中國電影產業(yè)：中場休息

1、Chinas Film Industry | AsiaA Break In The ActionsharepriceweaknesshasfactoredinthisyearsHowever,weameaningfulMORGAN STANLEY ASIA LIMITED+Qianlei Fan, CFAEQUITY ANALYST HYPERLINK mailto:Qianlei.Fan Qianlei.FanGary YuEQUITY ANALYST HYPERLINK mailto:Gary.Yu Gary.YuSara WangRESEARCH ASSOCIATE HYPERLINK

2、mailto:Sara.Wang Sara.Wang+8522239-1875+8522848-6918+8522239-1230trard,adareatisnCiasilmitry rtext6-2t.Greater China MediaAsia PacificIndustryViewCautiousetCasxffealsowata02%CAGRn2092,down from114%n016-1.Boxoffcereceptswereoff5%YoYntheyearthrouh May,andtheoutlookremansuncertanduetomacroheadwnds,an u

3、nfavorablereulatoryenvronment,andUS-Chnatradetensons.Overthelong term,thouh,ourconstructvevewsunchaned.In01,Chnasdomestcbox offcewasUS$5bn,7%oftheUSandCanadandomestcboxoffce.Palala.eepecttosee1)furtherconsoldatonnthe ehbtonsement;)contnuedvertcalnteratonalongthevaluechan,ledby ehbtors,producers,andd

4、strbutors;and)onlnetcketngplatformsanng dstrbutonsharefromofflnedstrbutors.Pal.Thesenclude1)vdeostreamn,althouhourbasecases forlmtedboxoffcedlutonfromstreamngplayers,and)nternetplayers, whchweepecttoncreasnlypartcpatendstrbuton&promoton, producton,andfnancn.EffectsofUS-Chinatensions.IfimportsofHolly

5、woodmoviesdecrease,would hurt theatre operators and distributors but have a neutral to positive impactondomesticstudios.IfChinaincreasesimportsofHollywoodmovies, distributors and theatre operators should benefit slightly. However, film distributorswouldbenegativelyimpactedthetakeratesforforeignstudi

6、osare hikedunderanewimportagreement.Stock preferences:We prefer theatre operators to distributors and studiosWepreferlargerplayerstosmallerones.WeareOW WandaandinitiateofShanghaiFilmatEWandHengdianand Jinyi atUWWepreferdistributorsofforeignfilms(ChinaFilm;initiateat EW)toofflinedomesticfilmdistribut

7、ors(Enlight;UW)Studios:WeareUWHuayiduetoearningsuncertaintyandhigh valuations.atldakese:1)Aturnaroundnconsumptonrowth;) favorablepolcyshfts,suchaslessstrctcontentcontrolsandtaxncentves;and3) a higher import quota for Hollywood movies.Exhibit 1: Chinas film industry: Ratings and price targets*NameTic

8、kerRatingPrice target(Rmb)CurrentpriceNameTickerRatingPrice target(Rmb)CurrentpriceImpliedreturnChina Film600977.SSEW14.9015.13-2%603103.SSUW13.8016.83-18%Huayi Brothers300027.SZUW4.205.46-23%Enlight300251.SZUW5.106.86-26%Average-15%Source: Thomson Reuters, Morgan Stanley Research. Share prices as o

9、f June 25, 2019.*Withthisreport,MorganStanleyresumes coverageofBeijingEnlightInaddition,Fan assumes primary coverage of Beijing Enlight WandaFilm,andHuayiBrothers.Morgan Stanley does and to do business with companiesinMorganStanleyResearch.Asa result,investorsshouldbeawarethatthefirmmayhavea conflic

10、t of that could the objectivity of Morgan Stanley Research. should consider MorganStanleyasonlyasinglefactorinmaking their investmentdecision.ForanalystandotherimportantrefertotheSection,locatedattheendofthis report.+=Analystsemployedbynon-U.S.affiliatesarenotregisteredwith FINRA,maynotbeassociatedp

