Bullish on the stability of subsequent performance foundations or on clearly restored supply sides, high cost-performance investment tracks, and flexible varieties with incremental dimensions or improved external factors.
According to information from the智通财经APP, China Galaxy Securities released a research report stating that current market sentiment is relatively positive, with a higher overall risk appetite. Looking ahead to 2025, the performance of key sectors in the media industry is expected to stabilize with high certainty. There is a bullish outlook on subsequent performance foundations remaining stable or showing significant supply-side recovery, higher cost-effectiveness investment tracks, and elastic varieties with incremental dimensions or improvements from external factors. It is recommended to focus on the central state-owned enterprise sector with robust core business, while seeking progress steadily, with attention on the optional consumer sector benefiting from policy-induced recovery and the AI theme driven by the acceleration of AI applications.
The main viewpoints of China Galaxy Securities are as follows:
2024 Industry Review: The media industry index has shown upward volatility this year.
Since 2024, the performance of the A-share media sector has continued to be catalyzed by AI-related concepts: as of December 13, 2024, the media sector's year-to-date fluctuation is 19.01%. In comparison, the Csi 300 Index has increased by 14.63% during the same period. At the same time, Hong Kong Internet stocks have risen due to multiple factors such as improved funding and positive policy changes, with the Hang Seng Media Index rising by 12.49% since the beginning of the year.
2025 Industry Outlook: Transformation and innovation are the two major themes for the industry.
In recent years, the reform of central and state-owned enterprises has been continuously advanced. With the increasing autonomy in operation and independent decision-making, the assessment system is continuously improving, which has enhanced the competitiveness of central and state-owned enterprises in the industry. At the same time, new productive forces are ushering in transformation, and the AI era is bringing new opportunities, with AI application scenarios continuously being implemented.
At the consumer end, user penetration rates are continuously increasing, with the main AI application active data showing consistent month-on-month growth; at the business end, the commercialization models in areas such as AI marketing have gradually been validated. Under the AI wave, as the disruption caused by AI technology in the industry increases, AI applications are expected to bring more diverse application scenarios to various fields and promote the development of the industry ecosystem.
Investment suggestion: Focus on three main lines: cyclical consumer sectors, AI applications, and State-owned Enterprise Reform.
1) Consumer sectors: From the perspectives of Hong Kong stock Internet, marketing, film, and gaming, it's recommended to pay attention to TENCENT (00700) with stable growth in its business and solid fundamentals, and Bilibili-W (09626), which has turned a profit for the first time and is expected to continue improving. Also, focus on Focus Media Information Technology (002027.SZ), which is a leader in building media and cinema screen advertising, Bona Film Group (001330.SZ), Wanda Film Holding (002739.SZ), and MAOYAN ENT (01896), benefiting from the recovery of the Movie Theater Line Large Cap, and Beijing Ultrapower Software (300002.SZ), which excels in SLG category and has impressive international gaming business.
2) Central SOEs: It's suggested to focus on Shandong Publishing&Media (601019.SH), which has a stable main business and continuously expanding external business, as well as Citic Press Corporation (300788.SZ), which is enhancing market share with the support of AIGC digital intelligence platforms.
3) AI applications: It's recommended to pay attention to companies involved in content production empowered by AI: Kunlun Tech (300418.SZ), Mango Excellent Media (300413.SZ), and others.
Risk warning: Risks of intensified market competition, risks related to work review and approval, uncertainties in resource integration, risks of demand for emerging business formats falling short of expectations, and risks of AI application development not meeting expectations.
