Weak first-half box office severely hurts Maoyan's results; summer recovery supports a rebound, but near-term catalysts are limited

Overview

This report reviews Maoyan Entertainment's weak first-half 2026 results, analyzes the recovery in summer holiday films, the expansion of offline entertainment event ticketing, and the upcoming film slate, and accordingly lowers its earnings forecasts and target price. Citi believes the company remains weighed down in the near term by weakness in China's film market and project losses, but its long-term position in ticketing platforms, film distribution, and content services continues to support a Buy rating.

Core views

First-half 2026 results were broadly consistent with the earlier profit warning: Maoyan's revenue was RMB1.8 billion, down 28% year over year, while adjusted net profit was only RMB21 million, down 91% year over year. The main reason was weakness in China's film market, with nationwide box office falling 41% year over year to RMB17 billion during the period, together with losses on multiple film projects, which Citi estimates included Panda Project 2. This indicates that Maoyan is affected not only by the contraction in overall industry box office, but also by the profitability of individual films in which it invests or participates in production, which can significantly amplify earnings volatility. The second half, however, began on an improving note. Maoyan-participated films Kung Fu Women's Football and The Eight Immortals ranked first and second at the summer holiday box office, generating RMB2.3 billion and RMB1.7 billion, respectively, partially offsetting the below-expectation performance of Johnny Keep Walking 2, which generated only RMB150 million. Given the still-challenging film market, Citi expects Maoyan to strictly control its investment ratio in individual film projects, while continuing to participate in a range of projects to maintain its content distribution and production presence, thereby reducing single-film risk without withdrawing from the industry value chain. Potential National Day holiday releases may include Detective and Peppa Pig, although the report notes that release dates are now generally confirmed relatively late. Other important films in the second half of 2026 include Avengers. The offline entertainment business represents another growth avenue. Maoyan's offline entertainment event ticketing business continued to grow faster than the overall market in the first half of 2026, and Citi estimates that it already accounts for 15% to 20% of the company's total ticketing revenue. The report believes that the segment's primary objective at this stage remains expanding market share rather than pursuing profits, so faster growth may not immediately translate into a proportionate earnings contribution. Based on the first-half results, Citi lowered its 2026 revenue forecast by 4% to RMB4.165 billion, or approximately RMB4.2 billion, and raised its 2027 revenue forecast by 1% to RMB4.479 billion, or approximately RMB4.5 billion. Its adjusted net profit forecasts for 2026 and 2027 were both cut by 32%, from RMB512 million and RMB611 million to RMB347 million and RMB418 million, respectively. Adjusted earnings per share forecasts were also both reduced by 32%, from RMB0.44 and RMB0.53 to RMB0.30 and RMB0.36, respectively. The 2028 revenue forecast was raised by 5% to RMB4.727 billion, but the adjusted net profit forecast was cut by 28% to RMB465 million, while the earnings per share forecast was reduced from RMB0.56 to RMB0.40. These forecasts are based on China box office reaching RMB40 billion in 2026 and RMB44 billion in 2027. The forecasts indicate a gradual earnings recovery after bottoming in 2026: revenue is expected to shift from a 10.1% year-over-year decline in 2026 to growth of 7.5% and 5.5% in 2027 and 2028, respectively. Core net profit is expected to decline 48.9% in 2026 before growing 20.8% and 11.2% in 2027 and 2028, respectively. Gross margin is expected to fall from 43.3% in 2025 to 37.9% in 2026, before recovering to 39.1% in 2027 and 39.5% in 2028. Adjusted EBITDA margins are expected to be 10.3%, 11.3%, and 12.1%, respectively. Following the earnings forecast cuts, Citi lowered its 2026 dividend per share to HK$0.09, still based on a payout ratio of 40% of earnings per share, corresponding to a dividend yield of approximately 2%. Citi's long-term positive view is supported by the recovery potential of China's post-pandemic box office; the online movie ticketing business's role as a user-traffic gateway and source of cash flow; expansion in film advertising, distribution, and entertainment content services; Maoyan's unique position in the film industry value chain; potential growth momentum from new business models; and support from strategic shareholders. The company began with online movie ticketing and has since expanded into entertainment event ticketing, film promotion and distribution, co-production of film and television content, as well as IP merchandise, venue catering, and advertising. The report describes Maoyan as China's largest online movie ticketing service provider and leading distributor of domestic films, and believes its market share in film distribution continues to increase. On valuation, Citi believes the price-to-earnings method appropriately reflects Maoyan's growth momentum. Applying an unchanged target P/E multiple of 14 times 2027 adjusted earnings per share yields a target price of HK$6.00. This multiple is consistent with Maoyan's average P/E range over the past five years and also reflects the latest valuation rerating in the media industry. The target price was lowered from HK$8.00 to HK$6.00 mainly because of lower earnings forecasts rather than a change in the target multiple. Relative to the current price of HK$4.43, the report indicates an expected share-price return of 35.4% and, including a 2.0% dividend yield, an expected total return of 37.5%. In the scenario valuation, a faster box-office recovery accompanied by expansion of the film value chain corresponds to bullish fair value of HK$8.00; the base case corresponds to HK$6.00; and a slower box-office recovery corresponds to bearish fair value of HK$3.50. Citi therefore maintains its Buy rating, but believes there is a lack of major near-term catalysts after the end of the summer holiday season, with the National Day holiday season in October potentially serving as the next window to watch. Explicit downside risks to the target price include lower-than-expected box office, tighter regulation, intensifying competition, and the company's reliance on traffic from strategic shareholders.

