The Zhitong Finance App learned that Guohai Securities released a research report saying that the 2024 New Year's Day and Spring Festival programs both reached record highs, further verifying that the supply of high-quality content can create demand for movie viewing. Based on this, the film industry's “Recommended” rating is maintained. It is recommended to lay out the content production/promotion company behind the Spring Festival film and the film investment company that has benefited from the recovery of the market, focusing on Light Media (300251.SZ) (the main investment and distribution of “Article 20”, reserve “Nacha's Demon Boy Naohai” and “Xiao Qian”), Hengdian Film and Television (603103.SH) (2024 Spring Festival Film Screening No. 2.), benefiting from the Spring Festival program's sinking market cinemas, to produce “Bears Raid: Reversing Time and Space”, “Flying Life 2”, “Article 20”, etc.), focusing on Wanda Films (39,0027) SZ) (No. 1 in the 2024 Spring Festival Film Festival, produced “Bear” “Incursion: Reversal of Time and Space”), etc.

Incidents:

According to Cat's Eye, 2024 Spring Festival movies grossed 8,016 billion yuan, breaking the record.

▍ The main views of Guohai Securities are as follows:

Market performance: The overall box office of the Spring Festival program reached a record high. The number of visitors increased compared to the same period in 2023, and the sinking market showed impressive performance.

(1) According to Cat's Eye, the 2024 Spring Festival program grossed 8.016 billion yuan, and the number of moviegoers was 163 million, all of which reached record highs, with an average ticket price of 49.1 yuan. The 2024 Spring Festival has a total of 8 days (8 days of holidays from the first to the eighth day of the new year, including Valentine's Day. In previous years, it was mostly a 7-day holiday from New Year's Eve to the sixth day of the new year, which is equivalent to 2 days more than previous years). 2021 was the highest box office for the Spring Festival in previous years, with a box office of 7.84 billion yuan, 160 million people, and an average ticket price of 48.8 yuan. The box office for a single day from the first to the eighth day of the 2024 New Year was 13.45/10.56/10.09/9.51/11.91/9.11/8.73/714 million yuan. The first five days were Valentine's Day schedule, and the box office declined in reverse.

(2) On a year-on-year basis (the first to the sixth day of the new year), ticket prices declined, and the number of visitors increased year-on-year. According to Cat Eye, the total box office for 2024 was 6.46 billion yuan, slightly lower than the 6.75 billion yuan in the same period in 2023, the third record; the number of movie viewers was 130 million, higher than 128 million in the same period in 2023, and the demand for movie viewing was better; the average ticket price fell 5.4% from the same period in 2023. The estimated reason is: ① The average length of the 2024 headline movies is 125 minutes, while the 2023 Spring Festival headline movies are longer (“Man Jianghong” and “Wandering Earth 2” are all over 150 minutes), so the ticket price is higher in 2023 ②; wandering Sci-fi blockbusters such as “Earth 2” are suitable for special effects theaters, but in 2024 there were no big effects movies. According to Top, the 2024 Spring Festival special effects department box office accounted for 18.8%, down 1.4 pcts from 2023.

(3) The share of people in the sinking market continues to rise, and ticket prices are resilient, making it the main market for the Spring Festival box office. According to Yien, the total box office share of the 2024 Spring Festival in the third to fifth tier cities was 59.8%, up 3.1 pct from the 2023 Spring Festival program; the number of visitors was 60.1%, up 1.9 pct from the 2023 Spring Festival program. The wave of returning home during the Spring Festival led to strong demand for watching movies in the sinking market; the average ticket prices in Tier 1 to 5 cities fell 15.0%/6.6%/5.0%/3.3%/3.6%, respectively, from the 2023 Spring Festival program.

Content side: The content is young, but the video quality is excellent.

(1) According to Cat's Eye, as of February 19, the 2024 Spring Festival “Hot and Hot Hot” (produced by China Image/Alibaba Pictures) had the highest box office, grossing 2,956 billion yuan (Cat's Eye forecast 3.61 billion yuan); “Flying Space2” (produced by Ao Ticket/Cat's Eye/Bona/China Movie/Hengdian) ranked second, with a box office of 2.63 billion yuan (Cat Eye predicts 3.33 billion yuan); “Bears appear to reverse time and space” (produced by Hengdian/Zhongying/Cat's Eye/Wanda) ranked third (1.56 billion yuan). Forecast 1.97 billion yuan); “Article 20” (Light/China Film/Hengdian production) is fourth, The box office grossed 1,578 billion yuan (forecast 2.39 billion yuan). “Article 20” had a good reputation. The share of box office from the 3rd to the 7th day of the new year/single-day box office showed a reversal trend. Since the first five days of the new year, it has surpassed “The Bear Came” to third place in the box office in Liège, and is expected to break out of the long-term box office trend.

(2) As of February 19, out of the 8 movies released during the 2024 Spring Festival, the last 4 movies grossed less than 100 million and had been withdrawn and rescheduled; although the 4 headlining films, such as “Hot and Hot,” did not include industrial blockbusters and had a certain homogenization of themes (except for “The Bear Came Out”, which was a comedy), Douban scored an average score of 7.5 points, the highest since 2019. 2023 was around 7.2 points; the box office was mainly driven by the improvement in quality on the content side.

Channel side: Hengdian's layout sank into the market, and the Spring Festival program clearly benefited.

(1) According to Cat Eye, the 2024 Spring Festival Wanda/Hengdian/Happy Blue Sea ranked 1/2/4, with a cumulative box office of 10.0/3.0/136 million yuan, up 13.3%/26.8%/11.5% from the same period in 2023, and 15.4%/12.2%/7.1% over the same period in 2021; Jin Yi/Zhongying/Bona/Shanghai Film compared with 3.3%/6.2%/-17.0%/2.6% compared with the same period in 2023.

(2) 70% of Hengdian cinemas are located in Tier 3 to 5 cities. The market share of the Spring Festival in 2024 was 0.3 pct higher than in 2023. The market share of other leading film companies declined compared to 2023, mainly due to the fall in the number of people during the Spring Festival and a large number of projection theaters in Tier 1 and 2 cities.

Risk warning:

Market competition intensifies risks, risk of insufficient supply of high-quality films, risk of changes in movie viewing habits, risk of competition in other forms of entertainment, risk of declining valuation center, risk of film development process and box office performance falling short of expectations, risk of falling short of expectations in film cost control, risk of inventory and asset impairment, and risk of insufficient capital, focusing on risks such as insufficient company performance.