Damai Entertainment (SEHK:1060) Net Margin Expansion Reinforces Bullish Earnings Growth Narrative

Damai Entertainment Holdings (SEHK:1060) has reported H1 2026 results with revenue of about CN¥4.0 billion and basic EPS of CN¥0.017534, alongside net income of CN¥519.5 million that builds on a 149.5% net earnings jump over the past year and a move in net margin to 7.1% from 4%. The company has seen revenue climb from roughly CN¥3.1 billion in H1 2025 to CN¥4.0 billion in H1 2026, while trailing twelve month net income excluding extra items increased from CN¥363.6 million to CN¥546.5 million as EPS rose from CN¥0.012338 to CN¥0.018491. This has set the stage for analysts’ forecasts of approximately 37.9% annual earnings growth and approximately 11% annual revenue growth. Taken together with that margin profile, the latest print gives investors a clear view of a business pushing profitability higher even as they weigh the impact of a one off CN¥289.0 million loss on the recent earnings base.

See our full analysis for Damai Entertainment Holdings.

With the headline numbers on the table, the next step is to see how this earnings story lines up with the most widely held narratives around Damai Entertainment Holdings and where those views might need a rethink.

Curious how numbers become stories that shape markets? Explore Community Narratives

TTM revenue near CN¥7.7 billion backs 11% growth outlook

• Over the trailing twelve months, revenue reached about CN¥7,698.9 million, up from CN¥6,702.3 million a year earlier, which lines up with the forecast for roughly 11% annual revenue growth over the next few years.
• What strongly supports the bullish view is that this top line build is paired with faster profit growth, as net income excluding extra items increased from CN¥363.6 million to CN¥546.5 million over the same TTM window, suggesting that revenue growth is being converted into higher profits rather than just higher scale.
  • Analysts expecting around 37.9% annual earnings growth are leaning on this pattern where profit is rising faster than sales, not just on a hope for better demand.
  • For a beginner investor, this mix of double digit revenue expansion and even stronger profit growth is the kind of backdrop bulls often point to when they argue a business can keep compounding from here.

After this kind of revenue and profit momentum, many investors want to see whether the rest of the market is already pricing it in or still catching up, and how that balance between growth and expectations is shifting beneath the surface. 📊 Read the full Damai Entertainment Holdings Consensus Narrative.

Net margin at 7.1% challenges cautious profitability worries

• The latest trailing twelve month net margin of 7.1%, up from 4% a year ago, means more of each revenue unit is dropping to the bottom line even after factoring in reported items.
• Critics who take a bearish angle and focus on past lumpiness in profits have to grapple with the fact that net income excluding extra items climbed from CN¥219.1 million in the first half of 2025’s TTM window to CN¥546.5 million by the H1 2026 TTM period, indicating that underlying profitability has been steadily building rather than stalling.
  • Even with a recorded one off CN¥289.0 million loss in the trailing twelve months, the company still delivered this higher margin, which pushes back on the idea that profitability only looks better when there are no unusual charges.
  • For someone weighing a cautious thesis, this combination of higher margins and higher underlying earnings makes it harder to argue that the recent profit performance is purely cosmetic or overly dependent on adjustments.

Premium 43.4x P E but below DCF fair value

• The stock trades at roughly 43.4 times trailing earnings, well above the Hong Kong entertainment industry average of about 14 times and peer average of 37.1 times, yet the current share price of HK$0.88 still sits modestly below the DCF fair value estimate of about HK$0.97.
• Supporters taking a bullish stance argue that this premium multiple is justified by rapid profit growth, and the numbers give them some backing because net earnings rose 149.5% over the past year while analysts see scope for around 37.9% annual earnings growth and an analyst price target of HK$1.28, which together imply upside from today’s price even after acknowledging that the valuation is already higher than many peers.
  • The fact that the shares trade at a discount to both the HK$0.97 DCF fair value and the HK$1.28 analyst target, despite a rich P E, is exactly the type of setup bulls point to when they say the market may still be underestimating the durability of growth.
  • At the same time, the elevated multiple gives more cautious investors a clear yardstick, because any slowdown relative to the 11% revenue and 37.9% earnings growth forecasts would be immediately visible in that valuation spacer closing.

Bulls see a fast growing entertainment platform whose premium multiple is partly offset by discounts to fair value estimates and price targets, and they will be watching future semi annual updates to see if growth and margins keep tracking the current trajectory or start to diverge. Curious how numbers become stories that shape markets? Explore Community Narratives

Next Steps

Don't just look at this quarter; the real story is in the long-term trend. We've done an in-depth analysis on Damai Entertainment Holdings's growth and its valuation to see if today's price is a bargain. Add the company to your watchlist or portfolio now so you don't miss the next big move.

See What Else Is Out There

While Damai Entertainment Holdings is growing quickly, its rich 43.4 times earnings multiple and reliance on ambitious growth forecasts leave little room for disappointment.

If you want more upside potential without paying such a steep price for perfection, use our these 901 undervalued stocks based on cash flows to quickly focus on companies where robust fundamentals are not already fully reflected in the share price.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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