11、ersonsofthememberandmaynot besubjectNASD/NYSErestrictionsoncommunicationswitha subjectcompany,publicappearancesandtradingsecuritiesheldby a research analystaccount.Order of PreferenceExhibit 2: Chinas film industry: Order of preferenceAli Pictures1060.HKWanda002739.SZShanghai Film601595.SSJinyi00290

12、5.SZHuayi300027.SZEnlight300251.SZEqual-WeightEqual-WeightUnderweightUnderweightUnderweightUnderweightHKDCNYCNYCNYCNYCNY1.6012.3013.4013.8014.519.0-6%-15%-29%-18%-24%-26%5,692.6789.4742.01,551.62,218.42,925.5(in10.022.432.7Street View: Ratings100%0%70%85%| 33%100%100%| 33%| 80%0%100%25%15%| 67%0%0%|

13、 33%| 20%0%0%|5%0%0%0%0%| 33%0%27.913.010.324%46%64%66%136%49%-47%-43%-73%-68%-76%-59%1.01.80.8Morgan Stanley EstimatesCNYCNYCNYCNYCNYCNY2,9881,2022,1512,9374,4681,641(609)245415596983412(685)113131261824397(0.01)0.300.310.320.150.13FY20e3,8681,3122,4243,4094,7471,6915692684756901,090535492128153308

14、9255190.020.330.390.380.180.17FY19 MSe vs. Consensus Mean2.4%-6.1%-3.2%-3.7%-3.6%-25.6%2.4%-34.3%-10.7%-21.7%-11.3%-48.7%2.4%-64.9%NA-30.5%-7.8%-51.3%-19.4%-58.1%-53.0%-60.6%-40.7%-51.7%FY20 MSe vs. Consensus Mean0.1%-7.6%-3.0%0.1%-9.8%-37.8%0.1%-36.8%-4.8%-25.3%-13.0%-50.1%0.1%-64.9%NA-21.0%-11.3%-

15、53.6%-0.4%-57.6%-56.4%-58.2%-40.6%-52.5%Valuation Multiples at Last CloseFY19e-193.8x48.8x61.2x52.1x36.7x52.0 x-36.3x35.7x38.1x40.2x23.1x47.4x-40.8x16.4x12.1x17.6x19.4x45.7x8.3x3.3x2.3x3.6x4.3x11.5x-0.2%2.4%-8.3%1.0%0.7%1.6%FY20e72.9x43.7x49.2x44.3x31.1x40.2x67.2x30.8x32.5x33.6x20.4x36.0 x58.1x14.6x

16、10.4x15.0 x17.3x34.9x8.6x3.0 x2.0 x3.0 x4.0 x11.0 x0.4%2.6%2.0%2.1%2.4%2.3%Implied Multiples on MS Price TargetFY19e-185.8x41.3x43.2x42.8x28.2x38.6x-46.4x28.3x26.7x32.8x18.8x34.4x-52.2x13.0 x8.4x14.4x15.8x33.2x10.6x2.7x1.6x2.9x3.5x8.3xFY20e69.9x36.9x34.7x36.4x24.0 x29.9x87.8x42.2x28.6x33.5x15.1x34.5

17、x76.0 x20.1x9.2x14.9x12.8x33.5x11.2x4.1x1.8x3.0 x2.9x10.6xStock Price Performance1 Month(1.4%)8.4%0.9%4.2%12.5%(33.9%)5.3%4.4%1.9%3 Month(21.6%)20.1%(16.2%)(14.7%)(6.0%)10.9%(4.8%)(2.2%)(22.1%)1 Year(14.3%)87.6%(9.8%)(3.0%)(7.7%)(7.8%)(20.2%)(8.4%)(28.8%)YTD26.5%(14.3%)5.7%18.9%45.7%5.7%16.4%(9.7%)S

