Asia Pacific Equity Research

20 November 2020

Neutral
Alibaba Pictures 1060.HK, 1060 HK
Price (20 Nov 20): HK$1.04
Improving profitability despite revenue pressure,
▼ Price Target (Dec-21): HK$1.15
marketing going live Prior (Dec-21): HK$1.20

Alibaba Pictures’ 1HFY21 (Apr20-Sep20) revenue was suppressed by a China

nationwide cinema shutdown before mid-July, but losses narrowed thanks to Entertainment
stringent cost control. The company recently launched a campaign to leverage
Michelle Wei, CFA AC
live broadcasting for online promotion and distribution, and targets operating
(852) 2800-8562
income breakeven in FY21. We tweak our Dec-21 PT from HK$1.20 to michelle.z.wei@jpmorgan.com
HK$1.15 and remain Neutral due to relatively demanding valuations. Bloomberg JPMA WEI <GO>
 1HFY21 revenue affected by cinema closure: Total revenue decreased J.P. Morgan Securities (Asia Pacific) Limited/ J.P.
38% yoy, to Rmb927mn. Internet-based promotion and distribution (P&D) Morgan Broking (Hong Kong) Limited
was the main drag (-68% yoy), as a nationwide theatre closure before mid- James R. Sullivan, CFA
July and a yoy decline in box office after reopening led to a drop in online (65) 6882-2374
ticketing revenue. Content production revenue grew nicely, by 87% yoy, on james.r.sullivan@jpmorgan.com
the back of increased sales of self-produced dramas to Youku. Integrated J.P. Morgan Securities Singapore Private Limited/
J.P. Morgan Securities (Asia Pacific) Limited/ J.P.
development grew 40% yoy, decelerating from ~120% growth in FY20. Morgan Broking (Hong Kong) Limited
 Losses narrowed with stringent cost control: Gross margin came down
Alvin Au
22ppts yoy, to 38%, as the theatre shutdown led to a decline of high-margin (852) 2800-6073
online ticketing revenue. The S&M expense to revenue ratio came down to alvin.au@jpmorgan.com
7% from 44%/26% in 1HFY20/2HFY20 due partly to reduced ticket J.P. Morgan Securities (Asia Pacific) Limited/ J.P.
subsidies and less marketing expenditure during the lockdown. Profit (gross Morgan Broking (Hong Kong) Limited
profit minus allocable S&M expense) was Rmb285mn in 1HFY21 vs.
Key Changes (FYE Mar)
Rmb248mn in 1HFY20, as the turnaround of the content production
business offset weakness in online P&D. Net loss decreased to Rmb162mn Prev Cur
in 1HFY21 from Rmb390mn in 1HFY20 due mainly to S&M expense EPS (Basic) - 21E (Rmb) (0.00) 0.00
reduction. Management aims at operating income breakeven in FY21.
Style Exposure
 Content production business update: Movies: Alipics has released three
movies under Jincheng Collaboration Plan since 2018 (Peppa Celebrates Quant Current Hist %Rank (1=Top)
Chinese New Year, Love You Forever, Coffee or Tea?), and all are profit- Factors %Rank 6M 1Y 3Y 5Y
making. It plans to release 20 Jincheng movies, in which it is the lead Value 95 94 94 95 89
producer/distributor, in the next four years, and 13 are completed/under Growth 20 16 18 99 98
preparation. Dramas: Over the past three years, five dramas produced by Momentum 94 100 88 87 79
Alipics have been streamed, with another nine delivered and pending Quality 94 88 87 84 99
release. Nine projects are now under preparation. It targets delivering 10 Low Vol 54 51 60 51 98
dramas in FY21. ESGQ 83 95 11 14 8
 Online P&D with live broadcasting: Alipics recently launched an MCN
(Multi-Channel Network) project that leverages live broadcasting for P&D.
Partnerships have been formed with short video platforms such as Douyin,
Kuaishou and Taobao Live Broadcasting. Since commencement in June, it
has signed contracts with 178 KOLs, with over 300mn users registered.
Video view counts have exceeded 30bn.
 Management sees a low risk of cannibalization between theatres and
online streaming platforms. Blockbusters will go for theatrical release, and
small-budget comedies/classic movies can be released online. Alipics will
expand investment in web movies in the coming years.

