According to the Zhongtong Finance APP, Open Source Securities released a research report stating that Zhipu's "Clear Shadow" is now available, allowing for internationalization and continued layout of multimodal AI applications. In addition, IP, new games, hardware, and overseas expansion are the highlights of ChinaJoy and will continue to layout the IP track for games, card games, and other areas.

Zhipu's "Clear Shadow" is now available, allowing for internationalization and continued layout of multimodal AI applications.

On July 23, Mango TV's large-scale model officially passed the AI filing review of the Cyberspace Administration of China as a model for the media and entertainment industry, which can support rich application scenarios such as program creative planning, content creation and generation, role-based dialogue, and generation-based content recommendations. On July 24, Kuaishou's international version 1.0 was officially launched globally, and Meitu announced that its adjusted net income attributable to shareholders for the first half of 2024 based on non-international financial reporting standards was expected to grow by no less than 80% year-on-year. On July 26, Zhipu Huazhang, a domestic AI start-up, announced that its AI-generated video function "Clear Shadow" was fully launched. Users can get a 1440x960 high-precision video by entering a few to several hundred words and waiting for 30 seconds. Zhipu's AI video generation multimodal capabilities have made another leap. We believe that domestic large models such as Zhipu and Keling continue to improve their video generation and other multimodal capabilities and promote internationalization, coupled with the continued substantial reduction in access costs of domestic and foreign large models and breakthroughs in AI on terminal devices such as Apple and Huawei, which will accelerate the commercialization process of AI applications in fields such as agents, film and television, music, education, and marketing. It is suggested to continue to grasp AI investment opportunities. (1) Large models and language materials: Tencent Holdings (00700), Kuaishou (01024), Mango Excellent Media (300413.SZ), and the underlying targets include Kunlun Tech (300418.SZ), Alibaba-SW (09988), SenseTime-W (00020), iFlytek Co., Ltd. (002230.SZ), Zhejiang Daily Digital Culture Group (600633.SH), and Visual China Group (000681.SZ); (2) AI Agents: Tencent Holdings is highly recommended, and the underlying targets include Kunlun Tech; (3) AI+Film and Television: Kuaishou-W and Shanghai Film (601595.SH) are highly recommended, and the underlying targets include Beijing Jetsen Technology (300182.SZ), Meitu (01357), Zhejiang Huace Film & TV (300133.SZ), Col Group Co., Ltd. (300364.SZ), and Beijing Enlight Media (300251.SZ); (4) AI+Music: Highly recommended for Hubei Century Network Technology Inc. (300494.SZ) and Tencent Music Entertainment Group (01698), and the underlying target is Tencent; (5) AI+Education and Publishing: Underlying targets include Astro-century Education & Technology (300654.SZ), Southern Publishing and Media (601900.SH), and Beijing Shengtong Printing (002599.SZ); (6) AI+Marketing: Underlying targets include Inly Media Co., Ltd. (603598.SH), Guangdong Insight Brand Marketing Group (300781.SZ), and Bluefocus Intelligent Communications Group (300058.SZ).

IP, new games, hardware, and overseas expansion are the highlights of ChinaJoy and will continue to layout the IP track for games, card games, and other areas.

ChinaJoy (referred to as "CJ") will be held in Shanghai on July 26, 2024. More than 600 companies from 31 countries and regions around the world, including France, the United States, and Canada, will participate in it. The overall exhibition area exceeds 0.13 million square meters, covering IP industry chains, smart entertainment hardware and other digital entertainment fields. New games such as "Yanyun Shiliu Sheng", "Seven-Day World", and "Marvel Ultimate Reversal" and old games such as "Egg Party", "Identity V", "Genshin Impact" and "FGO" will bring their debuts and trial activities. The CJ Arena's on-site interactive gameplay brings upgraded alliance modes. Technology hardware, card games, and going global have become the highlights of the exhibition. The "Snapdragon Theme Pavilion" led by Qualcomm brings hardware exhibitions such as AI phones, AIPC, XR, and intelligent cabins. Collectible card exhibitors such as Card Society and Card Taobao participate, and BToB exhibitors include Mobvista, Yidian Tianxia, Unity and other major overseas advertising service providers. The report released by the Game Working Committee during the same period of the exhibition shows that the overseas sales revenue of self-developed games in the first half of 2024 increased by 4.24% year-on-year, faster than the domestic market growth rate. Newborntown Technology announced that the company's social business revenue is expected to increase by about 65.3%-67.7% year-on-year in 2024 H1, and the scale in key markets such as the Middle East and North Africa has been further improved. In addition, newly launched IP games continue to perform well. According to Qimai data, Netease's "NieR Recarnation" has continued to rank first in the iPhone game free list and ranked 3-4 in the bestseller list since its launch on July 25. Xindong Inc's "Xindong Town" maintained the second place in the iPhone game free list and rose to 28th in the bestseller list. The download volume on the Taptap platform exceeded 10 million. We recommend continuing to lay out IP industry chain games, card games and other sectors. The game sector is recommended: XD Inc (02400), Netease-S (09999), Tencent (tencent), Bilibili-W (09626), iDreamSky (01119), Kingnet Network (002517.SZ), and Beijing Ultralupower Software (300002.SZ); The anime/card game sector is recommended: Alpha Group (002292.SZ) and Shanghai Yaoji Technology (002605.SZ).

Risk Warning: AI commercialization progress is lower than expected, game revenue and derivative income are lower than expected, etc.