中国儒意-0136.HK-中国影视行业的寻道者首予“买入”评级

rtrchReport股票Initial买入(首次覆盖)rtrchReport股票Initial买入(首次覆盖)TeddyLin林荣叶 (86755)23976692rongye.lin@.hkCompanyReportCHINARUYIHK)儒意(00136HK)AForerunnerintheChineseFilmandTelevisionIndustry;InitiateWith"Buy"中国影视行业的寻道者，首予“买入”评级Weinitiatewitha"Buy"ratingandaTPofHK$2.50.AccordingtoourrelativevaluationbasedonEV/EBITDAratio,weassignChinaRuyia2023EV/EBITDAratioof15xwithatargetmarketvalueofHK$25bn.Weexpectthattherecoveryofthefilmandtelevisionindustrywillbesupportedbytheresumptionoffilmshootingschedules,aswellasthecontinuousimprovementofconstructionofChina'sfilmfacilitiesinrecentyears.ChinaRuyi(the"Company"),asafilmproducerwithastreamingmediaplatform,iswell-positionedtobenefitfromthisgrowth.Additionally,theCompany'srecentexceptionalperformanceinitsnewgamesbusinesshaslaidasolidfoundationforfuturecollaborationsbetweencontentIPandgames.WebelievethattheCompany'suniquead-freeplatformanditscharacteristicsasapureproducerenableitsfilmandtelevisioncreationstoachievebetter-than-expectedmarketperformance.Currently,thelong-termprofitabilityofmajorlong-formvideoplatformsinChinaisuncertain.However,PumpkinFilmoperatesprofitablywithoutrelyingonanyadvertisingincome.TheCompany'scentralproducersystemandabilitytodistributeandbroadcastensurecreativeindependence,whilebenefittingfromuserdatatoaidcontentcreation.ItsabilitytoproduceblockbusterhitsmakesPumpkinFilmhighlyvaluablebeyondjustrevenuegeneration.Catalysts:Ongoingrecoveryattheboxoffice;thereleaseoftheCompany’sfilmsorTVdramas;announcementofnewregulationsandpoliciesforthefilmandtelevisionindustry.Risks:Productionprojectsmaynotprogressasexpected;uncertaintiesindevelopmentofgamesbusiness.我们首次覆盖公司，目标价为2.50港元，投资评级为“买入”。根据我们基于企业价值倍数的相对估值，我们给予中国儒意2023年15倍企业价值倍数，目标市值为250亿港元。我们预期影视行业的复苏将受到影片拍摄计划重启以及近年来中国电影设施建设不断完善的支持。拥有流媒体平台的电影制片商中国儒意(“公司”)将在这一增长趋势中获得巨大的优势。此外，公司在新游戏业务方面的出色表现为其未来影视IP与游戏联动打下坚实的基础。我们认为公司特有的无广告平台和作为纯制片人的成长基因使其影视创作能获得超市场预期的表现。目前中国主要视频平台的长期盈利性存在不确定性。然而，南瓜电影在不依赖任何广告收入的情况下实现运营盈利。公司的制片人中心制和内容发行能力确保了其内容创意上的独立性，同时利用其用户数据来反哺其内容创作。其赋能制作爆款大片的潜在能力使得南瓜电影的价值远不仅限于其创造的收入流水。催化剂：票房的复苏预期实现；公司电影或电视剧的发行；影视行业新规及政策的颁布。风险提示：制作项目的进度不及预期；游戏业务发展存在不确定性。Rating:HK$2.50epriceStockperformance现ngeinSharePrice3MAbs.%绝对变动%toHSIndex相对恒指变动%priceHK平均股价(港元)Source:Bloomberg,GuotaiJunanInternational.ultureSectorCHINARUYI136HK)证券研究报告公司报告研究YearEndTurnoverNetProfitEPSEPSPERBPSPBRDPSYieldROE年结收入股东净利每股净利每股净利变动市盈率每股净资产市净率每股股息股息率净资产收益率12/31(RMBm)(RMBm)(RMBCent)(△%)(x)(RMB)(x)(RMB)(%)(%)2021A2,3181,17512.7928,4122.50.0000.034.62022A1,3207908.43021.90.8521.90.0000.02023F3,2132082.081(75.3)88.90.8262.00.0000.02.62024F4,1327156.040821.80.0000.07.62025F4,6609137.63226.424.20.9561.70.0000.08.3Sharesinissue(m)总股数(m)10,004.7Majorshareholder大股东KeLiming37.3%Marketcap.