Sources for: Style Exposure – J.P. Morgan Quantitative and Derivatives Strategy; all other tables are company data and J.P. Morgan estimates.

See page 9 for analyst certification and important disclosures, including non-US analyst disclosures.
J.P. Morgan does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that
the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single
factor in making their investment decision.

www.jpmorganmarkets.com
 Michelle Wei, CFA Asia Pacific Equity Research
(852) 2800-8562 20 November 2020
michelle.z.wei@jpmorgan.com

Price Performance Summary Investment Thesis and Valuation

Alibaba Pictures is a leading media platform in China
specializing in the movie ticketing business. Its flagship
product, the Taopiaopiao app, is the second-largest online
movie ticketing site in China. The company has three business
segments: (1) Internet-based promotion and distribution
(including ticketing); (2) content production; and (3)
integrated development. Internet-based promotion and
distribution is the key business segment, driving c80% of the
company’s revenue. Alipics is diversifying itself beyond
YTD 1m 3m 12m
ticketing by strengthening collaboration with various
Abs -24.1% -8.0% -5.5% -20.0% entertainment units within the Alibaba ecosystem. We
Rel -17.9% -15.7% -12.2% -18.4% appreciate the company’s distinctive strategy of being an
infrastructure service provider and its potentially remarkable
Company Data
growth in the IP derivative business, but are concerned about
Shares O/S (mn) 26,831 its stretched valuation and a lack of profit-making record.
52-week range (HK$) 1.48-0.89
Market cap ($ mn) 3,599 Maintain Neutral.
Exchange rate 7.75
Free float(%) 47.7% We use a DCF valuation methodology to derive the
3M - Avg daily vol (mn) 36.24
3M - Avg daily val ($ mn) 5.3 company’s fair value. Our Dec-21 price target of HK$1.15 is
Volatility (90 Day) 41 based on a DCF valuation that assumes a market risk premium
Index HSI of 7.0% and a risk-free rate of 4%. We also assume a beta of
BBG BUY|HOLD|SELL 1|2|0
1.3 and a terminal growth rate of 3%, which results in a
Key Metrics (FYE Mar) WACC of 12.1%.
Rmb in millions FY20A FY21E FY22E FY23E
Financial Estimates Performance Drivers
Revenue 2,875 2,544 4,107 4,966
Adj. EBIT (981) (24) 426 732
Adj. EBITDA (864) 136 633 940
Adj. net income (1,049) 180 555 807
Adj. EPS (0.04) 0.01 0.02 0.03
BBG EPS (0.02) (0.00) 0.02 -
Cashflow from operations (776) 153 441 710
FCFF (816) 55 341 604
Margins and Growth
Revenue growth (5.2%) (11.5%) 61.5% 20.9%
EBIT margin (34.1%) (0.9%) 10.4% 14.7%
EBIT growth 97.4% (97.6%) (1896.6%) 71.6%
EBITDA margin (30.1%) 5.4% 15.4% 18.9%
EBITDA growth 149.2% (115.8%) 364.4% 48.5%
Net margin (36.5%) 7.1% 13.5% 16.3%
Adj. EPS growth 340.2% (116.9%) 208.0% 45.3%
Ratios
Adj. tax rate (2.6%) 20.0% 20.0% 20.0%
Interest cover 31.3 NM NM NM
Net debt/Equity NM NM NM NM
Net debt/EBITDA 4.2 NM NM NM
ROE (7.3%) 1.3% 3.9% 5.5%
Valuation
FCFF yield (3.5%) 0.2% 1.4% 2.5%
Dividend yield 0.0% 0.0% 0.0% 0.0%
EV/Revenue 6.9 7.8 4.7 3.8
EV/EBITDA NM 145.3 30.7 20.0
Adj. P/E NM 131.5 42.7 29.4

