Since the beginning of this year, the stock price performance of two listed companies in China's entertainment industry, DAMAI ENT and MAOYAN ENT, has shown a stark contrast.
According to news from the Chasing Wind Trading Desk, JP Morgan's latest research report indicates that the Chinese media and entertainment industry is experiencing differentiation. Both DAMAI ENT and MAOYAN ENT focus on movie ticketing as their core business. Although they started from the same point, their different strategic focuses have led to significant performance divergence. Year-to-date, DAMAI ENT's stock price has risen by 91%, while MAOYAN ENT's has fallen by 10%.
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The latest data shows that DAMAI ENT has successfully diversified its business by shifting towards IP derivatives and offline entertainment activities, achieving a revenue growth of 33% to 6.7 billion RMB in the fiscal year 2025. In contrast, MAOYAN ENT, due to its heavy reliance on the domestic film market, is expected to see a 14% decline in revenue to 4.1 billion RMB in 2024.
The report predicts that DAMAI's valuation reassessment and upward earnings expectations will continue to drive its stock price upward, while MAOYAN faces challenges of sluggish growth.
<h2>The Divergence in Stock Price Performance Comes from Strategic Choices</h2>
The divergence in stock price trends between DAMAI ENT and MAOYAN ENT fundamentally stems from the different strategic directions of the two companies.
The report suggests that DAMAI has successfully captured the benefits of consumption upgrades and the release of post-pandemic entertainment demand by transforming its business from a movie ticketing-led model to the IP derivatives and offline performance market, resulting in a 91% increase in its stock price year-to-date.
In contrast, MAOYAN still heavily relies on the domestic movie ticketing business. Against the backdrop of a 23% year-on-year decline in box office revenue in 2024, the company's revenue and profits are under pressure, leading to a 10% drop in its stock price.
The report points out that DAMAI's business diversification has reduced its dependence on a single market, with movie-related revenue expected to account for only 37% of total revenue in the fiscal year 2026, while MAOYAN's movie-related revenue accounts for over 80%. This structural difference directly leads to different valuation expectations from the market for the two companies.
In the report, JP Morgan maintains an &#34;overweight&#34; rating for DAMAI, with a target price of HKD 1.2, while downgrading MAOYAN's rating to &#34;neutral,&#34; with a target price of HKD 6.8.
<h2>DAMAI's Dual Drivers: Growth in Offline Performances and IP Derivatives</h2>
DAMAI ENT's success is closely tied to its positioning in two high-growth areas: the offline performance market and the IP derivatives business.
According to JP Morgan's estimates, China's offline performance market achieved an 81% two-year compound annual growth rate from 2022 to 2024, with market revenue reaching 80 billion RMB in 2024, far exceeding pre-pandemic levels.
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With approximately 40% market share, DAMAI is expected to achieve ticketing revenue of 2.1 billion RMB in 2024, with projected revenues growing to 2.5 billion and 3 billion RMB in the fiscal years 2026 and 2027, respectively, and market share increasing to 42% and 45%.
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At the same time, the IP derivative business has become another major growth engine for DAMAI ENT.
JP Morgan analysis states that DAMAI ENT, through its AliFish platform, collaborates with popular IPs such as Sanrio, with IP merchandise revenue expected to grow by 73% to RMB 1.4 billion in 2024, and is projected to reach RMB 2.1 billion and RMB 2.8 billion in the fiscal years 2026 and 2027, respectively.
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The report predicts that DAMAI ENT's IP business will continue to expand at a compound annual growth rate of 28% from 2026 to 2029.
In terms of financial performance, DAMAI ENT's revenue is expected to grow by 33% to RMB 6.7 billion in the fiscal year 2025, with adjusted EBITA increasing by 61% to RMB 809 million. JP Morgan expects the company's revenue for the fiscal years 2026 and 2027 to reach RMB 8 billion and RMB 9.3 billion, respectively, exceeding market consensus expectations by 4% and 7%, indicating strong profit potential.
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<h2>MAOYAN ENT's Dilemma: Film Market Slump Drags Down Growth</h2>
In stark contrast to DAMAI ENT's diversification, MAOYAN ENT is highly dependent on the domestic film market, making it the first to be impacted by the industry's downturn.
In 2024, China's box office revenue is expected to decline by 23% year-on-year, recovering only to 67% of the pre-pandemic level in 2019, far below the overall retail consumption recovery level of 120%.
JP Morgan analysis believes this is mainly due to the elasticity of film consumption demand, structural insufficiency in content supply, and the impact of alternative entertainment forms such as short dramas.
As film-related revenue accounts for over 80% of MAOYAN ENT's total revenue, the company's revenue is expected to decline by 14% year-on-year to RMB 4.1 billion in 2024, with adjusted EBITA plummeting by 70% to RMB 328 million.
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The report predicts that domestic box office revenue will only grow by 8% in 2025, and return to a normal growth rate of 3% in 2026 and 2027. As a result, MAOYAN ENT's revenue in 2025 and 2026 is expected to grow by only 8% and 4%, respectively, reaching RMB 4.4 billion and RMB 4.6 billion, which is 9% and 13% lower than market consensus.
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In terms of valuation, MAOYAN ENT's current stock price corresponds to a price-to-earnings ratio of 10 times for 2026, lower than other entertainment companies in the industry such as NetEase and Tencent Music. However, JP Morgan believes that the low visibility of growth in the film market will continue to suppress its valuation space, lowering the target price to HKD 6.8, reflecting a cautious outlook on future performance

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JP Morgan believes that MAOYAN ENT is essentially an agent in the film industry, significantly impacted by the downturn in the domestic film market, while DAMAI ENT's business is gradually shifting towards offline performance activities and IP derivatives, achieving business diversification with strong profit potential

- The stock performance of two Chinese entertainment companies, Damai Entertainment and Maoyan Entertainment, has diverged significantly this year, with Damai's stock rising 91% and Maoyan's falling 10%.  
- Damai has successfully diversified its business by shifting focus to IP derivatives and offline entertainment, while Maoyan remains heavily reliant on the domestic film market, leading to a projected 14% revenue decline in 2024.  
- Morgan Stanley maintains an "overweight" rating for Damai with a target price of 1.2 HKD, while downgrading Maoyan to "neutral" with a target price of 6.8 HKD due to its growth challenges.

Why is there such a big difference in the performance of DAMAI and MAOYAN ENT, with DAMAI rising 91% and MAOYAN ENT falling 10%?