Key investment points:
In 2021, the film market will recover to 70% before the epidemic. As of December 31, 2021, China Film Co.Ltd(600977) market box office was RMB 47.032 billion, a year-on-year increase of 131.5%, and the split box office excluding service fees was RMB 42.863 billion, a year-on-year increase of 130.3%. The China Film Co.Ltd(600977) market will recover to about 73% in 2019 in 2021.
In 2021, the film market returns to order, and the industry is far from reaching the ceiling. The increase in the supply of high-quality content will drive the demand of the audience. Generally speaking, the China Film Co.Ltd(600977) market has entered an orderly stage of resumption of work and production in 2021. However, due to the continuous potential chain reaction of the epidemic, the reduced opening rate of cinemas, the insufficient supply of high-quality content and other factors, the box office and film viewers have not been able to recover before the epidemic. The Spring Festival, national day and other key schedules and key films can achieve better box office performance. Although the average ticket price of popular films increases more than in the past, it has less impact on the number of film viewers, which shows that under the condition of high-quality content supply, the audience still has high film viewing enthusiasm and reduced sensitivity to ticket price changes. From the perspective of annual film viewing frequency per capita, the industry is far from reaching the ceiling. We believe that in the Internet era, there are many traditional or emerging entertainment forms such as long video, games, short video, script killing and variety show, which have played a diversion role for the audience. Therefore, the film industry needs to provide more high-quality, rich and differentiated content to enhance the audience’s interest in watching movies.
The impact of the epidemic is expected to return to growth after the decline. It is expected that after the impact of the epidemic situation declines in the future, the production, production and release of domestic films will enter a normal state, and the introduction of imported films is expected to resume, forming a diversified supplement to the China Film Co.Ltd(600977) market content matrix, and the film market is expected to resume growth. Considering the policy encouragement direction, people’s film viewing enthusiasm, production cycle and other factors, the theme film may continue to occupy a relatively heavy market position in the medium and short term in the future. However, from the perspective of longer-term content creation, if too many homogeneous films appear, it may also cause aesthetic fatigue of the audience.
Investment suggestion: under the environment of intensified schedule effect, there is fierce competition among films. In line with the trend of “content is king”, high-quality films will stand out in the fierce competition. In the channel competition pattern, the market share of leading cinema companies has increased significantly, and the policy also encourages the improvement of industry concentration. In the future, leading cinema may continue to occupy a competitive advantage. Focus on the recommended content and channel head companies, recommend Wanda Film Holding Co.Ltd(002739) , Beijing Enlight Media Co.Ltd(300251) , and pay attention to China Film Co.Ltd(600977) .
Risk warning: repeated epidemic situation and variation risk; The quality of film content is not as expected; The introduction of imported films and the box office were not as expected; Risk of violations by performers