Source: J.P. Morgan Quantitative and Derivatives Strategy for Performance Drivers; company data, Bloomberg Finance L.P. and J.P. Morgan estimates for all other tables.
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Michelle Wei, CFA Asia Pacific Equity Research
(852) 2800-8562 20 November 2020
michelle.z.wei@jpmorgan.com

Table 1: 1HFY21 results summary

Rmb mn FY1H19 FY2H19 FY1H20 FY2H20 FY1H21 yoy % hoh %
Apr18- Sep18 Oct18- Mar19 Apr19- Sep19 Oct19- Mar20 Apr20- Sep20
Total revenue 1,532 1,502 1,501 1,373 927 -38% -33%
yoy growth 29% -6% -2% -9% -38%
Content production 310 148 205 224 382 87% 70%
Internet-based promotion and distribution 1,172 1,291 1,180 1,024 381 -68% -63%
Integrated development 49 62 117 125 163 40% 30%
Cost of sales and services (739) (529) (603) (705) (576) -4% -18%
Gross profit 794 972 898 668 351 -61% -48%
yoy growth -10% -7% 13% -31% -61%
Gross margin 52% 65% 60% 49% 38% -22% -11%
Selling and marketing expenses (872) (708) (658) (358) (69) -89% -81%
Segment results (73) 307 248 337 285 15% -15%
yoy growth 54% 176% 441% 10% 15%
Content production (164) (57) (75) 73 66 NA -10%
Internet-based promotion and distribution 64 324 251 199 129 -48% -35%
Integrated development 28 39 72 64 89 24% 39%
Administrative and other expenses (345) (338) (576) (955) (478) -17% -50%
Operating income/(loss) (423) (74) (336) (645) (196) 42% 70%
yoy growth 0% 90% 21% -778% 42%
Adjusted EBITA (489) (110) (276) (446) (130) 53% 71%
yoy growth NA NA 44% -306% 53%
Net interest income/(expense) 262 (29) 95 37 40 -58% 8%
Other income/(expense) 16 (32) (154) (133) (14) -91% -90%
Profit before tax (146) (134) (396) (741) (170) 57% 77%
Tax (8) (7) (1) (28) 0 NA NA
Effective tax rate 5% 5% 0% 4% 0%
Non-controlling interests 29 13 6 9 8 29% -18%
Net profit (126) (128) (390) (760) (162) 58% 79%
yoy growth 67% 85% -211% -494% 58%
Source: Company data and J.P. Morgan.

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Michelle Wei, CFA Asia Pacific Equity Research
(852) 2800-8562 20 November 2020
michelle.z.wei@jpmorgan.com

Figure 1: Revenue trend Figure 2: Gross profit trend

Source: Company data and J.P. Morgan. Source: Company data and J.P. Morgan.

Figure 3: Selling and marketing expense as % of revenue Figure 4: Segment results

Source: Company data and J.P. Morgan. Source: Company data and J.P. Morgan. Note: Segment results = Revenue - cost of sales and
services - allocated selling and marketing expenses.

