Under the encouragement and support of national policies, the game and IP reserve products have sufficient supply, and the game sector may usher in a new round of product cycle.
It is learned from the Intelligent Finance and Economics app that Ping An Securities released a research report, stating that based on the robust recovery logic of optional consumption, the media industry's sub-sectors may face an upward opportunity. Specifically, on the one hand, it is suggested to pay attention to investment opportunities in the game and IP sectors. With the encouragement and support of national policies, the game and IP reserve products have sufficient supply, and the game sector may usher in a new round of product cycle. On the other hand, the supply side of the movie theater line sector is gradually recovering, and the number of movies is showing a good growth trend. After repair and adjustment, the performance of head companies is gradually recovering. In addition, the valuation cost-effectiveness of the movie theater line industry is relatively high. Ping An Securities is optimistic about the performance recovery of leading companies in the industry and recommends focusing on leading movie theater lines and production companies.
The cultural and media industry refers to the collection of production activities that provide cultural products and related cultural products to the general public. According to Wind data, based on the SW media industry classification, the media industry can be divided into six secondary industries. Specifically, it can be divided into game and IP, advertising marketing, movie theater line, digital/internet media, publishing, and broadcasting-TV.
Game and IP: China's game industry market size is steadily increasing. Among them, the actual sales volume of the mobile game market is stable and the growth rate has turned positive. Although the actual sales volume of the web game market continues to decline, the decline is narrowing. The growth rate of China's self-developed game market is picking up, but the actual income from self-developed games in the overseas market continues to decline, and there is increasing pressure to go global with games. Ping An Securities believes that due to the policy support for the encouragement of cultural entertainment consumption, the game sector may usher in a new round of product cycle. At the same time, with the support of technologies like AIGC, game companies are expected to achieve cost reduction and efficiency improvement. Ping An Securities is optimistic about the operational performance of leading game companies and recommends paying attention to 37 Interactive Entertainment Network Technology Group, Perfect World, G-Bits Network Technology, etc.
Movie Theater Line: The distribution model promotes movie-related consumption. 1) The movie theater line market is gradually entering the recovery stage. Ping An Securities believes that the number of movie supplies has shown a good recovery trend, which is conducive to the recovery of the movie theater line industry. 2) New movies are constantly being released, and box office performance is good. 3) Looking at the performance of individual stocks, the supply side of the industry is gradually recovering, and the number of movies is showing a good growth trend. After continuous repair and adjustment, the performance of head companies is gradually recovering and improving. Ping An Securities believes that the continued support from the policy side and the encouragement of the country for cultural entertainment consumption will help boost the prosperity of the movie theater line industry. In addition, the movie theater line industry has a relatively high valuation cost-effectiveness. Ping An Securities is optimistic about the stable recovery of the performance of movie theater lines and leading film production companies, and recommends focusing on Wanda Film Holding and Beijing Enlight Media.
Advertising Promotion: The scale of the advertising market has achieved year-on-year growth. 1) Looking at different advertising channels, in the first half of 2024, the advertising expenditure of train/high-speed rail stations, elevator LCDs, and elevators has increased year-on-year, while others have experienced varying degrees of decline. 2) Looking at individual stocks, there is differentiation in the growth of revenue and profit among key companies in the industry. Due to the fact that advertising marketing investment slightly lags behind the overall economic recovery cycle, it still takes time for advertising marketing investment to recover. Elevator and station advertising display a faster recovery performance, while other channel advertising displays a slower recovery speed, resulting in performance differentiation among companies in the industry. Ping An Securities believes that the industry's leading companies with good customer structure, strong channel resource attributes, and potential for improved profitability will lead the recovery. Ping An Securities is optimistic about the broad "moat" of leading advertising marketing companies, especially the white horse stocks that are expected to improve or enhance profitability, and recommends focusing on Focus Media Information Technology and BlueFocus Intelligent Communications Group.
Digital Media and Publishing: 1) The scale of China's online population and the penetration rate of the Internet are stable, and the user base for long videos is stable, indicating a relatively stable overall industry landscape. It is recommended to focus on the leading companies in the digital media industry, especially the leading companies with large scale and new business expansion, and to pay attention to Mango Excellent Media. 2) The sales volume of the book retail market has declined year-on-year, while the sales volume of publishing in the education and children's categories has shown positive growth, suggesting a focus on publishing companies related to the education sector.
Investment advice: The media industry includes a diverse range of subsectors and attracts high market attention. Due to the continuous support and incentive of favorable policies, the supply side of the cultural and entertainment industry will show a diverse growth trend, and the media industry will continue to recover and improve. Based on the steady recovery logic of discretionary consumer spending, the media industry's subsectors may usher in an upward opportunity. It is recommended to focus on top-tier companies in the industry with strong performance certainty, high dividend yield, and stable dividend payout. Specifically, on the one hand, it is recommended to pay attention to investment opportunities in the gaming and IP sectors. With the encouragement and support of national policies, the supply of gaming and IP reserve products is sufficient, and the gaming sector may usher in a new product cycle. On the other hand, the supply side of the movie theater line sector is gradually recovering, and the number of films is showing a good growth trend. After repair and adjustment, the performance of top companies is gradually improving. In addition, the movie theater line industry has a high valuation cost-effectiveness, and Ping An Securities is bullish on the performance recovery of leading cinema chains and production-leading companies in the industry. Therefore, based on the overall marginal improvement trend of the media industry, for the first coverage of the media industry, Ping An Securities gives the industry an "outperform the market" rating.
Risk Warning: 1) Regulatory risks in the industry, 2) Lower-than-expected user demand, 3) Increasing industry competition, 4) Increase in book royalties and paper costs, 5) AI technology application progress falls short of expectations.
