YH Entertainment (2306) H2 2023 earnings summary

Executive summary

• FY2023 revenue fell 22.9% YoY to RMB755.7m; IFRS net loss was RMB142.6m, versus net profit of RMB1,725.2m in 2022, largely reflecting a swing in preferred-share fair value changes.

• Adjusted net profit declined 60.5% to RMB105.2m; adjusted net profit margin was 13.9%, down from 27.2%.

Financial highlights

• Gross profit decreased 51.8% YoY to RMB175.0m; gross margin contracted to 23.2% from 37.0%.

• Operating profit fell 85.3% to RMB31.1m; loss before tax was RMB105.1m.

• IFRS net loss was RMB142.6m, including a RMB160.5m fair value loss on convertible preferred shares; 2022 included a RMB1,582.0m fair value gain.

• Basic and diluted loss per share were both RMB0.17, versus basic EPS of RMB3.72 and diluted EPS of RMB0.20 in 2022.

Outlook and guidance

• Plans include expanding the artist roster and training capabilities, developing music IP through new releases and copyright acquisitions, and diversifying pan-entertainment through YH SPACE and AIGC.

• The artist training center was expected to enter use in 2024; remaining Global Offering proceeds were planned for use by end-2024, except funds allocated to the center.

• Overseas strategy targets continued development in Korea and expansion into Southeast Asia and Japan, alongside the newly established U.S. presence.