Star CM (6698) H2 2024 earnings summary

Executive summary

• FY2024 revenue fell 61.8% YoY to RMB163.1m; gross profit recovered to RMB40.0m from a RMB59.4m gross loss, while net loss narrowed to RMB230.0m from RMB1,634.2m.

• Lower goodwill impairment was the main reason for the smaller net loss; smaller-scale variety projects and losses from joint ventures continued to weigh on results.

Financial highlights

• Revenue was RMB163.1m versus RMB426.6m in 2023; cost of sales fell to RMB123.2m from RMB485.9m.

• Gross profit was RMB40.0m, compared with a gross loss of RMB59.4m; gross margin was 24.5% versus negative 13.9%.

• Net loss was RMB230.0m versus RMB1,634.2m; loss attributable to owners was RMB232.5m, and basic and diluted loss per share was RMB0.58 versus RMB4.03.

• Goodwill impairment declined to RMB48.5m from RMB1,191.6m; trade and other receivables impairment was RMB50.2m versus RMB167.7m.

Outlook and guidance

• Priorities include expanding variety, music, film and drama IP production, developing short dramas from the film library, and broadening distribution and audience reach.

• The 100 Hong Kong Films and Short Dramas Project with iQIYI and Happy Hour Film will adapt 100 classic Hong Kong film IPs into short dramas.

• Short-video and e-commerce opportunities and entertainment applications of AIGC are under exploration; AIGC is seen as a potential way to reduce costs and improve user experience.

• Management views the cultural-entertainment IP outlook as promising but remains alert to changes in the Chinese and global economies.