Considering that many key films are currently expected to be screened in the summer program, it is expected that after July, the box office market will pick up as key films are released one after another.
The Zhitong Finance App learned that China Galaxy Securities released a research report saying that according to Lighthouse Professional Edition data, the national box office in June was 1.89 billion yuan (including service fees), down 44.57% year on year and 35.91% month on month. During the 2024 Dragon Boat Festival holiday (June 8-10), the total box office of the Chinese film market reached 378 million yuan, with a total number of shows of 1.382 million. Considering that many key films are currently expected to be screened in the summer program, it is expected that after July, the box office market will pick up as key films are released one after another. It is recommended to focus on a track where the performance base is stable or there is obvious supply-side recovery, and sector valuations are attractive; then, seek steady progress, and seek flexible varieties with incremental dimensions or improvements in peripheral factors.
The main views of China Galaxy Securities are as follows:
Underperforming in the first month of the summer program, follow-up key films have been launched one after another
According to Lighthouse Professional Edition data, the national box office in June was 1.89 billion yuan (including service fees), down 44.57% year on year and 35.91% month on month. During the 2024 Dragon Boat Festival holiday (June 8-10), the total box office of the Chinese film market reached 378 million yuan, with a total number of shows of 1.382 million. On the demand side, the number of movie screenings in June was 11.8755 million, up 6.38% year on year, down 3.17% month on month, and the number of screenings reached a record high; attendance rate was 3.6%, down 43.75% year on year, down 26.53% month on month; number of movie viewers was 43 million, down 50.57% year on year, down 41.10% month on month. On the supply side, 41 movies were screened in June, and the number of movies decreased by 26.79% and 30.51%, respectively, compared with the same period last month. Considering that many key films are currently expected to be screened in the summer program, it is expected that after July, the box office market will pick up as key films are released one after another.
The overall supply in the game market is stable, and the performance of new summer games is outstanding
The number of editions distributed in the first six months of 2024 was 628, an increase of more than 20% over 522 in the same period last year. The trend of steady increase in edition numbers is expected to continue, the supply side of the industry continues to improve, and a new cycle of game products will begin one after another. Summer is approaching, and new games from major manufacturers are scheduled to be launched one after another. Key new tours that have already been launched, such as “dnFM” and “Three Kingdoms: Designing the World”, have performed quite well. It is expected that the new summer games will contribute new growth to the overall game market.
The marketing market rose year-on-year, and segmented channel fluctuations were adjusted
According to the “April 2024 Advertising Market Placement Data Overview” published by CTR, the advertising market rose 4.0% year on year in April 2024. Judging from changes in advertising spending in the industry (category), in April 2024, advertising costs in half of the industries such as Cosmetics/Bathroom Supplies, Fine Drinks, and Entertainment and Leisure all increased by more than 20% year-on-year, which is the main marketing force in the advertising market.
Apple launches Apple Intelligence, optimistic about AI application promotion
In the early morning of June 11, 2024, Beijing time, Apple officially announced the launch of Apple Intelligence at the WWDC24 conference to reinvent and upgrade all products using AI. Apple integrated Pen's ChatGPT into IRI, significantly improving its intelligent conversation capabilities. Through artificial intelligence and machine learning, Apple Intelligence can better provide users with powerful personal products, simplify people's lives, and push the experience of using Apple products to a new level.
Investment advice: It is recommended to focus on a track where the performance base is stable or there is obvious supply-side recovery, and sector valuations are attractive; then, seek steady progress, and seek flexible varieties with incremental dimensions or improvements in peripheral factors.
1) Hong Kong Stock Internet: Profitability improvement expectations for leading Internet companies have been strengthened, and the investment cost ratio is prominent. It is recommended to focus on Tencent Holdings (00700), which has steady growth in all businesses and stable fundamentals; Bilibili (09626), an Internet video platform company with opportunities to reverse losses in subsequent performance.
2) Publishing industry: The publishing industry will accelerate digitalization, personalized customization, and intelligent development. New volumes such as AI+ publishing and research businesses will bring new opportunities to the industry. It is recommended to focus on Shandong Publishing (601019.SH) and Southern Media (601900.SH), which have stable fundamentals and some room for business growth.
3) Film and television cinema & game industry: Quality content has always been a scarce resource in the industry. It is recommended to focus on AI-enabled game and movie theater companies: Shenzhou Taiyue (300002.SZ), Kaiying Network (002517.SZ), Optical Media (300251.SZ), Wanda Film (002739.SZ), etc. with rich content reserves.
Risk warning: Risk of AI technology development falling short of expectations; risk of content regulation; risk of industry competition; risk of application of related technology falling short of expectations.