Haitong International has released a research report initiating coverage on CHINA RUYI (00136), assigning it an "Outperform" rating with a target price set at HKD 4.50. The report highlights CHINA RUYI as a market leader across the entire value chain of China's film and television industry, showing long-term potential to become the "Chinese version of Netflix 2.0." The firm notes that CHINA RUYI's business footprint is extensive, encompassing content production and distribution (Ruyi Pictures), online streaming (Pumpkin Film), cinema exhibition (Wanda Film), online gaming (Jingxiu Games), and IP derivatives. According to data from the Lighthouse Professional Edition, the company has created and invested in over 100 film copyrights, with a cumulative box office of approximately RMB 40 billion. In the fiscal year 2024 and the first half of 2025, the company's total revenue is projected to be RMB 3.7 billion and RMB 2.2 billion respectively, with adjusted net profits significantly rising to RMB 1.25 billion and RMB 1.3 billion.

Notably, the company employs a "producer-centered system" as its core model, which allows it strong control over content themes, production, and quality, successfully launching multiple high-grossing films such as 「Hi, Mom」, 「Hot and Spicy」, and 「Send You a Little Red Flower.」 Additionally, through its holding in Wanda Film, CHINA RUYI not only enhances its cinema screening capabilities but also gains valuable pre-release investment windows for films, further solidifying its advantages in content investment and distribution. As the largest pure subscription-based streaming platform in China, Pumpkin Film focuses on content quality and provides personalized recommendations to paying users. As of June 2025, the platform boasts approximately 99.3 million registered users and 38.1 million paying users, with nearly a million film copyrights at hand. The firm believes that with the continuous expansion of exclusive content and the empowerment of AI technology, Pumpkin Film is on a healthy growth trajectory. The gaming business has become the largest source of income for the company, contributing 55% of its total revenue in the first half of 2025. Thanks to support from Tencent (00700) and various acquisitions, Jingxiu Games achieved nearly 500% compound annual growth rate from 2022 to 2024, providing stable cash flow for the company.

Overall, Haitong International believes that with nearly 20 years of experience, strategic investments, and the backing of Tencent, CHINA RUYI is moving towards building a high-quality exclusive content library akin to Netflix. This content library serves both online users (through Pumpkin Film) and offline users (through Wanda Film), aiming to create a converged online and offline film and television entertainment platform. The firm predicts that CHINA RUYI's adjusted net profits will reach RMB 2.42 billion, RMB 2.63 billion, and RMB 2.73 billion from 2025 to 2027. Based on the PEG valuation method, referencing the industry average PEG level of 0.8x and the company's 30% net profit compound annual growth rate, the target price is set at HKD 4.50.