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Michelle Wei, CFA Asia Pacific Equity Research
(852) 2800-8562 20 November 2020
michelle.z.wei@jpmorgan.com

Table 2: Key forecasts and revisions

Rmb mn FY21E FY22E FY21E FY22E
Total revenue Gross profit
Old 3,240 4,327 Old 1,912 2,726
New 2,544 4,107 New 1,183 2,588
Change (%) -21.5% -5.1% Change (%) -38.1% -5.1%
YOY growth (%) -New -11.5% 61.5% YOY growth (%) -New -24.5% 118.7%

Content production revenue Adjusted EBITDA

Old 908 1,209 Old 4 639
New 908 1,158 New 136 633
Change (%) 0.0% -4.3% Change (%) 3579.6% -0.9%
YOY growth (%) -New 111.6% 27.5% YOY growth (%) -New -115.8% 364.4%

Internet-based promotion and distribution revenue Adjusted EBITDA margin

Old 1,851 2,314 Old 0.1% 14.8%
New 1,300 2,211 New 5.4% 15.4%
Change (%) -29.8% -4.5% Change (%) 5.2% 0.6%
YOY growth (%) -New -41.0% 70.0% YOY growth (%) -New 35.4% 10.1%

Integrated development revenue Adjusted net profit

Old 481 803 Old 87 557
New 336 739 New 180 555
Change (%) -30.2% -8.0% Change (%) 106.6% -0.2%
YOY growth (%) -New 39.0% 120.0% YOY growth (%) -New NA 208.0%
Source: J.P. Morgan estimates.

Table 3: J.P. Morgan forecasts vs consensus

FY21E FY22E
Sales (RMB mn)
Consensus 3,046 4,297
J.P. Morgan 2,544 4,107
Difference -16.5% -4.4%
EBITDA (RMB mn)
Consensus 195 894
J.P. Morgan 136 633
Difference -30.1% -29.2%
EBITDA margin (%)
Consensus 6.4% 20.8%
J.P. Morgan 5.4% 15.4%
Difference -1.0% -5.4%
Net profit (RMB mn)
Consensus (44) 453
J.P. Morgan 180 555
Difference -513.0% 22.6%
Source: Bloomberg Finance L.P. and J.P. Morgan estimates.

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Michelle Wei, CFA Asia Pacific Equity Research
(852) 2800-8562 20 November 2020
michelle.z.wei@jpmorgan.com

Valuation
DCF-based Dec-21 PT of HK$1.15
Our Dec-21 price target of HK$1.15 is based on a DCF valuation that assumes an
equity risk premium of 7.0% and a risk-free rate of 4%. We also assume a beta of 1.3
and debt-to-capital ratio of 10%, which results in a WACC of 12.1%.

Table 4: Alibaba Pictures - DCF analysis

DCF Model FY22E FY23E FY24E FY25E FY26E FY27E FY28E FY29E FY30E
EBIT * (1-tax rate) 512 878 1,261 1,588 1,964 2,370 2,801 3,316 3,809
Depreciation & amortization 50 50 50 50 50 50 50 50 50
Change in w orking capital (8) 11 (17) (9) (1) 10 (4) 5 15
Capital expenditure and investment (50) (50) (50) (50) (50) (50) (50) (50) (50)
Free cas h flow s 504 889 1,244 1,578 1,963 2,379 2,797 3,321 3,824
% yoy grow th 76% 40% 27% 24% 21% 18% 19% 15%
Discounted FCF 490 688 858 971 1,078 1,165 1,222 1,294 1,329

Fiscal Year End M-22 M-23 M-24 M-25 M-26 M-27 M-28 M-29 M-30
Cash flow s tarting date D-21 D-20 D-20 D-20 D-20 D-20 D-20 D-20 D-20
Days left 90 820 1,186 1,551 1,916 2,281 2,647 3,012 3,377
Discount factor 0.25 2.25 3.25 4.25 5.25 6.25 7.25 8.25 9.25
Discount factor at WACC 1.03 1.29 1.45 1.62 1.82 2.04 2.29 2.57 2.88

