CICC has released a research report, stating that the current price of DAMAI ENT (01060) corresponds to an adjusted P/E of 18.3x for FY27 and 15.5x for FY28. The firm maintains its Outperform industry rating. Considering a decline in industry valuation levels, the target price is set at HK$0.9, corresponding to an adjusted P/E of 27.4x for FY27. This target price implies an upside potential of 50% from the current price. The forecast for FY28 adjusted net profit is introduced at RMB 1.008 billion. CICC's key points are as follows:
FY26 performance met market expectations. The company reported FY26 results: revenue reached RMB 8.024 billion, a year-on-year increase of 20%; net profit attributable to shareholders was RMB 705 million, a year-on-year increase of 94%, aligning with the performance forecast of not less than RMB 700 million; Non-IFRS EBITA was RMB 746 million, a 15% increase compared to the comparable FY25 figure.
DAMAI GMV continues to grow, while international business remains in an investment phase. According to the announcement, the company's FY26 performance revenue was RMB 2.28 billion, up 11% year-on-year; segment performance was RMB 1.19 billion, down 4% year-on-year, mainly due to gross margin impact from innovative business expansion. Ticketing: DAMAI GMV continues to grow and maintains industry leadership. Content: Accelerating upstream extension in the industry chain. Overseas expansion: According to the earnings call, DAMAI's international business will undergo phased validation in Southeast Asia, Japan/Korea, and North American markets, with continued prudent expansion. The firm assesses that domestic performances in FY27 are expected to achieve steady growth, suggesting attention to the synergistic gains from variety shows, performances, and commercialization, as well as the medium-term profit inflection point for overseas operations.
Diversified IP derivative layout, film business profitability recovers. IP derivatives: According to the announcement, FY26 IP derivative revenue was RMB 2.17 billion, a year-on-year increase of 60%; segment performance was RMB 400 million, up 12% year-on-year, primarily affected by the closure of Jinli Naqu and an increase in the proportion of self-operated business. The Chiikawa flagship stores in Shanghai and Hangzhou showed good sales momentum, with the company planning store expansion and product type enrichment. According to the earnings call, the AI toy design platform "Miaoya," developed in collaboration with Tongyi, has received positive production test feedback, and the offline pioneer store LuckyLoop continues to explore opportunities for self-owned IP. The firm expects FY27 IP derivative revenue to increase by 50% year-on-year, mainly driven by retail volume growth, suggesting attention to the progress in marketization of self-owned IP and potential margin improvement.
Film: Profitability has shown significant recovery following strategic reforms. The firm assesses that the film "A Letter to Grandma" may contribute incremental profits in FY27.
Attention to potential margin improvement. According to the earnings call, in FY27 the company will increase investment in international performance expansion, content development, and self-operated derivative products. The firm judges that diversified business layouts may lead to short-term cost increases, suggesting attention to medium-term output gains, such as returns from overseas performances, marginal improvements in gross margin for self-operated IP, cost reduction and efficiency enhancement through AI, and the successful operation of innovative business models.
Risk warnings: New business investment costs may exceed expectations, industry competition may intensify, and regulatory tightening may occur.
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