CICC: Keeping Damai Entertainment (01060) outperforming the industry rating target price of HK$1.32
The Zhitong Finance App learned that CICC released a research report stating that the annual revenue and profit forecast for Damai Entertainment (01060) remains unchanged, and that the current stock price trading is 21 times P/E for FY26. Maintain an outperforming industry rating. Maintain the target price of HK$1.32, corresponding to FY26 30 times P/E, with 40% upside compared to the current stock price. The company issued an FY1H26 profit forecast. It is expected that the net profit attributable to the owners of the company will be no less than 500 million yuan in the six months ending September 30, 2025, an increase of about 48% over the previous year. The company is expected to announce FY1H26 results on the evening of November 13. The bank forecasts FY1H26 non-IFRS EBITA of $537 million.
CICC's main views are as follows:
Aliyu's business has performed well, and IP derivative potential continues to be unleashed
The company stated in its profit forecast that one of the main reasons for the increase in FY1H26 net profit was the excellent performance of the Aliyu business, which recorded strong year-on-year growth in both revenue and profit. The bank believes that leading IPs such as Sanrio, Chiikawa, and Crayon Shin-chan are still the core drivers of current revenue and profit, and are showing good popularity. According to Sanrio's FY03/26 quarterly report (corresponding to natural year 2Q25), revenue from authorized businesses in mainland China also increased by 43.9% to 194 million yuan. However, since 3Q25, Aliyu has hosted large-scale offline events such as the Sanrio Hi Fen Festival, combined with the opening of the Chiikawa Shanghai flagship store. The bank determined that demand for the IP economy is still strong, and Aliyu's business revenue is growing well. Taking into account the negative impact of the shutdown of Koi Natsu on the IP derivative business, the bank predicts that the company's FY1H26 derivative revenue will also increase 55% to 930 million yuan under neutral conditions; it will follow up on the impact of the IP matrix operation trend and business development.
The basic structure of the performance business is steady, and the investment layout serves medium- to long-term healthy growth
The company stated in its profit forecast that the company currently has sufficient cash reserves and is expected to invest in diversified entertainment industries. On October 15, Galaxy Macau announced the renewal of a three-year strategic cooperation agreement with Damai Entertainment. The bank believes that the company invests reasonably in exploring innovative categories such as local cultural tourism, sporting events, and small and medium repertoire in the stable basic market of performance ticketing, and actively lays out overseas markets, with short-term or costly investment, but it is still expected to achieve continuous and healthy growth in the medium to long term.
Optimize asset structures and reduce portfolio risk exposure
The company stated in its profit forecast that the year-on-year increase in FY1H26 net profit was also due to a reduction in portfolio risk exposure. The bank judged that in terms of film production, the current reserve films include “Bursting Water” (scheduled for 2026/1/23), “Catch the Agent”, “Dart Man”, and “Stink Is Silent”. The bank judged that the overall risk is relatively manageable.
Risk warning: New business investment costs are higher than expected, industry competition is intensifying, and regulations are being tightened.