China Animation's revenue in 2020 is 393 million Hong Kong dollars, down 37.9% year-on-year

Recently, China Culture Technology (formerly known as China Animation) (01566) issued an announcement that for the year ended March 31, 2020, the company achieved revenue of 393 million Hong Kong dollars (the same unit below), a year-on-year decrease of 37.9%; the profit attributable to the company’s owners was 1.34 100 million yuan, an increase of 130% year-on-year; the announcement stated that the increase in net profit was due to the recognition of gains from the sale of certain intangible assets; the recognition of gains from the sale of 50% equity in a subsidiary; and the recognition of gains from the sale of Shanghai JOYPOLIS plant and equipment. 393 million Hong Kong dollars, down 37.9% year-on-year; gross profit was approximately 62.9 million Hong Kong dollars, down 60.4% year-on-year; annual profit was approximately 134 million Hong Kong dollars, an increase of 124% year-on-year. During the reporting period, the decrease in revenue was mainly due to a decrease in sales revenue of animation derivative products of approximately HK$120 million and a decrease in operating income of indoor theme parks of approximately HK$98.4 million. The decline due to the outbreak of the 2019 Coronavirus, the Group's main suppliers' factories in Shenzhen, China, and theme parks in China and Japan temporarily suspended operations. At the same time, the biggest reason for the doubling of net profit is the sharp drop in inventory costs. The financial report shows that the inventory cost recognized as an expense in fiscal year 2020 is 9,9139,000 Hong Kong dollars, which is about half of that of 183 million Hong Kong dollars in fiscal year 2019. The official website shows that China Culture and Technology Group (HK.1566) is one of the few domestic animation culture technology groups with top international technology. It gathers the world's best animation IP resources, indoor parks and VR multimedia technology. It will be an animation derivative product in fiscal year 2020. Sales revenue was approximately HK$138 million, a year-on-year decrease of 46.6%. The main reason is that due to the epidemic, the factory in Shenzhen temporarily suspended operations. In addition, China Cultural Technology's derivative products business mainly produces animation derivative products for third-party IP, such as One Piece. In addition, due to the epidemic, the park business dropped by 30 year-on-year. It is reported that the revenue of indoor theme amusement parks (Joypolis and Wonder Forest) in fiscal year 2020 is approximately HK$227 million, a year-on-year decrease of 30.2%. The number of tourists dropped by 19% from about 2.1 million in the previous year to about 1.7 million. Compared with 2019, Chinese tourists have not changed much. It is reported that in January 2017, China Animation successfully acquired Sega Japan, acquired and controlled Sega global theme park and animation VR games, hardware and software development, park IP, operations, etc. There are 4 world-leading indoor parks-SEGA JOYPOLIS and 1 authorized park around the world. China Animation signed a strategic cooperation intention with Yitian Group in May 2017, and signed a landing contract on the China Sega Children's Park project on July 3. China Animation will hold 51% of the equity in the joint venture. The project will enter Shenzhen Yitian Holiday Plaza and is expected to open at the end of September. It is reported that China Sega Children's Park is an intelligent and innovative parent-child park for children aged 3-12 years old. It belongs to the newly created international brand of China Sega Children's Park. The group expects that the number of parks will reach 100-150 within three years, and the main service areas will be first-tier cities across the country, with an average area of u200bu200b600-1200 square meters.