(HK$m)市值(HK$m)17,808.3Freefloat(%)自由流通比率(%)42.3%3monthaveragevol.3个月平均成交股数(‘000)36,502.5FY23Netgearing(%)FY23净负债/股东资金(%)Netcash52Weekshigh/low(HK$)52周高/低(HK$)3.220/1.220FY23Est.NAV(HK$)FY23每股估值(港元)3.0eCompanyGuotaiJunanInternationalSeethelastpageSeethelastpagefordisclaimerCHINARUYI136HK)CompanyReport15May2023CHINACompanyReport15May2023CHINARUYI中国儒意(00136HK) PpowerhouseintheChinesefilmindustry dtelevision systemVSdirectorunitsystem ectorunitsystemtocentralproducersystemabriefhistory angetheproductionsystem DirectorunitsystemandthedevelopmentprocessofChinesefilms 8oducersystemismoresuitableforthecurrentstageofChinasfilmindustry sitionfromthedirectorunitsystemtothecentralproducersystem andtelevisionindustry eniorproducersareascarcetalentresourceintheindustry Scriptdevelopmentacoreelementthatisoftenoverlooked 13coreteamandcompanyphilosophy dy value ingplatform okofthelinkbetweenfilmsandgamesinthemidtolongterm n Page2of20SeethelastPage2of20CompanyReport1.InvestmentsummaryInvestmentCompanyReport1.InvestmentsummaryInvestmentthesis:AsChinarelaxesitspandemicpreventionandcontrolmeasuresandgraduallyresumeseconomicoverandshowstronggrowthinThisrecoverywillbesupportedbytheresumptionoffilmshootingschedulesandofflineviewing,aswellascontinuousimprovementinfilmfacilitiesconstructioninChinainrecentyears.ChinaRuyiHoldingsLimited("ChinaRuyi",orthe"Company"),afilmproducerwithitssitionedtobenefitfromthisItsstreamingmediaplatformcansupportitsownfilmandtelevisioncreationwhilealsocapitalizingongrowthofthefilmandtelevisionindustry.Additionally,theCompany'srecentexceptionalperformanceinitsnewgamebusinesshaslaidasolidfoundationforfuturecollaborationbetweenfilmandtelevisionintellectualproperty(IP)andgames.WebelievethattheCompanysuniqueadfreeplatformanditsbackgroundasapurecontentproducerenableitsfilmandtelevisioncreationstoperformbetterthanmarketexpectations.Currently,thelong-termprofitabilityofmajorlong-formvideoplatformsinChinaisbeingwidelyquestioned,andevenmoresoforPumpkinFilm,ChinaRuyi’sself-ownedoplatformwhichreliessolelyonsubscriptionfeesanddoesnothaveanyadvertisingrevenuePumpkinFilmisoneofthefewvideoplatformsintheChinathatoperateprofitablywithoutrelyingonanyadvertisingincome.WebelievethatasChinaRuyi'sself-ownedbroadcastingplatform,PumpkinFilmensuresthattheCompany'sfilmandTVproductionshaveadirectchanneltoreachitsaudience.TheCompany'sinnovativecentralproducersystem,combinedwithitsownershipofcopyrightdistributionandbroadcastingensurestheindependenceofitscreativeprocess.Throughitsstreamingplatform,theCompanyandirectlyrespondtouserdemandwithuserdatafeedbackfeedingintoitscontentcreationIntermsofcontentcreationtheautonomythatisnotcommonintheindustryqualityitcanproduceblockbusterhitsthatexceedexpectations.Asaresult,thecommercialvalueoftheCompany'sstreamingplatform,PumpkinFilm,goesfarbeyondtherevenueitgeneratesfortheCompany.Catalysts:ThepositiveimpactoffutureChinesepublicholidaysonChina'sboxoffice;positivenewsrelatedtothereleaseoffilmsandTVdramasinwhichtheCompanyisinvolvedin;andtheannouncementofnewregulationsandpoliciesforthefilmandtelevisionindustrywhichwillfurtherstandardizetheindustryandbenefitmatureproductioncompanieslikeChinaRuyi.1)TheCompany'sfilmandtelevisionprojectsmaynotprogressasexpected,andfilmproductionmaynotbecompletedas2)ThedevelopmentofthegamebusinessmaybeimpactedbypolicyfactorssuchasgameapprovalsanduncertaintiesrelatedtoTheCompanysdevelopmentteams15May2023CCHINARUYI中国儒意(00136HK)Page3of20SeethelastPage3of20Page4of20SeethelastPage4of20CompanyReport1CompanyReport15May2023CHINARUYI中国儒意(00136HK)2.TheriseofChinaRuyi:acontentIPpowerhouseintheChinesefilmindustryoductioncompanywithinnovativecentralproducersystemChinaRuyiisaprominentfilmproductioncompanyinChinathathasastrongcommitmenttoproducinghigh-qualityculturalcontent.Overtheyears,theCompanyhascontributedtomanyinfluentialproductionsintheindustry,includingtheofasinglefilmcannotguaranteeacompany'slong-termprofitabilityinthehighlycompetitivefilmindustry,ChinaRuyi'strackthusiasticresponsesfromitsaudienceEvenbeforeHiMomstrongboxofficefigures.eProminentproductionsofChinaRuyiinrecentyearsSource:theCompany,GuotaiJunanInternational.lproducersystemwhichservesasthebedrockofitsestablishmentWhilethecentralproducersystemoriginatedfromthematurefilmproductionindustryintheUnitedStates,ithasyettogaintractioninChina'sfilmandtelevisionindustry,whichiscurrentlytransitioningtothesystem.However,ChinaRuyiadoptedthecentralproducersystemasthecorepolicyofitsmanagementsystemfromtheoutset,enablingtheCompanytocreateacompletecontentproductionchainandeffectivelyservedirectorsandcreativeteams.ThishasledtothestandardizationandisiondramaproductionChinaRuyileveragesitsuniquecontentdevelopmentperspectivesmatureindustrializedproductionprocessesandstandardizedproducermanagementsystemstoproducefilmsandtelevisiondramaswhicharethekeyfactorscontributingtoitsrepeatedsuccess.Byintegratingproduction,distribution,andscreeningintoacompleteindustrialchain,theCompanyhassetitselfapartinChina'sfilmandtelevisionindustry.WhileothercompaniesmayproducetheirowncontentandhavetheirowncapabilitiesTheCompanyssuccessfulfilmandtelevisionworksPage5of20SeethelastPage5of20CompanyReport15CompanyReport15May2023CHINARUYI中国儒意(00136HK)contentIPagency,anddistributioncapabilitiesallowittoprovideamassiveamountofhigh-qualitycontentforitsself-ownedemembershipbasedandadfreeplatformPumpkinFilmprovidesimportantuserviewingdatathatenhancesthepossibilityofsuccessfortheCompany'swork.Moreover,withthesupportofitsmajorshareholder,Tencent,ChinaRuyihasexpandeditsindustrialchainbymonetizingitsself-ownedIPgamesbusiness.Overall,ChinaRuyi'sinnovativebusinessmodelandcapabilitiesputsitinastrongpositionforcontinuedsuccessinthecompetitiveinesefilmandtelevisionindustryootsinfilmandtelevisionAfteraseriesofcompanyreorganizations,ChinaRuyireturnedtoitsoriginalbusinessoffilmandtelevisionculturalcontentcreation.ChinaRuyichangeditsnamefromHengtengNetworkin2022andfullyreturnedtothefilmandtelevisionindustry.HengtengNetworkwasformerlyacompanylistedontheHongKongMainBoardin1997namedMascotteHoldingsLimited("Mascotte").AfterbeingacquiredbyEvergrandeGroupandTencentHoldingsin2015,itwasrenamedandenteredtheinternetcommunityserviceindustry.Attheendof2020,itcompletedtheacquisitionofRuyiGroup,withthemainentitiesbeingJingxiu,BeijingXiaoming,andShanghaiRuyi.Beforetheacquisition,ShanghaiRuyiwasengagedinthedevelopment,production,andpromotionoffilmsandTVshows,Jingxiuwasengagedininternetvideoplaybackbusiness,andBeijingXiaomingwasengagedintheprovisionoftechnicalsupportinShenzhen.Inthesecondhalfof2021,thelargestshareholder,Evergrande,begantoreduceitsstakeinHengtengNetworkduetoitsdebtproblems,anditsstakewascompletelysoldattheendof2021.Attheendof2021,theCompanychangeditsnametoChinaRuyiandshifteditsfocusentirelytothefilmandtelevisionindustrywhiledivestingotherbusinesses.Beforetheacquisition,ChinaRuyihadbeenrootedinthefilmandtelevisionindustryandpublishingbusinessformanyyearswithsolidexperienceinfilmproduction.TheearliesthistoryofChinaRuyi'sfilmbusinesscanbetracedbackitialestablishmentofBeijingRuyiXinxinFilmInvestmentCoLtdalsoknownasRuyiGroupRuyiGroupisoneastrongoriginalcontentlibraryandintegratingcapabilitiesintheoverallplanning,scriptdevelopment,andcontentproductionoffilmandtelevisionshows.RuyiGroupisalsoinvolvedinbookpublishingbusiness,whichhasestablishedgoodlong-termcooperativerelationshipswithmanywell-knownwritersandscreenwriters. FigureAbriefhistoryoftheequitystructureoftheCompanyanditsbusinesstransformationanddevelopmentSource:theCompany,Qichacha,GuotaiJunanInternational.Performanceinthefilmandtelevisionbusinessistiedtobettingagreements,andthemanagement'sinterestsareresultsInthebeginningHengtenNetworksfullyacquiredChinaRuyiandPumpkinFilmforHK$7.2bnthroughtheissuanceofshares,warrants,andpaymentmethods.HengtenNetworkssignedathree-yearbettingenNetworksandChinaRuyiduringtheacquisition,ChinaRuyipromisedtoachieveannualnetprofitaftertaxofoverHK$400mn,HK$500mn,andCompanyCompanyReportPage6of20SeethelastPage6of201515May2023CHINARUYI中国儒意(00136HK)HK$600mnin2021-2023,respectively.IfChinaRuyiFilmfulfillsitsbettingcommitmentswithinthreeyears,KeLimingwouldhavetheopportunitytoexerciseamaximumof1,834,279,307warrantsattheinitialwarrantsexercisepriceofHK$0.96pereachwarrant.AfterEvergrande'sdebtcrisis,majorshareholdersincreasedtheirstakeinChinaRuyi,highlightingtheirconfidenceHengtenNetworksbeforethenamechangetoChinaRuyiuntiltheholdingswerecompletelysoldforatotalamountofoverHK$10bn.InJune2021,EvergrandetransferredofitsstakeinHengtenNetworkstoCEOLimingKeforHK4bn.InAugust2021,Evergrandetransferred7%and4%ofHengtenNetworksharestoTencentandotherthirdparties,respectively,forHK$2.1bnandHK$1.2bn.InearlyymnsharestotalingHKmnOnNovember17,2021,Evergrandecompletelysoldits18%stakeinHengtenNetworks,amountingtoHK$2.1bn.AccordingtothelatestinformationdisclosedbytheHongKongExchangesandClearingLimited,KeLimingandTencentcurrentlyholdslyrepresentingtheCompanyslargestandsecondlargestshareholderdeeplytiedtotheCompany'sinterests.3.Howdoesafilmcometobeing?CentralproducersystemVS.director-unitsystemThecentralproducersystemandthedirector-unitsystemarethetwomostimportantproductionsystemsinfilmemiscenteredaroundtheproducersselectionoffilmprojectsfinancingorganizingthecreativeteam(includingcastingdecisions),andtheproducer'sultimatedecisiononfinaleditingandselectingthemarketinganddistributionteam.Thedirector-unitsystem,ontheotherhand,referstothedirectortakingonsomeoftheproducer'sresponsibilities,suchasselectingtheproducer,securingfinancing,choosingthecreativeteam,havingthecastingdecisionselectionThecoredifferencebetweenthecentralproducersystemandthedirector-unitsystemisinthepowerofthedirectorandtheproducer.Fromabusinessperspective,thecentralndOntheotherhandworkproducedunderthedirector-unitsystemisclosertothedirector'svision,sometimesmakingtheproductionmoreniche.Comparedwiththecentralproducersystem,thedirector-unitsystemtendstobeempiricalandindividualisticinthefilmproductionprocess,thusriskmanagementisrelativelyweak.AccordingtoastudybyEntgroupabouttheindustrializationofChina'sfilmindustry,althoughthelarge-scalefilmandtelevisioncompaniesinChinahavebeguntoimplementindustrializedproductionprocesses,theoverallChinesefilmproductionindustryisstillleaningtowardsievethatthisismainlyduetothesystemofmakingfilmswhichdeterminesthelevelofindustrializationoftheindustry.Thedirector-unitsystemtendstobebasedonthedirector'sexperience,andtheentireproductionprocessoundthedirectorspersonalideasThereforeitisdifficulttoadoptastandardizedprocessforstagetrackingandqualitycontrol.Comparingthetwomodels,itisnotdifficulttofindthatthedegreeofriskcontrolwillbethemostcriticaldifferencebetweenthetwo.CHINARUYI136HK)Page7of20SeethelastPage7of20CompanyReport15CompanyReport15May2023CHINARUYI中国儒意(00136HK) FigureComparisonofmainstreamproductionmanagementsystemsinChinaandtheUnitedStatesSource:Entgroup.Currently,themainstreamproductionmodelforChinesefilmsisstillthedirector-unitsystem,whileHollywoodfilmsaremainlydominatedbythecentralproducersystem.AlthoughthedevelopmentoftheChinesefilmindustryisgraduallyshiftingtowardsthecentralproducersystem,overall,filmproductioninChinastilllargelyfollowsthedirector-unitsystem.Fromdirectorunitsystemtocentralproducersystem-abriefhistoryThedirector-unitsystemandthecentralproducersystemaretwodifferentapproachestofilmproductionthathaveAccordingtoAdrianRthedirectorunitsystemwasusedrsofHollywoodfromthestotheearlysUndersuchasystemthedirectorhadprimarycreativecontroloverfilmsandwasresponsibleforallaspectsofproduction,includingselectingthecastandcrew,creatingthescript,andmanagingthebudget.Thedirectorwasessentiallythe"auteur"orauthorofthefilmandhadthefinalsayoverallcreativedecisions.ThecentralproducersystemrgedinthesandbecamepopularizedduringtheclassicalHollywoodperiodssInthissystem,acentralproduceroversawtheproductionofmultiplefilmsforastudioandwasresponsibleformanagingthevariousdepartmentsinvolvedinfilmproduction,includingselectingscripts,hiringdirectorsandactors,andmanagingbudgets.Thelywiththestudiosexecutivesandhadtheultimatesayoverallcreativedecisionsalthoughtheywouldtypicallydelegatesomecreativecontroltothedirector.Inessence,themaindifferencebetweenthetwosystemsisthelevelofcreativecontrolgiventothedirector.Inthedirector-unitsystem,thedirectorwastheprimarycreativeforcebehindfilms,whileinthecentralproducersystem,thecentralproducerhadmorecontroloverthecreativedirectionoffilms.Bothsystemshavetheiradvantagesanddisadvantages,andasbeenusedsuccessfullyindifferentcontextsthroughoutHollywoodhistoryheforcedrivingAmericanstudiostochangetheproductionsystemStudioschangedtheirfilm-makingmodelfromthedirector-unitsystemtothecentralproducersystemprimarilyduetotheneedforgreaterefficiencyandcostcontrol.Thedirector-unitsystem,whichwasprevalentintheearlydaysof1RobbeAdrian(2015).ClassicalHollywood’sCentralProducerSystem:TheContributionofIrvingThalbergtoStudioEraFilmStyle.CHINARUYI136HK)CompanyCompanyReportPage8of20SeethelastPage8of201515May2023CHINARUYI中国儒意(00136HK)Hollywood,wasadecentralizedmodelthatgavedirectorsandtheirunitsalotofcreativecontrolovertheirfilms.Whilethistionandcreativityitalsoledtolongproductionschedulesandhighcostsaswellasinconsistencyinthequalityoffilmsproduced.Thecentralproducersystem,ontheotherhand,wasamorecentralizedmodelthatplacestheproduceratthecenterofthefilmmakingprocess.Thissystemallowsforgreatercostcontrolandefficiency,astheproducercancoordinateallaspectsofthefilm'sproduction,fromdevelopmenttodistribution.Theproducerisresponsibleforassemblingateamofcreativeprofessionals,includingthedirector,writer,andactors,andmanagingthebudgetandschedule.Thissystemenablesstudiostoproducefilmsmoreefficientlyandwithgreaterconsistencyinquality,whichwasnecessarytokeepupwiththegrowingdemandforfilmsinthemid-20thcenturytothecurrentday.DirectorunitsystemandthedevelopmentprocessofChinesefilmsTheChinamoviequotasystemgavebirthtotheChineseDirector-UnitSysteminfilmproduction.ThereasonwhyChinesefilmcompaniesgenerallyadoptthedirector-unitsystemisthatforalongtime,thedomesticfilmmarketexistedintheformofgovernment-centralizedpurchasesandsales,andproductionquotaswereassignedtofilmstudiosunderlocalrationCFGCwasresponsibleforthedistributionandlocaldistributioncompaniescooperatedinscreeningthefilms.Thissystemwasnotchangeduntilthepromulgationofthe"OpinionsonDeepeningtheReformoftheFilmIndustryMechanism"in1993.Despitethattherehasbeenmarketizationofthefilmindustryduetocapitalinjectionfromtheinternetindustry,theoriginalproductionsystemisstilldeeplyingrained.BecauseChinesefilmswereoriginallyproducedbasedonaquotasystem,theproductionmanagerwhocontrolledthefinancialbudgetintheearlystagesoffilmproductionwasessentiallyservingthedirector.Aftertheadjustmentofthesystemstructureandbeingaffectedbyvariousfactors,theoutputandcoverageofdomesticfilmsdidnotimmediatelyincrease.Thenumberoffilmsreleasedeachyearwasonlyafewdozen(unreleasedfilmswereequivalenttosemi-finishedproducts),andthenumberofcitieswithcinemaswasverylimited.FortheigibleThereforewecanseethattherehasbeengradualmarketizationofthefilmindustryonlyinthepastdecadeduetotherapiddevelopmentofcommercialrealestate,macropolicyadjustments,andlatercapitalinjectionfromtheinternetindustryintothefilmindustry.Thedegreeofadministrativecontrolinthefilmindustryisstillrelativelyhighcomparedtootherindustries.Atthesametime,amongthemajorcompaniesthatcontrolChina'scorefilmproductionprojects,mostprojectsadoptacontractedoutsourcingproductionmethod.AlthoughthesixmajorHollywoodfilmproductioncompaniesalsoadoptcontractedoutsourcing,thecoredifferenceisthatAmericanfilmcompaniesoutsourcefilmstoprofessionalproductioncompanies,whileChinesefilmcompaniesoutsourcefilmstodirector'sproductionteams.Therefore,thedirector-unitsystemisstillprevalentinChinaatpresent.CompanyCompanyReportPage9of20SeethelastPage9of20 FigureFilmmarket