WACC As sumptions TV calculation 1-yr Fw d

2022-30 Cost of equity = 13.0% Terminal value grow th 3.0%
NPV of cash f low s 9,095 Cost of debt = 5.0% Implied TV exit mult. (X) 11.3
Perpetual grow th (%) 3.0% Tax rate = 25.0% Free cash flow s (FCF) 3,824
Im plied Exit FCF m ultiple (X) 11.0 Risk f ree rate = 4.0% FCF*exit mult 43,277
PV of terminal value 15,040 Beta = 1.3 Discount f actor at WACC 2.88
Enterprise value 24,134 Equity risk premium = 7.0% PV of terminal value 15,040
Terminal value as % of EV 62% Req equity market return = 11.0%
Net cash (debt) 3,892 Debt/capital = 10.0%
Equity value (Rm b m n) 28,026 Equity/capital = 90.0%
Equity value (Rm b/share) 1.04 WACC = 12.1%
CNYHKD 1.10
Equity value (HKD/share ) 1.15
Source: J.P. Morgan estimates.

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Michelle Wei, CFA Asia Pacific Equity Research
(852) 2800-8562 20 November 2020
michelle.z.wei@jpmorgan.com

Investment Thesis, Valuation and Risks

Alibaba Pictures (Neutral; Price Target: HK$1.15)
Investment Thesis
Alibaba Pictures is a leading media platform in China specializing in the movie
ticketing business. Its flagship product, the Taopiaopiao app, is the second-largest
online movie ticketing site in China. The company has three business segments:
(1) Internet-based promotion and distribution (including ticketing); (2) content
production; and (3) integrated development. Internet-based promotion and
distribution is the key business segment, driving c80% of the company’s revenue.
Alipics is diversifying itself beyond ticketing by strengthening collaboration with
various entertainment units within the Alibaba ecosystem. We appreciate the
company’s distinctive strategy of being an infrastructure service provider and its
potentially remarkable growth in the IP derivative business, but are concerned about
its stretched valuation and a lack of profit-making record. Maintain Neutral.

Valuation
We use a DCF valuation methodology to derive the company’s fair value. Our Dec-
21 price target of HK$1.15 is based on a DCF valuation that assumes a market risk
premium of 7.0% and a risk-free rate of 4%. We also assume a beta of 1.3 and a
terminal growth rate of 3%, which results in a WACC of 12.1%.

Risks to Rating and Price Target

Upside risks to our rating and price target include: (1) box office beating
expectations; (2) online penetration rate of movie ticket purchasing rising faster than
expectations; and (3) IP derivative business growing faster than expectations.

Downside risks include: (1) box office uncertainty; (2) intensified competition in the
film ticket sales market; and (3) the implementation of restrictive government
regulations.

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Michelle Wei, CFA Asia Pacific Equity Research
(852) 2800-8562 20 November 2020
michelle.z.wei@jpmorgan.com

