According to the Futubull APP, Ping An Securities released a research report stating that the media industry's segmented sectors may see an upward opportunity based on the steady recovery logic of optional consumption. Specifically, on the one hand, it is recommended to focus on investment opportunities in the gaming and IP sectors. With the encouragement and support of national policies, the game and IP reserve products are abundant, and the gaming sector may usher in a new round of product cycles. On the other hand, the supply side of the film and television theater sector is gradually recovering, and the number of films is showing a good growth trend. After repair and adjustment, the performance of leading companies is gradually recovering. In addition, the valuation cost-effectiveness of the film and television theater industry is relatively high, and Ping An Securities is optimistic about the steady recovery of leading theater companies and production-leading enterprises in the industry.

The cultural and media industry refers to the collective production activities that provide cultural products and culture-related products to the public. According to Wind data, based on the SW media industry classification, the media industry can be divided into six secondary industries. Specifically, it can be divided into gaming and IP, advertising marketing, movie theater line, digital/internet media, publishing, and broadcasting - tv.

Games and IP: China's game industry market scale is steadily rising. Among them, the actual sales scale of the mobile game market is stable and the growth rate is turning positive. Although the actual sales scale of the web-based game market continues to decline, the decline has narrowed. China's self-developed game market growth rate has rebounded, but the actual revenue of self-developed games in overseas markets has continued to decline year-on-year, and the pressure of going global in games has increased. Ping An Securities believes that due to the policy support for entertainment consumption, the gaming sector may usher in a new round of product cycles. At the same time, with the support of technologies such as AIGC, gaming companies are expected to reduce costs and increase efficiency. Ping An Securities is optimistic about the operating performance of leading gaming companies and recommends focusing on 37 Interactive Entertainment Network Technology Group, Perfect World, G-bits Network Technology, etc.

Movie theater line: The distribution model of the industry promotes related movie consumption. 1) The movie theater market has entered a stage of gradual recovery. Ping An Securities believes that the number of films supplied shows a good trend of recovery, which is conducive to the recovery of the movie theater industry. 2) New movies continue to be released and have performed well at the box office. 3) From the performance of individual stocks, the supply side of the industry is gradually recovering, and the number of films shows a good growth trend. After continuous repair and adjustment, the performance of leading companies is gradually recovering. Ping An Securities believes that the continued support from the policy side and the encouragement of the country's entertainment consumption will help the prosperity of the film and theater industry. In addition, the film and theater industry has a relatively high valuation cost-effectiveness, and Ping An Securities is optimistic about the steady recovery of leading theaters and film production companies. It recommends focusing on Wanda Film Holding, Beijing Enlight Media, etc.

Advertising Marketing: The scale of the advertising market's investment has achieved year-on-year growth. 1) Looking at different advertising channels, in the first half of 2024, advertising spending at train/high-speed rail stations, elevator LCD screens, and elevators showed year-on-year growth in spending, while others experienced varying degrees of decline. 2) From the perspective of individual stocks, the revenue and profit growth of key companies in the industry have shown differentiation. Due to the advertising marketing investment slightly lagging behind the overall economic recovery cycle, it will still take time for advertising marketing investment to recover. The restoration of elevator and station advertising placement has performed quickly, while other channel placements have shown slow recovery, resulting in performance differentiation among companies in the industry. Ping An Securities believes that industry-leading companies with excellent customer structure, strong channel resources, and potential for improved profit margins will be the first to recover. Ping An Securities is optimistic about the broad "moat" of leading advertising marketing companies, especially Hikoko stock, which is expected to improve profitability, and recommends focusing on Focus Media Information Technology and Bluefocus Intelligent Communications Group.

Digital Media and Publishing: 1) The scale of China's Internet users and Internet penetration rate are stable, and the scale of long video users is stable, so the overall situation in the industry is relatively stable. It is recommended to focus on leading companies in the digital media industry, especially large-scale companies with new business expansion, and recommend focusing on Mango Excellent Media. 2) Bookstore retail sales volume has decreased year-on-year, while sales of educational and children's books have achieved positive growth. It is recommended to pay attention to publishing companies related to the education sector.

Investment recommendation: The media industry includes multiple diversified sub-tracks and has a high level of market attention. Due to the continuous positive impact of favorable policies, the supply side of the cultural and entertainment industry will show a diversified growth trend, and the media industry will continue to recover and improve. Based on the stable recovery logic of optional consumer spending, the media industry's sub-sectors may see upward opportunities. It is recommended to focus on industry-leading companies with strong performance certainty, high dividend yield, and stable dividend payout ratios. Specifically, on one hand, it is recommended to pay attention to investment opportunities in the gaming and IP sectors. With the encouragement and support of national policies, there is ample supply of gaming and IP reserve products, and the gaming sector may enter a new product cycle. On the other hand, the supply side of the movie theater line sector is gradually recovering, with the number of films showing a good growth trend, and the performance of leading companies gradually recovering after repair and adjustment. In addition, the movie theater line industry has a relatively high valuation cost-effectiveness, and Ping An Securities is bullish on the performance recovery of leading movie theater lines and production companies. Therefore, based on the overall marginal improvement trend of the media industry, for the first coverage of the media industry, Ping An Securities gives the industry a rating of "outperform the market".

Risk advisory: 1) Industry policy regulation risks, 2) User demand falls below expectations, 3) Increasing industry competition, 4) Increase in book royalties and rise in paper costs, 5) AI technology application progresses slower than expected.