18、ource: Morgan Stanley Research, Thomson Reuters (consensus mean). e = Morgan Stanley Research estimates. Share prices as of June 25, 2019.Investment SummaryIndustry overviewBoxoicerothtonormaiein01eepectChnasboxoffcerowthtoslowto10%annuallyn019-1from%n 007-15and114%n016-1.ethnkthedeceleratonsbengled

19、by1)areductonn tcketsubsdes,pushngupeffectvetcketprces;)Chnasboxoffce/dsposable ncomesalreadyhhcomparedwthUSandCanadanlevels;)lessdversfedsupply duetoundernvestmentncontent,leadngtodemandsoftness;and4)macro headwndscausngaslowdownnconsumptonrowth.eepectmportedflmstocontrbuteabout40%ofChnastotalboxof

20、fcen019-1, flatfrom01.Atodecinein09andpickupin00eepectthendustrysperscreenaveraeboxoffceS)todropby5%n019 beforersng1%n00and47%n01.Thedeclnethsyearsmanlyduetohher supplynumberofscreens)rowthcomparedwthdemandtotalboxoffce)rowth.Exhibit 3: Chinas film industry: Value chainSource: Morgan Stanley Researc

21、hExhibit 4: Chinas film industry: Typical box office splitTaxFilm FundStudiosDistributorsTheatre circuitsTheatre investment and management companiesChinese films3.3%5.0%39.4%6.4%45.9%Imported revenue sharing films3.3%5.0%25%14.4%52.3%Source: Morgan Stanley Research. Note: online service fees exclude

22、d.Distribution: Online continues to take share from offlineOnlnetcketngplatformslkeMaoyanandlictureshaveepandedthershareofthe flmdstrbutonsementfrom%n016to5%n01.ebeleveonlnedstrbutors wllcontnuetotakesharefromofflnedstrbutorsthankstotherstrongdatamnng capabltes,whchshouldhelpmprovetheeffcencyofehbto

23、nresourceallocaton andpromotonsnordertomamethepotentalboxoffcefortaretmoves.Consolidation in the exhibition segmentThemarketsharentermsoftotalboxoffceforChnastopfvecnemacrcuts ncreasedfrom4%n015to46%n01.eepectsementconsoldatonto contnue,ledbylarerplayerswthbetterearnnsandcashflowsthansmallerones.Ver

24、tical integration to continueWe highlight three models led by players in different segments:Vertical integration led by exhibitors Wanda: Exhibitor + Studios and DistributorsVertical integration led by distributors Enlight: Distributor + StudiosledbyHuayi:Studio/Distribution+Exhibitors+IP authorizat

25、ion.We prefer the Wanda model as theatre operators have better cash flows than upstream studios and distributors, and they also have higher bargaining power over the upstream.Potential disruptionsVideo streamingWe see limited downside risks from streaming service providers, asThere is a window betwe

26、en cinema exhibition and streaming distributionSeeing movies provides social connections for people, while streaming does notThe US case shows 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 ca

27、pita are still lowInternet playersInadditiontotheonlineticketingmarket,internetplayersarealsoactivelyparticipating the distribution, promotion, and production of films China. We expect internet playerstoimprovetheirsharethefilmdistributionsegmentthemediumtolong term,butweareunsurewhetherinternet-bas

28、ed technologiescan helplowerthehit-or- miss risk filmproduction.US-China trade tensionsTheareementbetweenChnaandtheUScoverngflmmportsepredn017ands subjecttoanupdate.ebeleveneotatonswllfocusonmportquotasandrevenue sharngwthUSstudos.ecannotsaywhenanewareementwllbereached.ScenarioA1ScenarioA2Scenario B

29、Scenario descriptionHigherimportquotaHigherstudiotakerateActualfilmimportlowerthanquotaPositivePositiveNegativeImpactsonUSstudiosPotentiallyScenarioA1ScenarioA2Scenario BScenario descriptionHigherimportquotaHigherstudiotakerateActualfilmimportlowerthanquotaPositivePositiveNegativeImpactsonUSstudiosP