Alibaba Pictures: Summary of Financials

Income Statement FY19A FY20A FY21E FY22E FY23E Cash Flow Statement FY19A FY20A FY21E FY22E FY23E
Revenue 3,034 2,875 2,544 4,107 4,966 Cash flow from operating activities (1,377) (776) 153 441 710
COGS (1,268) (1,308) (1,361) (1,520) (1,738) o/w Depreciation & amortization 95 125 50 50 50
Gross profit 1,766 1,567 1,183 2,588 3,228 o/w Changes in working capital (845) (665) 228 (8) 11
SG&A (2,476) (2,548) (1,202) (2,341) (2,696)
Adj. EBITDA (347) (864) 136 633 940 Cash flow from investing activities 1,090 1,665 (42) (42) (43)
D&A (95) 0 (5) (50) (50) o/w Capital expenditure (59) (12) (50) (50) (50)
Adj. EBIT (497) (981) (24) 426 732 as % of sales 1.9% 0.4% 2.0% 1.2% 1.0%
Net Interest 66 28 60 62 70
Adj. PBT (281) (1,137) 32 499 811 Cash flow from financing activities 1,765 (420) 0 0 0
Tax (15) (29) (6) (100) (162) o/w Dividends paid 0 0 0 0 0
Minority Interest 42 15 16 17 18 o/w Shares issued/(repurchased) 1,090 0 0 0 0
Adj. Net Income (241) (1,049) 180 555 807 o/w Net debt issued/(repaid) 691 (392) 0 0 0
Reported EPS (0.01) (0.04) 0.00 0.02 0.02 Net change in cash 1,478 469 111 399 667
Adj. EPS (0.01) (0.04) 0.01 0.02 0.03
Adj. Free cash flow to firm (1,505) (816) 55 341 604
DPS 0.00 0.00 0.00 0.00 0.00 y/y Growth (5592.3%) (45.8%) (106.7%) 521.3% 76.9%
Payout ratio 0.0% 0.0% 0.0% 0.0% 0.0%
Shares outstanding 26,629 26,328 26,849 26,849 26,849
Balance Sheet FY19A FY20A FY21E FY22E FY23E Ratio Analysis FY19A FY20A FY21E FY22E FY23E
Cash and cash equivalents 3,341 4,005 4,116 4,515 5,182 Gross margin 58.2% 54.5% 46.5% 63.0% 65.0%
Accounts receivable 1,825 1,661 1,744 1,832 1,923 EBITDA margin (11.4%) (30.1%) 5.4% 15.4% 18.9%
Inventories 1 0 0 0 0 EBIT margin (16.4%) (34.1%) (0.9%) 10.4% 14.7%
Other current assets 2,370 2,026 2,096 2,171 2,251 Net profit margin (7.9%) (36.5%) 7.1% 13.5% 16.3%
Current assets 7,537 7,692 7,957 8,518 9,356
PP&E 201 74 119 119 119 ROE (1.7%) (7.3%) 1.3% 3.9% 5.5%
LT investments - - - - - ROA (1.5%) (6.5%) 1.1% 3.4% 4.7%
Other non current assets 8,880 8,083 8,100 8,100 8,100 ROCE (3.5%) (6.7%) (0.1%) 2.3% 3.9%
Total assets 16,618 15,848 16,176 16,737 17,575 SG&A/Sales 81.6% 88.6% 47.2% 57.0% 54.3%
Net debt/Equity NM NM NM NM NM
Short term borrowings 5 10 394 394 394 Net debt/EBITDA 7.6 4.2 NM NM NM
Payables 832 964 1,353 1,515 1,705
Other short term liabilities 63 168 36 36 36 Sales/Assets (x) 0.2 0.2 0.2 0.2 0.3
Current liabilities 900 1,142 1,783 1,946 2,135 Assets/Equity (x) 1.1 1.1 1.1 1.2 1.2
Long-term debt 712 384 0 0 0 Interest cover (x) 5.3 31.3 NM NM NM
Other long term liabilities 53 345 345 345 345 Operating leverage (1284273.1%) (1857.4%) 847.8% (3086.1%) 342.5%
Total liabilities 1,666 1,871 2,129 2,291 2,481 Tax rate (5.4%) (2.6%) 20.0% 20.0% 20.0%
Shareholders' equity 14,856 13,898 13,985 14,400 15,067 Revenue y/y Growth 9.3% (5.2%) (11.5%) 61.5% 20.9%
Minority interests 96 78 62 45 28 EBITDA y/y Growth 267378.6% 149.2% (115.8%) 364.4% 48.5%
Total liabilities & equity 16,618 15,848 16,176 16,737 17,575 EPS y/y Growth - 340.2% (116.9%) 208.0% 45.3%
BVPS 0.56 0.53 0.52 0.54 0.56 Valuation FY19A FY20A FY21E FY22E FY23E
y/y Growth 1.7% (5.4%) (1.3%) 3.0% 4.6% P/E (x) NM NM 131.5 42.7 29.4
P/BV (x) 1.6 1.7 1.7 1.6 1.6
Net debt/(cash) (2,624) (3,610) (3,721) (4,120) (4,788) EV/EBITDA (x) NM NM 145.3 30.7 20.0
Dividend Yield 0.0% 0.0% 0.0% 0.0% 0.0%
Source: Company reports and J.P. Morgan estimates.
Note: Rmb in millions (except per-share data).Fiscal year ends Mar. o/w - out of which

