Q: How did the results compare vs. expectations?
A: 9M16 revenue was Rmb1.87bn, up 27.46% YoY, while net profit was Rmb179m,down 6.5%. Sales and profit were below our full-year estimates.
Q: What were the most noteworthy areas in the results?
A: 3Q revenue was up 30.9% YoY to Rmb771m but net profit was down 32.15% YoYto Rmb88m. Key results from Q3 earnings: 1) For 9M16, the sports segmentcontributed 12% of total sales (amounting to Rmb231m), in line with our heftyexpectation. 2) Q3 operational costs were Rmb598m, up 53.6% YoY, as a result of itsin film & TV segment investment. 3) The company is likely to regain momentum inQ416, given booked income from Midnight Diners (TV series) and My New Clothes(variety TV).
Q: Has the company's outlook/guidance changed?
A: No. Hualu expects 13 TV dramas, 2 movies and 2 variety show projects to bookincome in 4Q, including Soft Hands (hit variety show with high profit potential).
Q: How would we expect investors to react?
A: We expect the market to react negatively to 3Q results.