Analysis framework

Citi first links changes in Maoyan's first-half revenue and profit to China's box office and specific loss-making projects, and then assesses operating trends in summer holiday films, potential National Day holiday releases, and offline entertainment event ticketing. It subsequently uses China box-office assumptions of RMB40 billion in 2026 and RMB44 billion in 2027 to revise its revenue, profit, earnings per share, and dividend forecasts. Finally, it determines the target price using a P/E multiple of 14 times 2027 adjusted earnings per share and uses bullish, base, and bearish scenarios to illustrate the impact of the pace of box-office recovery on fair value.

Methodology notes

• Valuation MethodPE/PEG valuation

  P/E valuation based on 2027 adjusted earnings per share

  The report multiplies 2027 adjusted earnings per share by a target P/E multiple of 14 times to derive a target price of HK$6.00. This multiple is consistent with Maoyan's average P/E range over the past five years and reflects the latest valuation rerating in the media industry.

• Company Fundamentals and Financial Framework

  Box-office-assumption-driven earnings forecasts

  The report uses China box-office forecasts of RMB40 billion in 2026 and RMB44 billion in 2027 as the core operating assumptions for its revenue and profit forecasts, and further adjusts its earnings forecasts based on film-project performance and investment ratios.

• Valuation Method

  Bull, base, and bear scenario valuation

  The report establishes three scenarios based on the pace of box-office recovery and the expansion of the film value chain, assigning fair values or target prices of HK$8.00, HK$6.00, and HK$3.50, respectively.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Maoyan Entertainment (1896.HK)

  The recovery of China's box office, the performance of the summer and National Day holiday film slates, expansion in offline entertainment event ticketing, and extension of the film value chain will all affect its revenue, profit, and valuation.

  Strengths

  The report describes it as China's largest online movie ticketing service provider and leading distributor of domestic films, with broad user reach, platform data, and big-data capabilities spanning ticketing, promotion and distribution, content production, and derivative businesses.

  Weaknesses

  Its results are sensitive to China's box office and the profitability of individual film projects; at this stage, offline entertainment event ticketing prioritizes expanding market share rather than profits.

  Comparison

  Offline entertainment event ticketing grew faster than the overall market in the first half of 2026; the target P/E multiple is consistent with Maoyan's average P/E range over the past five years.

  Risks

  Lower-than-expected box office, tighter regulation, intensifying competition, and reliance on traffic from strategic shareholders.

Key data

• First-half 2026 revenueRMB1.8 billionDown 28% year over year
• First-half 2026 adjusted net profitRMB21 millionDown 91% year over year
• China box office in the first half of 2026RMB17 billionDown 41% year over year
• Box office of key summer holiday filmsKung Fu Women's Football RMB2.3 billion; The Eight Immortals RMB1.7 billion; Johnny Keep Walking 2 RMB150 millionThe first two performed strongly, while the third fell below expectations
• Share of revenue from offline entertainment event ticketing15%-20%Citi's estimate of its share of Maoyan's total ticketing revenue
• China box-office forecast assumptionsRMB40 billion in 2026; RMB44 billion in 2027The principal basis for revenue and earnings forecasts
• 2026 forecast revisionsRevenue RMB4.165 billion; adjusted net profit RMB347 million; adjusted EPS RMB0.30Revenue forecast cut by 4%; net profit and EPS forecasts both cut by 32%
• 2027 forecast revisionsRevenue RMB4.479 billion; adjusted net profit RMB418 million; adjusted EPS RMB0.36Revenue forecast raised by 1%; net profit and EPS forecasts both cut by 32%
• 2028 forecast revisionsRevenue RMB4.727 billion; adjusted net profit RMB465 million; adjusted EPS RMB0.40Revenue forecast raised by 5%; net profit and EPS forecasts both cut by 28%
• 2026 dividend forecastHK$0.09 per shareA payout of 40% of earnings per share, corresponding to a dividend yield of approximately 2%
• Target price and current priceTarget price HK$6.00; current price HK$4.43Target price lowered from HK$8.00; expected share-price return of 35.4%
• Expected total return37.5%Includes an expected share-price return of 35.4% and an expected dividend yield of 2.0%
• Valuation benchmark14 times 2027 adjusted earnings per shareTarget multiple remains unchanged
• Scenario valuationBullish HK$8.00; base HK$6.00; bearish HK$3.50Primarily dependent on the pace of box-office recovery and expansion of the film value chain
• Market capitalizationHK$5.149 billionMarket value stated in the report

Impact & implications

The report believes that declining box office and losses on individual films will pressure Maoyan's earnings in 2026 and have led to the target-price cut. However, the success of its summer holiday films demonstrates that its distribution and content portfolio can still provide upside resilience in a weak market. Future earnings recovery depends on whether China's box office can reach the forecast assumptions, the performance of key films, and control over project investments, while offline entertainment event ticketing is currently more focused on expanding market share. In the long term, its ticketing traffic gateway, film distribution position, and expansion across the industry value chain remain the main reasons for Citi's Buy rating.

Risks

• China's box-office performance may fall below the report's expectations.
• The regulatory environment may tighten further.
• Competition in movie ticketing, distribution, and related businesses may intensify.
• Maoyan relies on traffic provided by strategic shareholders.

What to watch

• Monitor whether the National Day holiday season in October can become the next catalyst and whether potential films such as Detective and Peppa Pig ultimately secure release dates.
• Monitor the release and box-office performance of key films such as Avengers in the second half of 2026.
• Track whether China's box office can reach the forecast assumptions of RMB40 billion in 2026 and RMB44 billion in 2027.
• Observe whether Maoyan can strictly control investment ratios and single-film loss risks while continuing to participate in a range of film projects.
• Monitor growth in offline entertainment event ticketing market share and when the segment shifts from prioritizing market share to contributing profits.