According to the Futu Securities APP, Guosen Securities released research reports stating that in 2025, the short-term media industry sentiment is at its lowest level. In the medium term, with the improvement of base effects, content supply, and changes in external macroeconomic expectations, the sentiment is expected to gradually bottom out and recover. With oversold, undervalued, and underallocated backgrounds, there is a possibility of upward movement. In the medium to long term, the new technology trend represented by AIGC is gradually becoming clearer and is expected to continue to catalyze sector performance.

Guosen Securities' main points are as follows:

Market performance first suppressed and then rebounded, with low sentiment, valuation, and allocation.

From the beginning of 2024 to the present, the media (Shenwanchuanmei Index) sector has fallen by 5.54%, underperforming the CSI 300 Index by 15.65 percentage points. In terms of overall market ranking, as of the beginning of the year, the media sector ranks 22nd out of 31 industries in the Shenwan Level I classification. There has been significant underperformance from the beginning of the year until September 23, but since September 24, there has been a significant outperformance against the CSI 300 Index. In terms of individual stock performance, dividend styles were prominent from the beginning of the year to the end of September, and small and medium market capitalizations as well as AI themes have been more prominent since the end of September. In the first three quarters of 2024, A-share listed companies in the media sector saw year-on-year increases of 0.40% in operating revenue and a decrease of -32.58% in net profit attributable to the parent, with revenue stabilizing and net profit declining significantly, indicating an overall low sentiment.

Currently, the Shenwanchuanmei Index corresponds to a TTM-PE of 37x, which is at the 60th percentile for the past 5 years and the overall valuation remains at historically low levels. Horizontally, compared within the TMT sector, it is only higher than telecommunications and significantly lower than computers and electronics. Public offering institutions hold a position of 0.79% (0.81% in the same period of the previous year), only slightly higher than the position during the epidemic period in 2022 and is at historically low levels.

The turning point in sentiment is imminent, with mergers, reorganizations, and cultural expansion aiding the upward trend.

The game regulatory policy remains stable, with a total of 1163 game licenses issued from January to October, a year-on-year increase of 38%; as the base effect diminishes and games go global, the industry growth rate has hit bottom again since August 2024; under the base effect and the release of new product profits, the performance of listed companies is expected to rebound.

The film market achieved a box office revenue of 38.368 billion yuan from January to October, a year-on-year decrease of 22.05%; the main reasons are the domestic film supply cycle and base effect, with expectations of a recovery in supply-side beginning in Q4 to drive the upward turning point of the box office market. Focus on top content production and theater channels.

The advertising market saw slight growth in the first three quarters, with weak macro expectations of advertisers being the main reason for the decline in growth rate; under policy efforts, the advertising industry is expected to bottom out in terms of growth in ad spending; collectibles/blind boxes/trading cards/IP grains and other trend-play tracks remain hot, with high growth and continuous category innovation. Focus on the commercialization potential of IP content; M&A and restructuring are expected to accelerate sector performance and valuation recovery, with cultural expansion abroad expected to further enhance growth potential.

Multi-mode acceleration on the client side, AI applications transitioning from deployment to commercialization are promising.

Overseas giants like OpenAI and Meta are making efforts, while domestic AI giants such as ByteDance, Kuaishou, Alibaba, and Tencent are rapidly deploying AI technologies. AI multimodal video generation capabilities are evolving rapidly; from cloud to edge, AI capabilities on devices like phones and AR/VR glasses continue to improve, accelerating user access to AIGC. From the perspective of scenarios, a variety of AI applications like Chatbots, AI agents, AI search, social, education, and tool software are continuously landing, with large-scale domestic user applications emerging. The performance of companies like Applovin and Palantir in revenue and the secondary market also validate the commercialization potential of AI.

Regarding Symbol.

1) Reversal of economic prospects: a) In the gaming sector, grasp the product cycle and performance from the bottom up, recommended symbols such as Kingnet Network (002517.SZ), Giant Network (002558.SZ), Shanghai Yaoji Technology (002605.SZ), Bilibili (09626), XD Inc. (09626), etc.; b) The bottom recovery of the film sector is in sight, recommend channels (Wanda Film Holding (002739.SZ), Maoyan Entertainment (01896)) as well as content (Beijing Enlight Media (300251.SZ), Zhejiang Huace Film & TV (300133.SZ), etc.); Media focus on the increased advertising spending brought about by the economic uptick (Focus Media Information Technology (002027.SZ), Mango Excellent Media (300413.SZ), etc.); Trend-play IPs recommend Pop Mart (09992), China Literature (00772), Shanghai Yaoji Technology, etc.; also focus on the publishing sector from the perspective of high dividends and low valuations for investment opportunities.

2) New technologies represented by AIGC are expected to continue to drive sector performance, focusing on IPs, AI agents, and scenario applications; also pay attention to M&A and restructuring opportunities driven by policies.

Risk warning: performance below expectations, technological progress below expectations, regulatory policy risks, etc.