Tianfeng Securities: The performance of US AI application companies exceeded expectations, and focus on the progress of A-share media application side

The Zhitong Finance App learned that Tianfeng Securities released a research report stating that individual stock financial reports related to AI applications in overseas US stocks have been disclosed one after another, that OpenAI plans to release AI Agent products, that Zhipu AI will launch AutogLM, and that overseas OpenAI will release the strongest model O1. Competition for AI applications continues to maintain a fierce trend, focusing on investment opportunities such as AI models and related high-quality calculations.

Tianfeng Securities suggests focusing on industrial chain-related layout companies: AI+ Toy Shifeng Culture (002862.SZ), Tom Cat (300459.SZ), Xinghui Entertainment (300043.SZ), etc.; AI+ Marketing Easy World (301171.SZ), etc.; AI+ e-commerce is worth buying (300785.SZ), etc.; AI+ Search Kunlun Wanwei (300418.SZ); AI+ Social Shengtian Network (300494.SZ), etc.; AI+ Education Doushen Education (300010.SZ), etc.

The main views of Tianfeng Securities are as follows:

This week (November 18 to November 22, 2024), the Shenwan Media Index fell 2.06%, ranking 18th in the sector. The Shanghai Composite Index fell 1.91% and the GEM Index fell 3.03% during the same period. This week, the gaming sector fell 2.69%, the cinema line fell 1.81%, advertising fell 1.17%, publishing fell 3.04%, and TV broadcasting fell 2.82%.

On the AI side, financial reports on individual stocks related to AI applications in overseas US stocks have been revealed one after another. OpenAI plans to release AI Agent products, Smart Spectrum AI will launch AutogLM, and overseas OpenAI will release the strongest model O1. Competition for AI applications continues to be intense, focusing on investment opportunities such as AI models and related high-quality computing materials. It is recommended to focus on industrial chain-related layout companies: AI+ Toys [Shifeng Culture, Tom Cat, Xinghui Entertainment, Aofei Entertainment]; AI+ Marketing [Easy Point World, Blue Cursor]; AI+ E-commerce [Worth Buying, Rebate Technology, Guangyun Technology, Focus Technology, Remote Vision Technology]; AI+ Search [Kunlun World Wide]; AI+ Social [Shengtian Network, Kunlun World Wide]; AI+ Education [Doushen Education, Century Tianhong].

In terms of movies, as of November 23, the cumulative box office in November had reached 1,284 billion dollars. Up to now, a total of 51 movies have been scheduled for the Lunar New Year (11/22-12/31), including “Crayon Shin-chan: Our Dinosaur Diary” (254,000 people want to watch, with a cumulative box office of 503.2 million), “Deceiving” to Like You (Cat Eye Entertainment, China Confucius, and Wanda Films are the top three production companies), “Lone Star Project” (produced by Maogan Entertainment), “Ocean's 2”, “Xiao Qian” (owned and controlled by Optical Media), “Good Luck” (second product produced by Cat Eye Entertainment) “Accidental Killing 3” (produced by Wanda Films, Alibaba Pictures, and China's Ruyi), “Misjudgment ” (Maogan Entertainment and Huace Film are considered the top two production companies), etc. The successive implementation of favorable policies combined with the orderly release of supply is expected to stimulate potential market demand. Focus on the improvement of media companies' Q4 business conditions in this round of economic stimulus. Recommended attention: [Shanghai Film] The “Myth of Love” parallel film “Good Things” was officially announced to be scheduled for November 22. As of November 24, it had accumulated a total box office of 117 million yuan, or contributed to flexible performance. [Cat's Eye Entertainment] With the help of a recovery in movie supply and consumer subsidies, the Q4 box office is expected to increase year-on-year. [Wanda Film] Changes and collaboration in the content sector under increased cinema concentration and market recovery.

On the game side, the November edition was released, and the supply base continues to improve. 1) Industry News: The State Administration of Press and Publication released November game versions, including 112 domestic game versions and 7 imported game editions. Key games that passed the November review include NetEase's “Live Soccer Online”, 37 Entertainment's “Guarding the Dragon”, Kaiying's “Fairy Tales” and “Flood Sword”, “Disappearing the World”, Hikawa Network's “Trendy Adventure Group”, Youzu Network's “Endless Chest”, the hero game “Double Helix”, and “Flower and Interscreen Drama” by Lingxi Interactive. In the first 11 months of 2024, the number of approved domestic and imported game versions increased 38% year-on-year, continuing to lay a good supply foundation for the booming game industry. 2) Ranking tracking: According to the Qimai Data iOS game bestseller ranking, “Wang Zhe Rongyao” stabilized the TOP1 ranking this week (2024/11/17-2024/11/23, same below). Bilibili's “Three Kingdoms: Determining the World” ranked in the TOP2 for the first three days. Tencent's “Dungeons and Warriors: Origins” fell to TOP8 on November 23. “Endless Winter”, a subsidiary of Diandian Interactive, has stabilized in the TOP4-6 ranking range this week. NetEase's “Dream Journey to the West” ranked in the TOP7-11 range this week. 3) Industry view: We believe that judging from the fact that “Black Myths: Goku” has received a large number of positive reviews from mainstream media and that the number of monthly editions remains high, the signal of policy support for the game industry is clear. Combined with the steady domestic growth policy, some markets' concerns about the resilience of game users' consumption may be reversed. The game sector's valuation repair foundation is relatively solid. Currently, A-share game companies are rich in game reserves, such as Kaiying Network's “Doulo: The Legend of Demon Slayer”, “Tomb Raider Notes: Departure”, “Nazarek: Rise”, etc.; Gibbit's “Asking Sword for Eternity” and “The Legend of the Sword and the Sword”; 3

Seven's “Dora Continent: World of Soul Hunters”, “The Son-in-law”, etc. We think A-share game manufacturers are rich in product reserves, starting in September

As the release window improves, competitive pressure on mature games may gradually stabilize. At the same time, the release schedule for new games may accelerate, and the game sector's performance growth is expected to enter an upward channel starting in the fourth quarter. Recommended attention: [Kaiying Network, Shenzhou Taiyue (joint coverage with Computer Group), Yao Ji Technology (joint coverage with Light Industry Textile Service Group), Gigabit, Perfect World, Giant Network].

In terms of mergers and acquisitions, on September 24, Chairman Wu Qing of the Securities Regulatory Commission announced that the “Six Mergers and Acquisitions Rules” will be introduced, which mainly include strongly supporting the transformation and upgrading of listed companies in the direction of new productivity and encouraging listed companies to strengthen industrial integration. Recommended attention: [Shanghai Film], [Tang De Film and Television], [Zhongguang Tianze], [Guomai Culture], [TV Media], and [Qitian Technology].

In terms of IP derivatives, according to the Insight Consulting Report, the market size of China's trading card industry has increased from 700 million yuan in 2017 to 12.2 billion yuan in 2022, and is expected to rapidly grow at a compound annual growth rate of 20.6% to 31 billion yuan in 2027. Focus on companies with IP cards and other related layouts. Follow-up recommendations follow up on the implementation of the Card Game Company's Hong Kong stock listing. [Yao Ji Technology (joint coverage with the Light Industry Textile and Clothing Group), Aofei Entertainment, Shanghai Film].

Risk warning: Subsequent game launches fall short of expectations; repeated risk of domestic epidemics; domestic economic growth is slowing down; policy stimulus effects are insufficient.