Shenwan Hongyuan has reiterated its "Buy" rating on DAMAI ENT (01060), citing robust growth in IP-related revenue and steady expansion in performance business operations. The firm highlights the company's long-term potential in the high-growth live entertainment sector. Key insights are as follows:

**Financial Performance (FY26H1, ending September 30, 2025)** Revenue reached RMB4.05 billion, up 33% YoY, while net profit attributable to shareholders rose 54% YoY to RMB520 million (previously guided above RMB500 million). Adjusted EBITA stood at RMB550 million, reflecting a 14% YoY increase after excluding a one-time RMB160 million financial asset impairment reversal in FY25H1.

**IP Business Performance** IP derivative revenue doubled YoY, driven by strong growth in ToB licensing and rapid progress in ToC initiatives. FY26H1 revenue surged 105% YoY to RMB1.16 billion, with segment performance (gross profit minus allocated sales expenses) up 44% to RMB230 million. Margin contraction was attributed to one-off impacts from the closure of subsidiary Jinli Naqu, while core Aliyu business revenue grew over 100% YoY with near-doubled profits. - **ToB Licensing**: Expansion with premium IPs like Sanrio Family, Chiikawa, and Pokémon, alongside new partnerships such as Universal Studios. Aliyu plans to scale team investments and broaden downstream brand collaborations. - **Retail Brand Operations**: Launched flagship stores for brands like Chiikawa (mainland China debut) and TOPPS (Tmall store). Future plans include offline experiential formats such as themed restaurants and compact indoor entertainment venues.

**Performance Business** Core domestic concert revenue grew steadily (+14.5% YoY to RMB1.34 billion), while segment performance edged up 4.7% to RMB750 million. Margin pressure stemmed from early-stage international expansion and lower-margin content investments. - **Ticketing**: Concert demand remained robust despite supply constraints (e.g., venue saturation), with DAMAI platform GMV rising and抢票 users increasing 17% YoY. The platform serviced over 2,500 events (+19% YoY), offering integrated solutions to organizers. - **Live Entertainment Content**: Revenue jumped 50% YoY through investments in large-scale concerts (e.g., Jackson Yee’s 2025 tour), festivals, theater, and comedy shows. - **Global Expansion**: Targeting Southeast Asia and Japan/Korea markets amid rising cross-border demand, with plans to attract top global artists to Asia.

**Film and TV Content** Film revenue totaled RMB1.06 billion (segment profit: RMB95 million), with strategy pivoting toward low-budget, high-quality projects. Summer release *Catch the Wind* outperformed expectations. TV production generated RMB480 million in revenue (profit: RMB40 million).

**Operational Efficiency** Management expenses ratio improved to 16.5% (-3.1pct YoY), reflecting risk mitigation post-FY25 adjustments.

**Risks**: Regulatory shifts in content/platform policies; project delays/underperformance; ticketing or IP derivative business setbacks.