30、otentiallyhigherboxofficeinChinaHigherboxofficesharingpercentageLowerboxofficeinChinaMinorpositiveNeutralNegativeThe2012MOUChina and the US signed a Memorandum of Understanding on film imports in2012PositiveImportquota:20-34titlesUSstudiostakerate:13%-25%PositivePotentiallyhigherboxoffice,buttheimpa

31、ctImpactsonChinesetheatresmaynotbesignificant,asChinahasalready Weassumenochangestothetakerateofdr0sn,1ofwhichwereunderrevenuesharingterms, therestwereunderbuy-outterms.theatres.PotentiallylowertotalboxofficeForeign films box office in Chinadmnn,o nn.MinorpositiveNegativeNegativeImpactsonChinaFilm(o

32、neofthetwodistributorsofimportedfilms thesameasforChinesetheatresinChina,50%marketshare)Higher take rate for foreign studios leads tolowerdistributionprofitsforChinaFilm,thesameasforChinesetheatres assumingtheatrestakerateisunchanged.MinornegativeNeutralNeutral/minor positiveImpactsonChinesestudiosM

33、orecompetitionfromglobalpeersLess competition from global peers;potentialpolicysupportfromregulatory bodiesWandaChinaFilmSensitivity:5%highertotalboxShanghaiFilmofficeon2020earningsJinyi(exhibitionbusiness)HengdianEnlightHuayiN.A.Sensitivity: 5ppt higher take rate for foreign studios on 2020 earning

34、sChina Film*-40%Source: Morgan Stanley Research. *Note: Assume no changes to import taxes and management fees that China Film has to pay.Stock preferencesShare price performance reflects weak box office this year.Chnasboxoffcedropped51%YoYntheyearthrouhMay,wtha15%YoYdeclnen admssonsanda9%YoYncreasen

35、tcketprce.SnceJanuary1,01,themedan underperformancefor-shareflmstocksunderourcoveraevs.ChNetndexs17ppt.Exhibit 6: Chinas box office growth has been weak in 201970%60%50%40%30%20%10%Jan-16Jan-16a-6 y16 Jl6 ep6 N-6 Ja-7 a-7 y17 Jl7 ep7 N-7 Ja-8 a-8 y18 Jl8 ep8 N-8 Ja-9 a-9 y19-10%-20%-30%-40%Source: C

36、hina Film AdministrationExhibit7: Sharepriceperformance:A-sharestocksunderour coverage vs.Exhibit8: Sharepriceperformance:A-sharestocksunderour coveragevs. ChiNext, 50%40%30%20%10%0%-10%-20%-30%-40%20%15%10%5%0%-5%-10%-15%-20%-25% Wanda ChinaFilm ShanghaiFilm Hengdian Jinyi Enlight HuayiSource:Thoms

37、onReuters.SharepricesasofJune24,2019,Note:allstocksinthechartare componentsofbutwethinktheindexisarelevantreference.-30%Source:ThomsonReuters.SharepricesasofJune24,2019.Note:allstocksinthechartare componentsofbutwethinktheindexisarelevantreferencebut we dont expect a turnaround in the near termOurpr

38、icetargetsforA-sharefilmstocksimply,onaverage,15%downside.Weprefer downstream exhibitors over upstream studios and distributors, thanks to their bargainingpowerovertheupstream,higherearningsvisibilityandlowervaluations.OWaaandasthelaresttheatreoperatornChnawtha1%market shareasof01.Ithasalsonteratedu

39、pstreamsementsncludngproducton anddstrbuton,leadngtolon-termsyneresamongsements,webeleve.e aeEWaaiFlmadUWJiadHa.EW China Film We expect solid earnings growth for China Film thanks to its exposure to the duopolistic foreign film distribution market. However, potential risks may appear if imports of H

40、ollywood 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.Comparison with the USExhibit 9: Chinese film industry compared w