FigureFilmmarketenvironmentandindustrydevelopmentinChinaandNorthAmericaSource:Entgroup.CentralproducersystemismoresuitableforthecurrentstageofChina'sfilmindustryWiththemajorchangesinthefilmindustryoverthepastdecade,thefilmindustrynowhasbecomemoremarket-orientedandmature.AccordingtotheJournalofChineseFilmStudies,therapiddevelopmentofcommercialrealestateandtheinternetindustry,aswellasgovernmentpolicies,hascontributedtogrowthofthefilmindustryinChina.Firstly,theboomincommercialrealestateinChinaprovidednewopportunitiesforthedevelopmentofcinemas.Secondly,theincreasingpopularityofonlinevideostreamingplatformshasgreatlyexpandedtheaudiencebaseforChinesefilmsandalsocreatednewdistributionchannelsforfilmproducers.Lastly,theChinesegovernmenthasimplementedaseriesofpoliciestosupportthedevelopmentofthefilmindustryinthepastdecade,includingtaxincentivesforfilmproduction,subsidiesforegulationsonfilmdistributionthishascreatedamorefavorableenvironmentforinvestmentinthefilmindustryandhashelpedtoattractmorecapitalintotheindustry.15May2023CCHINARUYI中国儒意(00136HK)CompanyCompanyReportPage10of20SeethelastPage10of20 FigureFilmmarket FigureFilmmarketenvironmentconsumermediaandindustrydevelopmentinChinaandNorthAmericaSource:Entgroup,GuotaiJunanInternational.China’sfilmindustryhasbecomemoremarket-orientedandmature.Twentyyearsago,thedevelopmentandconditionsofthefilmindustriesinChinaandtheUnitedStateswerevastlydifferent.However,theChinafilmmarketexperiencedrapidgrowthandfinallyfacedaperiodofmarketself-regulation,scaleandlong-tailbenefitsbegantoemerge.Currently,Chinahastheconditionsforitsfilmindustrytomovetowardsamoreindustrializedmarketandeconomiesofscale.WebelievethatthematurecentralproducersystemdevelopedbytheUnitedStatesismoresystematicforChinesefilmandtelevisioncompaniesatthistimeespeciallythestandardizedproductionprocess,productionmanagementtools,andsupportingproductionenriskmanagementThedevelopmentofeconomiesofscaleinthefilmindustryhasledtotheextensionofacomplicatedindustrialvaluechain,makingitparticularlyimportantforproducerstodevelopthevalueofcontentIP.AftertheChinesefilmindustrybeganbenefittingfromeconomiesofscale,theindustrychainfromfilmproductiontomonetizationoffilmcopyrightsbecamemuchmorecomplex.Andineachlinkoftheindustrialchain,thecopyrightinterestsinvolvedcanbeverycomplicated.Beforeachievingeconomiesofscale,thetraditionalChinesefilmandtelevisionindustrychainonlyconsistedofproduction,distribution,andscreening,andafterscreening,theonlywaytogenerateadditionalincomewastopenetrateoverseasnichemarketsasmuchaspossible.However,afterexperiencingcapitalinjectionandindustrialization,thefilmindustrychaininChinaisnowsimilartotheNorthAmericanfilmindustry.Afterafilmgoesthroughproduction,distribution,andscreening,thespaceforitscopyrighttoextendisverybroad,fromoverseasincometoadvertisingincome,thechannelsthatcanbereachedextendbeyondcinemas.IPcanevenbefurthermonetizedthroughotherchannels,suchasgames.Therefore,producerswhocanoverseetheentirelifecycleofthefilmisatthecoreofthisnewbusinessmodel.15May2023CCHINARUYI中国儒意(00136HK)CHINARUYI136HK)Page11of20SeethelastPage11of20CompanyReport15CompanyReport15May2023CHINARUYI中国儒意(00136HK) FigureThefilmindustryistransitioningfromaninefficientscaletoamoreefficientscaleSource:Entgroup,GuotaiJunanInternational.ProducersinthefilmindustryplayacrucialroleinmaximizingthevalueofIPandprojectdevelopment.AccordingtoWorldIntellectualPropertyOrganizationWIPO(2022)2,producersareclosesttotheheartoftheprocessofmakingafilm.Inthisuniqueposition,producersmusthaveathoroughunderstandingofhowIPrightscanbeusedstrategicallytoobtainproductionfundingandattractthebest