<div id="readability-page-1"><div><p>Citi published a research report stating that DAMAI ENT (01060.HK)<span> </span><span> -0.020 (-3.333%)  </span> <span> Short selling $14.25M; Ratio 17.540%  </span> 's results for the fiscal year ended March 2026 showed progress in optimizing its film business and streamlining headcount. However, profitability of the IP business and Damai business fell short of expectations due to increased investments. Management expects the Damai mainland China business to achieve profit growth in fiscal 2027, while the film segment continues to enhance efficiency, creating room to invest in new initiatives such as Damai international expansion, IP and AI. Although such investments lay the foundation for future growth, they will weigh on earnings visibility in the near term. The broker lowered its adjusted EBITA forecasts for fiscal 2027 and 2028 by 16% and 19%, respectively, maintained a Buy rating, and cut the TP from HKD1 to HKD0.8.</p><p>The report noted that fiscal 2026 revenue was 1% and 3% above Citis and market expectations, respectively, mainly driven by strong drama production revenue, while IP merchandise retail and Damai revenue missed forecasts. Adjusted EBITA amounted to RMB746 million, 15% below Citis estimate, primarily due to higher operating expenses and a slight decline in gross margin. By segment, profit from the film and drama segment exceeded market expectations, while Damai and IP segment profits were below expectations.</p><p>For the IP business, Alifish revenue in fiscal 2026 rose by more than 70% YoY, with retail revenue increasing by more than 1x and distribution and licensing revenue rising 40% to 50% YoY. Management said margins across sub-segments were stable, but overall IP margin declined due to changes in revenue mix, as lower-margin retail business grew faster. Rapid growth of the retail segment in fiscal 2027 is expected to continue affecting overall IP margin. For the Damai business, ticketing revenue in fiscal 2026 was flat YoY, while content revenue increased 51% YoY. Management expects both revenue and profit of the Damai mainland China business to grow in fiscal 2027, although international expansion will continue. In the film segment, Citi expects the movie &#34;A Letter to Grandma&#34; to contribute profit in 1H27, with the group continuing cost control and headcount optimization.</p><p>Citi estimated that DAMAI ENT had net cash of RMB10 billion in fiscal 2026, or about RMB6 billion after deducting customer ticketing prepayments. At the results briefing, management did not commit to dividends or share buybacks. The broker believes cash is more likely to be used for new initiatives rather than shareholder returns. (da/a)(HK stocks quote is delayed for at least 15 mins.Short Selling Data as at 2026-05-29 12:25.)</p></div></div>

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<p>Citi Cuts DAMAI ENT TP to HKD0.8 as New Business Investments Weigh on Earnings Visibility</p>