YH Entertainment (2306) H1 2023 earnings summary

Executive summary

• H1 revenue fell 25.2% YoY to RMB364.8m; reported net loss was RMB175.9m versus net profit of RMB92.7m in H1 2022, including a RMB160.5m preferred-share fair-value loss.

• Adjusted net profit was RMB49.9m, down 70.4% YoY; adjusted net profit margin declined to 13.7% from 34.6%.

Financial highlights

• Gross profit fell 62.6% YoY to RMB76.2m; gross margin declined to 20.9% from 41.8%.

• Operating profit was RMB1.8m versus RMB153.0m; loss before tax was RMB160.7m versus profit before tax of RMB126.0m.

• Basic and diluted loss per share were RMB0.22, versus H1 2022 basic EPS of RMB0.20 and diluted EPS of RMB0.17.

• Adjusted net profit excludes equity-settled share payments, preferred-share fair-value changes, listing expenses and redemption-liability interest.

Outlook and guidance

• Plans include establishing an artist training center, expanding the trainee and artist roster, and boosting artist operations, promotion and commercial value.

• Music IP plans include digital releases and acquiring quality copyrights; pan-entertainment development includes AIGC and broader offerings.

• Overseas priorities include Korea, Southeast Asia, Japan and the United States, with plans to strengthen Yuehua Korea's operating capabilities.

• YH SPACE is expected to create additional performance and entertainment opportunities; no numerical financial guidance was stated.