Star CM (6698) H1 2023 earnings summary

Executive summary

• H1 revenue fell 21.1% YoY to RMB144.1m and gross profit fell 16.1% to RMB47.4m; net loss widened to RMB17.2m from RMB13.4m.

• Lower variety-program activity weighed on results, partly offset by growth in film and drama licensing and other IP-related business.

Financial highlights

• Revenue was RMB144.1m vs RMB182.6m; gross profit was RMB47.4m vs RMB56.5m, and loss before tax was RMB19.9m vs RMB12.3m.

• Adjusted net loss was RMB17.2m vs RMB6.3m; H1 2022 adjusted results excluded RMB7.1m of listing expenses.

• Selling and distribution costs were RMB11.9m, up 29.3% YoY; administrative expenses were RMB54.7m, up 6.2%.

• Net cash from operating activities was RMB80.8m; cash and cash equivalents were RMB404.9m at June 30, 2023, vs RMB587.6m at Dec. 31, 2022.

• Income tax was a RMB2.7m credit vs a RMB1.1m expense, primarily reflecting the H1 2023 pretax loss.

Outlook and guidance

• H2 plans included Sing! China 2023, Street Dance of China 2023, Guess the Singer 2023, and new talent and talk-show formats; Sing! China broadcasting was temporarily suspended Aug. 25 pending investigation.

• Priorities include expanding variety, music, film and drama IP creation, distribution and overseas reach, pursuing complementary M&A, and recruiting talent.

• Program revenue and margins may fluctuate with cooperation models, platform negotiations, economic conditions and audience preferences.