Source: CITIC Securities Research
The country supports innovation in artificial intelligence technology, the implementation of relevant policies has been accelerated, and the high degree of certainty of industry trends has been further confirmed. We believe that the catalysis of AI technology and application layers is not over yet, and we continue to recommend major investment lines such as AI+ leading platforms, AI+ publishing, and AI+ games.
The Internet Information Office drafts industry standards, and AI industry trends continue to be verified
On April 11, 2023, the State Internet Information Office drafted the “Administrative Measures on Generative Artificial Intelligence Services (Draft for Comments)” (hereinafter referred to as the “Administrative Measures”) to regulate product generation content, algorithm design, training data, intellectual property rights, etc. The country supports innovation in artificial intelligence technology, the implementation of relevant policies has been accelerated, and the high degree of certainty of industry trends has been further confirmed. We believe that the catalysis of AI technology and application layers is not over yet, and we continue to recommend investment lines such as AI+ leading platforms, AI+ publishing, etc., and AI+ games.
AI+ head platform:
The “Administrative Measures” encourage priority adoption of safe and trustworthy software, tools and resources, and require content generated by artificial intelligence to comply with laws, regulations and social morality, which shows the importance that the country attaches to the safety and autonomy and control of AI technology in scientific and technological change. The leading platform has strong R&D capabilities and deep data accumulation, and can take the lead in implementing AI technology applications in China. Recently, Baidu, Ali, Shangtang, etc. have released the latest developments in AI technology one after another, further confirming the competitive advantage of leading platforms. Internet valuations are still low, and there is strong certainty that this year's performance will recover. Wait for consumption to recover. Continued attention is recommended$TENCENT (00700.HK)$,$NTES-S (09999.HK)$,$KUAISHOU-W (01024.HK)$,$XD INC (02400.HK)$,$CHINA LIT (00772.HK)$,$BILIBILI-W (09626.HK)$Wait for the head platform.
AI+ Publishing:
The “Administrative Measures” require AI product providers to be responsible for training data and not infringe on intellectual property rights. The value of data assets under the AI system is highlighted. Publishing companies and IP companies have accumulated high-quality data content resources and will rely on the scarcity of data assets, value multiplication effects, and transaction circulation systems to achieve value revaluation. They can also train small vertical model applications in vertical fields such as education and science. Suggest to pay attention$Jiangsu Phoenix Publishing&Media Corporation (601928.SH)$,$China South Publishing & Media Group (601098.SH)$,$Central China Land Media (000719.SZ)$,$XINHUA WINSHARE (00811.HK)$Other publishing companies.
AI+ Gaming:
The country promotes the healthy development and standardized application of generative artificial intelligence technology. The game industry is expected to take the lead, and the industry's valuation level is still within a reasonable range. Suggest to pay attention$G-bits Network Technology (603444.SH)$,$37 Interactive Entertainment Network Technology Group (002555.SZ)$,$Perfect World (002624.SZ)$Wait for game companies.
Investment advice:
AI has brought revolutionary innovation to the media industry, industrial policies have been implemented at an accelerated pace, and the development trend of the AI industry has been further confirmed. We believe we should focus on the following main investment lines: 1) AI+ leading platforms, recommending leading entertainment platforms with strong R&D capabilities and data resource advantages; 2) AI+ publishing, recommending the publishing sector with data asset advantages and marginal changes in state-owned enterprise reform; 3) AI+ gaming, recommending gaming sectors that are easier for organizations to configure and are more flexible.
Risk Factors:
The development of core AI technology has fallen short of expectations; AI production content has risks such as copyright, public opinion, and accuracy; the spread of AI technology has led to increased competition in the media industry and the risk of diversion of users of new products and services; content quality and safety risks; macroeconomic and consumption recovery falls short of expectations and affects consumption capacity; and related regulatory policies are becoming stricter.
Editor/Somer