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Michelle Wei, CFA Asia Pacific Equity Research
(852) 2800-8562 20 November 2020
michelle.z.wei@jpmorgan.com

Analyst Certification: The Research Analyst(s) denoted by an “AC” on the cover of this report certifies (or, where multiple Research
Analysts are primarily responsible for this report, the Research Analyst denoted by an “AC” on the cover or within the document
individually certifies, with respect to each security or issuer that the Research Analyst covers in this research) that: (1) all of the views
expressed in this report accurately reflect the Research Analyst’s personal views about any and all of the subject securities or issuers; and
(2) no part of any of the Research Analyst's compensation was, is, or will be directly or indirectly related to the specific recommendations
or views expressed by the Research Analyst(s) in this report. For all Korea-based Research Analysts listed on the front cover, if
applicable, they also certify, as per KOFIA requirements, that the Research Analyst’s analysis was made in good faith and that the views
reflect the Research Analyst’s own opinion, without undue influence or intervention.
All authors named within this report are Research Analysts unless otherwise specified. In Europe, Sector Specialists (Sales and Trading)
may be shown on this report as contacts but are not authors of the report or part of the Research Department.

Important Disclosures

 Market Maker/ Liquidity Provider: J.P. Morgan is a market maker and/or liquidity provider in the financial instruments of/related to
Alibaba Pictures.
 Client: J.P. Morgan currently has, or had within the past 12 months, the following entity(ies) as clients: Alibaba Pictures.
 Client/Non-Investment Banking, Securities-Related: J.P. Morgan currently has, or had within the past 12 months, the following
entity(ies) as clients, and the services provided were non-investment-banking, securities-related: Alibaba Pictures.
 Non-Investment Banking Compensation: J.P. Morgan has received compensation in the past 12 months for products or services
other than investment banking from Alibaba Pictures.
 Debt Position: J.P. Morgan may hold a position in the debt securities of Alibaba Pictures, if any.
Company-Specific Disclosures: Important disclosures, including price charts and credit opinion history tables, are available for
compendium reports and all J.P. Morgan–covered companies by visiting https://www.jpmm.com/research/disclosures, calling 1-800-477-
0406, or e-mailing research.disclosure.inquiries@jpmorgan.com with your request. J.P. Morgan’s Strategy, Technical, and Quantitative
Research teams may screen companies not covered by J.P. Morgan. For important disclosures for these companies, please call 1-800-477-
0406 or e-mail research.disclosure.inquiries@jpmorgan.com.

Alibaba Pictures (1060.HK, 1060 HK) Price Chart Date Rating Price (HK$) Price Target
(HK$)
3
10-Aug-19 N 1.41 1.6
08-May-20 N 0.99 1.05
22-Sep-20 N 1.18 1.2

2 N HK$1.6 N HK$1.05 N HK$1.2

Price(HK$)

0
Nov Feb May Aug Nov Feb May Aug Nov Feb May Aug Nov
17 18 18 18 18 19 19 19 19 20 20 20 20

Source: Bloomberg Finance L.P. and J.P. Morgan; price data adjusted for stock splits and dividends.
Initiated coverage Aug 09, 2019. All share prices are as of market close on the previous business day.

