larger players with better earnings and cash flows than smaller ones.Vertical integration to continueWe highlight three ms led by players in different segments:Vertical integration led by exhibitors Wanda: Exhibitor + Studios and Dis

33、tributorsVertical integration led by distributors Enlight: Distributor + StudiosVertical integration led by producers Huayi: Studio/Distribution + Exhibitors + IP authorization.We prefer the Wanda mas theatre operators have better cash flows than upstreamstudios and distributors, and they also have

34、higher bargaining power over the upstream.Potential disruptionsstreamingWe see limited downside risks from streaming service providers, asThere is a window between cinema exhibition and streaming distributionSeeing movies provides social connections for people, while streaming does notThe US case sh

35、ows that Netflix has had a limited impact on per-capita cinema attendance, compared with TVs impact on per capita attendance in the 1930sChinas admissions per capita are still lowInternet playersIn addition to the online ticketing market, internet players are also actively participatingin the distri

36、bution, promotion, and production of films. We expect internetplayers to improve their share in the film distribution segment in the medium to longterm, but we are unsure whether internet-based technologies can help lower the hit-or- miss risk in film production.4US-China trade tensionsThe agreement

37、 between China and the US covering film imports expired in 2017 and is subject to an update. We believe negotiations will focus on import quotas and revenue sharing with US studios. We cannot say when a new agreement will be reached.Exhibit 5: New US-China film import agreement potential scenariosSc

38、enario A1Scenario A2Scenario BThe 2012 MOUChina and the US signed a Memorandum of Understanding on film imports in 2012Scenario descriptionHigher import quotaHigher studio take rateActual film import lower than quotaPositivePositiveNegativePositiveImpacts on US studios- Import quota: 20 - 34 titles-

39、 US studios take rate: 13% - 25%Potentially higher box officeHigher box office sharing percentageLower box officeMinor positiveNeutralNegativePositivePotentially higher box office, but the impactmay not be significant, as China has already We assume no changes to the take rate ofwhich werethe rest w

40、ere under buy-out terms.Foreign films box officeImpacts ontheatresNegativeMinor positiveNegativeImpacts on China Film (one of theHigher take rate for foreign studios leads to lower distribution profits for China Film, assuming theatres take rate is unchanged.two distributors of imported films the sa

41、me as fortheatresthe same as for, 50% market share)Neutral/minor positiveMinor negativeNeutralLess competition from global peers; potential policy support from regulatory bodiesImpacts onstudiosMore competition from global peersWanda6%Sensitivity: 5% higher total box office on 2020 earnings (exhibit

42、ion business)Shanghai Film Jinyi11%22%Hengdian15%EnlightN.AHuayiN.A.Sensitivity: 5ppt higher take rate for foreign studios on 2020 earningsChina Film*-40%Source: Morgan Stanley Research. *Note: Assume no changes to import taxes and management fees that China Film has to pay.Stock preferencesShare pr

43、ice performance reflects weak box office this year.Chinas box office dropped 5.1% YoY in the year through May, with a 13.5% YoY decline in admissions and a 9.8% YoY increase in ticket price. Since January 1, 2018, the median underperformance for A-share film stocks under our coverage vs. ChiNext ind

44、ex is 17ppt.5China Film3%Exhibit 6: Chinas box office growth has been weak in 201970%60%50%40%30%20%10%0%-10%-20%-30%-40%Source: China Film AdministrationExhibit 7: Share price performance: A-share film stocks under our coverage vs. ChiNext50%Exhibit 8: Share price performance: A-share film stocks u

45、nder our coverage vs. ChiNext, median20%40%15%30%10%20%5%10%0%0%-5%-10%-10%-20%-15%-30%-20%-40%-25%-30%WandaChina FilmShanghai FilmHengdianJinyiEnlightHuayiSource: Thomson Reuters. Share prices as of June 24, 2019,Note: Not all stocks in the above chart are components of ChiNext, but we think the in

46、dex is a relevant reference.Source: Thomson Reuters. Share prices as of June 24, 2019. Note: Not all stocks in the above chart are components of ChiNext, but we think the index is a relevant reference.but we dont expect a turnaround in the near termOur price targets for A-share film stocks imply, on

47、 average, 15% downside. We prefer downstream exhibitors over upstream studios and distributors, thanks to their bargaining power over the upstream, higher earnings visibility and lower valuations.OW Wanda Wanda is the largest theatre operatorwith a 13% marketshare as of 2018. It has also integrated

48、upstream segments including production and distribution, leading to long-term synergies among segments, we believe. We are EW Shanghai Film and UW Jinyi and Hengdian.EW China Film We expect solid earnings growth for China Film thanks to its exposure to the duopolistic foreign film distribution marke

49、t. However, potential risks may appear if imports of Hollywood movies decrease due to any escalation of trade tensions. We are UW Enlight as we think offline film distributors will continue to lose share to online distributors.UW Huayi. Earnings visibility is low due to hit-or-miss risks.6Jan-16Mar-

50、16 May-16 Jul-16 Sep-16 Nov-16 Jan-17 Mar-17 May-17 Jul-17 Sep-17 Nov-17 Jan-18 Mar-18 May-18 Jul-18 Sep-18 Nov-18 Jan-19 Mar-19 May-19Comparison with the USExhibit 9:film industry compared with the US and CanadaSource: China Film Administration, Maoyan Pro, company data, Thomson Reuters, National A

51、ssociation of Theatre Owners. Note: * Per urban capital admission for China, *based on Wanda Films domestic revenue only. Market cap data as of June 24, 2019.Exhibit 10: Wandas 2018 revenue breakdown (post the acquisition of upstream)Exhibit 11: Disneys 2018 revenue breakdownGame 5%OthersElimination

52、s-1%3%Film investment and promotion 10%Media Networks 36%Direct-to- Consumer & International 6%Studio Entertainment 17%Theatre advertisement 15%Admissions 56%Theme Parks and Resorts 33%Consumer Products and Interactive 7%Merchandise and F&B 11%Source: Company dataSource: Company data7China (Rmb)Chin

53、a (US$)US+Canada (US$)Industry dataTotal box office (2018, mn) Admissions (mn) Admissions per capita* Average ticket priceNo.of screens PSA (000)Market share of top 4 theatre operators56,5398,54511,8581,7161,7161,3012.12.13.632.95.09.160,07960,07940,31394114229425%25%64%Leading playersLeading player (Integrated) Market capLeading player (Integrate