Star CM (6698) H2 2023 earnings summary

Executive summary

• FY2023 revenue fell 51.2% YoY to RMB426.6m; gross loss was RMB59.4m versus gross profit of RMB281.1m in 2022.

• Net loss was RMB1,634.2m, mainly reflecting RMB1,191.6m goodwill impairment, weaker variety and music IP results, and aging drama copyrights.

Financial highlights

• Revenue declined to RMB426.6m from RMB873.4m; cost of sales was RMB485.9m versus RMB592.4m.

• Operating costs included RMB1,191.6m goodwill impairment and RMB167.7m net impairment losses on financial assets, versus RMB24.6m in 2022.

• Adjusted net loss was RMB1,634.2m versus adjusted net profit of RMB120.8m in 2022; adjusted net loss margin was 383.1% versus a 13.8% profit margin.

Outlook and guidance

• Priorities include expanding and diversifying IP production, distribution channels and overseas reach, while evaluating complementary M&A opportunities and recruiting talent.

• Plans include developing short drama and short-form video, exploring e-commerce and social/content integrations, and applying AIGC to reduce costs and improve user experience.