41、ith the US and CanadaChina (Rmb)China (US$)US+Canada (US$)Industry dataolxe2,m)56,53958Admissions (mn)1,7161,7161,301Admissions per capita*Average ticket price32.95.09.1No.of screens60,07960,07940,313PSA (000)941142294Market share of top 4 theatre operators25%25%64%Leading playersLeading player (Int

42、egrated)WandaWandaDisneyMarket cap39,719,3Leading player (Integrated)China FilmChina Film253,353Market cap24,164Leading player (Theatre operator)Market capWanda39,719WandaAMC Entertainment,3Theatre operationsF&B as % of admission revenue*Wanda6.5Wanda511WandaAMC Entertainment%WandaAMC Entertainment1

43、.0WandaAMC Entertainment7 8F&B sales per admission*Advertising and other revenue per screen (000)*Source:ChinaFilmAdministration,MaoyanPro,companydata,ThomsonReuters,NationalAssociationofTheatreOwners.Note:*Perurbancapital admissionforChina,*basedonWandaFilmsdomesticrevenueMarketcapdataasofJune24,20

44、19.Exhibit10: Wandas2018revenuebreakdown(posttheacquisitionof upstream)Exhibit 11: Disneys 2018 revenue breakdownGameOthersFilm investment and promotion 10%Theatre advertisement 15%Merchandise and F&B 11%Source: Company data5% 3%Admissions 56%Direct-to- Consumer & 6%Source: Company dataEliminations-

45、1%Studio 17%Consumer Products Interactive 7%Media Networks 36%Theme Parks and Resorts 33%Exhibit12: Wandas2018revenuebreakdown(beforetheacquisition ofproduction/distribution)Others 5%Exhibit 13: AMC Entertainments 2018 revenue breakdownTheatret %Merchandise and F&B sales 13%Source: Company dataAdmis

46、sions 64%Other 7%Source: Company dataFood and beverage 31%Admissions 62%Exhibit14: Revenuebreakdownofatypicalcontentproducer & distributor, Huayi(2018)Exhibit15: RevenuebreakdownofatypicalUScontentproducer& distributor,LionsGate(2018)Filmand93%IP authorization 4%Others 2%Theatrical 15%International

47、25%Video (DVD) 43%Television 15%Others 2%Theatrical 15%International 25%Video (DVD) 43%Television 15%Inter-segment elimination 1%Non-core 1%Source:Companydata.Note:ThereisverylowcontentincomefromDVD/TV/internationaldistributionfor Chinesestudios.Source: Company dataExhibit 16: Global comparablesCURR

48、pxMSRatingMkt Cap(LC Mn)Mkt Cap(USD Mn)Sha1-more 3-mo12-moHighWanda Film Holding Co LtdCNY18.7120.20O38,8875,6531%-16%-10%31.1017.93China Film Co. Ltd.CNY15.1314.90E28,2484,1064%-15%-3%21.8210.49Shanghai Film Co LtdCNY14.5412.30E5,43178912%-6%-8%16.8610.99Guangzhou Jinyi Media CorpCNY18.9913.40U5,10

49、5742-34%11%-8%41.5811.40Hengdian Entertainment Co LtdCNY16.8313.80U10,6741,5525%-5%-20%23.7013.06Huayi Brothers Media CorporationCNY5.464.20U15,2102,2184%-2%-8%6.864.06Beijing Enlight MediaCNY6.865.10U20,1252,9252%-22%-29%10.756.22Maoyan EntertainmentHKD12.5425.00O12,4341,807-1%-22%-14%18.329.88Alib

50、aba Pictures Group LtdHKD1.671.60E39,1605,6938%20%88%1.850.82Discovery Inc.USD27.5732.00E19,64419,6448%7%6%31.5521.99Fox CorporationUSD35.3442.00O21,97321,973-4%-6%-7%41.9533.78Walt Disney CoUSD139.94160.00O252,829252,8295%30%34%143.50100.35Cinemark Holdings, Inc.USD35.4541.00E4,1134,113-7%-13%-1%43

