CICC has reiterated its revenue and profit forecasts for DAMAI ENT (01060), with the current stock price trading at 21x FY26 P/E. The firm maintains an Outperform rating and a target price of HK$1.32, implying 30x FY26 P/E and a 40% upside potential.

DAMAI ENT released an earnings preview for 1H FY26, expecting net profit attributable to shareholders of no less than RMB 500 million for the six months ending September 30, 2025, up approximately 48% YoY. The company plans to announce its 1H FY26 results on the evening of November 13. CICC projects 1H FY26 Non-IFRS EBITA at RMB 537 million. Key insights from CICC include:

1. **Strong Performance of Aliyu Business**: The earnings preview highlighted Aliyu's robust revenue and profit growth as a key driver of the YoY net profit increase. Top IPs such as Sanrio, Chiikawa, and Crayon Shin-chan remain core revenue and profit drivers, maintaining strong popularity. According to Sanrio's Q1 FY26 report (natural Q2 2025), licensing revenue in mainland China surged 43.9% YoY to RMB 194 million. Since Q3 2025, Aliyu has hosted large-scale offline events like the Sanrio Festival and opened Chiikawa's flagship store in Shanghai, indicating sustained demand for IP-driven economies. CICC forecasts a 55% YoY increase in DAMAI ENT's derivative revenue to RMB 930 million for 1H FY26, factoring in the negative impact of Jinli Naqu's closure. Future trends in IP portfolio operations and business expansion will be closely monitored.

2. **Stable Ticketing Business and Strategic Investments**: The earnings preview noted DAMAI ENT's ample cash reserves, with plans to diversify investments in the entertainment sector. On October 15, Galaxy Macau renewed its three-year strategic partnership with DAMAI ENT. CICC believes the company is prudently investing in local cultural tourism, sports events, and small-to-medium-scale productions while expanding overseas. Although short-term costs may rise, these moves are expected to support sustained and healthy long-term growth.

3. **Optimized Asset Structure and Reduced Risk Exposure**: The earnings preview attributed part of the net profit growth to lower investment portfolio risk exposure. CICC assessed that film investments, including titles like *Burst Water Pipe* (scheduled for January 23, 2026), *Catch the Spy*, *Biao Ren*, and *Silent Awakening*, present relatively controllable risks.

**Risks**: Higher-than-expected costs for new ventures, intensified industry competition, and regulatory tightening.