The chart(s) show J.P. Morgan's continuing coverage of the stocks; the current analysts may or may not have covered it over the entire
period.
J.P. Morgan ratings or designations: OW = Overweight, N= Neutral, UW = Underweight, NR = Not Rated
Explanation of Equity Research Ratings, Designations and Analyst(s) Coverage Universe:
J.P. Morgan uses the following rating system: Overweight [Over the next six to twelve months, we expect this stock will outperform the

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Michelle Wei, CFA Asia Pacific Equity Research
(852) 2800-8562 20 November 2020
michelle.z.wei@jpmorgan.com

average total return of the stocks in the analyst’s (or the analyst’s team’s) coverage universe.] Neutral [Over the next six to twelve
months, we expect this stock will perform in line with the average total return of the stocks in the analyst’s (or the analyst’s team’s)
coverage universe.] Underweight [Over the next six to twelve months, we expect this stock will underperform the average total return of
the stocks in the analyst’s (or the analyst’s team’s) coverage universe.] Not Rated (NR): J.P. Morgan has removed the rating and, if
applicable, the price target, for this stock because of either a lack of a sufficient fundamental basis or for legal, regulatory or policy
reasons. The previous rating and, if applicable, the price target, no longer should be relied upon. An NR designation is not a
recommendation or a rating. In our Asia (ex-Australia and ex-India) and U.K. small- and mid-cap equity research, each stock’s expected
total return is compared to the expected total return of a benchmark country market index, not to those analysts’ coverage universe. If it
does not appear in the Important Disclosures section of this report, the certifying analyst’s coverage universe can be found on J.P.
Morgan’s research website, www.jpmorganmarkets.com.
Coverage Universe: Wei, Michelle: Alibaba Pictures (1060.HK), China Film - A (600977.SS), China Mobile (0941) (0941.HK), China
Telecom (0728) (0728.HK), China Tower (0788) (0788.HK), China Unicom - A (600050.SS), China Unicom - H (0762.HK), Chunghwa
Telecom Co., Ltd (2412.TW), Far EasTone Telecom (4904.TW), HKBN Ltd. (1310) (1310.HK), HKT Trust (6823) (6823.HK),
Hutchison Telecom HK (0215) (0215.HK), IMAX China (1970.HK), Maoyan Entertainment (1896.HK), PCCW Limited (0008)
(0008.HK), SmarTone (0315) (0315.HK), Taiwan Mobile Co., Ltd. (3045.TW), Wanda Film - A (002739.SZ), Zhejiang Huace Film &
TV Co. Ltd - A (300133.SZ)

J.P. Morgan Equity Research Ratings Distribution, as of October 10, 2020

Overweight Neutral Underweight
(buy) (hold) (sell)
J.P. Morgan Global Equity Research Coverage 47% 39% 14%
IB clients* 52% 49% 37%
JPMS Equity Research Coverage 46% 40% 14%
IB clients* 75% 70% 55%
*Percentage of subject companies within each of the "buy," "hold" and "sell" categories for which J.P. Morgan has provided investment banking services
within the previous 12 months. Please note that the percentages might not add to 100% because of rounding.
For purposes only of FINRA ratings distribution rules, our Overweight rating falls into a buy rating category; our Neutral rating falls into a hold rating
category; and our Underweight rating falls into a sell rating category. Please note that stocks with an NR designation are not included in the table above.
This information is current as of the end of the most recent calendar quarter.

Equity Valuation and Risks: For valuation methodology and risks associated with covered companies or price targets for covered
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Representative or visit https://www.theocc.com/components/docs/riskstoc.pdf for a copy of the Option Clearing Corporation's

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Michelle Wei, CFA Asia Pacific Equity Research
(852) 2800-8562 20 November 2020
michelle.z.wei@jpmorgan.com

Characteristics and Risks of Standardized Options or

http://www.finra.org/sites/default/files/Security_Futures_Risk_Disclosure_Statement_2018.pdf for a copy of the Security Futures Risk
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Michelle Wei, CFA Asia Pacific Equity Research
(852) 2800-8562 20 November 2020
michelle.z.wei@jpmorgan.com

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 Michelle Wei, CFA Asia Pacific Equity Research
(852) 2800-8562 20 November 2020
michelle.z.wei@jpmorgan.com

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Completed 20 Nov 2020 11:18 PM HKT Disseminated 20 Nov 2020 11:26 PM HKT