51、.4834.14Amc Entertainment Holdings IncUSD9.48NCNC984984-25%-37%0%21.459.42P/E (x)P/B (x)ROE(%)EV/EBITDA (x)20E18A18A19EWanda Film Holding Co Ltd8.4-1.1China Film Co. Ltd.8.51.6Shanghai Film Co Ltd43.72.0Guangzhou Jinyi Media Corp4.31.2Hengdian Entertainment Co Ltd9.30.9Huayi Brothers Media Corporati

52、on4.9-0.3Beijing Enlight Media4.50.5Maoyan Entertainment7.6NA1.418.1-Alibaba Pictures Group Ltd(1.4)-Discovery Inc.10.02.01.928.4-Fox Corporation17.1-1.3Walt Disney Co17.11.4Cinemark Holdings, Inc.20.04.2Amc Entertainment Holdings Inc-5.1China Average6.80.7China Median4.90.8Foreign Average17.02.42.7

53、15.53.0Source: Morgan Stanley Research estimates, Thomson Reuters consensus estimates for non-covered (NC) companies.Investment ThesisMarket overviewBoxoicerothtonormaiein01In01,ChnastotalflmboxoffcereachedRmb610bn,ncludngRmb44bn7)n servcefeescharedbyonlnetcketngplatforms.Chnasflmmarketeperencedrapd

54、rowthataCGRof%durng007-15, accompanedbyelevatedpenetratonntermsofadmssonspercapta.Durng016-1, theboxoffceCGRslowedto114,ledbylowerrowthnadmssons.Exhibit17:Chinasmarket:Boxoffice(including9080706050403020102007200820092010201120122013201420152016201720182019E2020E2021E-2007200820092010201120122013201

55、420152016201720182019E2020E2021E70%60%50%40%30%20%10%0%Exhibit 18: Chinas film market: Admissions2007200820092010201120122013201420152016201720182019E2020E2021E-2007200820092010201120122013201420152016201720182019E2020E2021E60%50%40%30%20%10%0%office(inclfee)Source:ChinaFilmAdministration,MorganStan

56、leyResearch.e=MorganStanleyResearchestimatesAdmissions(mn)YoYSource: China Film Administration, Morgan Stanley Research. e = Morgan Stanley Research estimatesExhibit19: Chinasmarket:Averageprice(includingExhibit20: Chinasdisposableandaverageper capitaRmbRmb4035302520072007820092010201120122013201420

57、152016201782019E2020E2021E-2010 2011 2012 2013 2014 2015 2016 2017 2018DisposableincomepercapitaAverageadmissionpercapita1.401.201.000.800.600.400.20-Source: CEIC, China Film AdministrationSource: China Film Administration, Morgan Stanley Research. e = Morgan Stanley Research estimateseepectChnastot

58、alboxoffceCGRtoslowto10%durng019-1.ethnka furtherslowdownnrowthsmanlyledby:Ainticketsubsidies,leadinghighereffectiveticketOnline ticketingplatforms,asthemajorsponsorsofticketingsubsidies,aimtocut subsidiesgraduallyoverthenextfewyears.(Pleaseread HYPERLINK /eqr/article/webapp/cf43a694-40bd-11e9-a671-

59、dd21a7377d3f?ch=rpint&sch=cr ourreportonMaoyanfor more on thistopic.)Box office/disposable income is already high compared with the US and Canada, due to a higher average ticket price.diversifiedsupplyleadingsoftnessindemand.Filmproduction investment slowedsignificantly,accordingtolistcos,mainlyduet

60、olowerliquidity,ahigher effectivetaxfortheindustrychain,aswellascontentcensorship,wethink.Soft economic/consumption growth: We believe slower consumption growth has negatively impacted film attendance.Exhibit 21: Declining ticket subsidiesRmb3,0002,5002,0001,500Exhibit 22: Slowdown in Chinas consump