According to Zhizhong Finance APP, Yinhe Securities released a research report suggesting to pay attention to two tracks subsequently: the routes with stable performance foundation or significant supply-side recovery, and tracks with relatively high investment cost performance and elastic varieties improving due to incremental dimensions or external factors: 1) Hong Kong stock internet: Leading internet companies expect profit improvement, highlighting investment cost performance, suggested to focus on tencent (00700) and others with steady growth across all businesses and solid fundamentals; 2) Publishing industry: The publishing industry will accelerate its digital, personalized, customized, and intelligent development, new increments like AI + publishing, and research and learning business will bring new opportunities to the industry. Coupled with state-owned enterprise market cap management potentially being included in assessments, suggested to focus on: shandong publishing&media (601019.SH) and southern publishing and media (601900.SH) with solid fundamentals and certain business increment space.

3) Movie theater line & game industry: Quality content remains a scarce resource in the industry, suggested to focus on game and movie theater line companies empowered by AI: beijing ultrapower software (300002.SZ) with rich content reserves, etc. 4) For IP derivative products: suggested to focus on the leading retail market for IP trendy toys, pop mart (09992).

The main viewpoints of Galaxy Securities are as follows:

The box office stabilized in November, watch for subsequent supply turning points.

According to data from the Lighthouse Professional Edition, the national box office in November is 1.877 billion yuan (including service fees), a year-on-year increase of 11.4%, and a month-on-month decrease of 48.1%. In terms of demand, in November, the number of screening sessions reached 11.257 million, a year-on-year increase of 29.2% and a month-on-month decrease of 7.6%; the attendance rate is 3.5%, a year-on-year decrease of 10.3% and a month-on-month decrease of 42.6%; the number of viewers is 0.048 billion, a year-on-year increase of 14.3% and a month-on-month decrease of 46.7%. There were 59 films released in November, with the number of films increasing by 20.4% year-on-year and 68.6% month-on-month. Currently, 34 key films are expected to be released in December, pay attention to the upcoming scheduling and online situations of key films.

The gaming market continues to grow, marketing large cap undergoing adjustment.

In October 2024, the actual sales revenue of the domestic gaming market reached 29.083 billion yuan, down 4.10% month-on-month and up 14.40% year-on-year, showing a relatively stable growth trend, with the market size maintaining year-on-year growth for three consecutive months. In the first eleven months of 2024, the number of game licenses issued was 1,184, an increase of over 36% compared to 873 in the same period last year. As new game products are gradually released throughout the year, the growth trend of the gaming market is expected to be sustained. According to the "2024 Advertising Market Investment Data Overview" published by CTR: In September 2024, the advertising market decreased by 3.5% year-on-year. In terms of advertising spending changes by industry (major categories) from January to September 2024, the cosmetic/bathroom products, entertainment and leisure, postal and telecommunications, and alcoholic beverages sectors all experienced year-on-year increases of over 10%, making them the main force in the advertising market.

The "millet economy" is thriving, and high-quality IP is the key.

Throughout 2024, IP products continue to maintain high popularity, from the My Little Pony card game in the first half of the year to the millet stores and Jellycat pop-up stores since Q3, all maintaining high attention and strong market demand. IP development is central to the consumption of "millet" and trendy toys, and the influence of IP plays a crucial role in attracting fans and blending various business formats. As a key factor for products to accumulate users and break through, high-quality IP can better attract consumers and extend the product lifecycle. Therefore, under the current market environment of high attention and strong demand, high-quality IP products are expected to maintain high prosperity.

Risk warning:

Risks include the slower-than-expected development of AI technology; content regulatory risks; risks of competition within the industry; and risks associated with the insufficient application of related technologies.