Tianfeng Securities: US stock AI application companies' performance exceeds expectations, focus on A-share media application progress

According to the Zhitong Finance APP, Tianfeng Securities released a research report stating that the financial reports of overseas US stock AI application-related companies are being disclosed one after another. OpenAI plans to launch AI Agent products, and Zhiyu AI has introduced its autonomous intelligent agent AutoGLM. Overseas, OpenAI has released the strongest model o1, and the competition in AI applications remains intense. Attention should be paid to investment opportunities in large AI models and related high-quality computing resources.

Tianfeng Securities recommends focusing on companies related to the industrial chain layout: AI + toys Shifeng Cultural (002862.SZ), Tom Cat (300459.SZ), Rastar (300043.SZ), etc.; AI + marketing ECLICKTECH (301171.SZ), etc.; AI + e-commerce 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 points of Tianfeng Securities are as follows:

This week (November 18 to November 22, 2024), the Shenwan Media Index fell by 2.06%, ranking 18th among sectors, while the Shanghai Composite Index fell by 1.91% and the ChiNext Index fell by 3.03%. This week, the gaming sector fell by 2.69%, the film and television box office fell by 1.81%, advertising and marketing fell by 1.17%, publishing fell by 3.04%, and television broadcasting fell by 2.82%.

In terms of AI, the financial reports of overseas US stock AI application-related companies are being disclosed one after another. OpenAI plans to launch AI Agent products, and Zhiyu AI has introduced its autonomous intelligent agent AutoGLM. Overseas, OpenAI has released the strongest model o1, and the competition in AI applications remains intense. Attention should be paid to investment opportunities in large AI models and related high-quality computing resources. It is recommended to focus on companies related to the industrial chain layout: AI + toys [Shifeng Cultural, Tom Cat, Rastar, Aofei Entertainment]; AI + marketing [ECLICKTECH, BlueFocus]; AI + e-commerce [Worth Buying, Rebate Technology, Guangyun Technology, Focus Technology, Yaowang Technology]; AI + search [Kunlun Wanwei]; AI + social [ShengTian Network, Kunlun Wanwei]; AI + education [DouShen Education, Century Tianhong].

In terms of movies, as of November 23, the cumulative box office for November has reached 1.284 billion. So far, 51 films have been scheduled for the New Year’s Eve period (11/22-12/31), including "Crayon Shin-chan: Our Dinosaur Diary" (with 254,000 people wanting to watch on Maoyan, cumulative box office of 50.302 million), "I Like You" (with Maoyan Entertainment, China Ruyi, and Wanda Film as the top three production companies), "Lone Star Project" (produced by Maoyan Entertainment), "Moana 2", "Little Qian" (mainly invested and controlled by Light Media), "Good Luck Comes" (second production by Maoyan Entertainment), "Misjudgment 3" (produced by Wanda Film, Alibaba Pictures, and China Ruyi), "Misjudgment" (with Maoyan Entertainment and Huace Film as the top two production companies), etc. Policy benefits are gradually being implemented, and the orderly release of supply is expected to stimulate potential market demand. Attention should be paid to the improvement of media companies' Q4 operating conditions due to this round of economic stimulus. It is recommended to focus on: [Shanghai Film] "Love Myth" parallel film "Good Things" officially announced to be scheduled for November 22, with a cumulative box office of 117 million as of November 24, which may contribute to performance elasticity Under the recovery of film supply and consumer subsidies, the Q4 box office is expected to achieve a year-on-year increase. The concentration of cinemas in Wanda Film and the recovery of the overall market are driving collaborative changes in the content sector.

In terms of games, the issuance of licenses in November continues to improve the supply foundation. 1) Industry dynamics: The National Press and Publication Administration released the game licenses for November, including 112 domestic game licenses and 7 imported game licenses. Key games approved in November include: NetEase's "Pro Evolution Soccer Online," 37 Interactive Entertainment's "Guardians of Douluo," Kaiying's "Xian Yuan Lu" and "Hong Huang Ao Jian," Diandian Interactive's "Xiao Xiao Chuang Tian Xia," Glacier Network's "Chao Wan Adventure Group," Youzu Network's "Endless Treasure Chest," Hero Game's "Double Helix," and Lingxi Entertainment's "Hua Hua and Interlude," among others. From January to November 2024, the number of approved domestic and imported game licenses increased by 38% year-on-year, continuing to lay a good supply foundation for the improvement of the gaming industry. 2) Ranking tracking: According to Qimai data, in the iOS game bestseller rankings for this week (2024/11/17-2024/11/23, same below), "Honor of Kings" maintains a stable TOP1 ranking. Bilibili's "Three Kingdoms: Strategizing the World" ranked TOP2 in the first three days. Tencent's "Dungeon & Fighter: Origin" dropped to TOP8 on November 23. Diandian Interactive's "Endless Winter" stabilized in the TOP4-6 range this week. NetEase's "Fantasy Westward Journey" ranked in the TOP7-11 range this week. 3) Industry perspective: We believe that the positive evaluations from mainstream media for "Black Myth: Wukong" and the high number of licenses issued monthly indicate clear policy support for the gaming industry. Coupled with the further implementation of domestic stable growth policies, concerns about the resilience of gaming user consumption in some markets may be reversed. The foundation for valuation recovery in the gaming sector is relatively solid. Currently, A-share gaming companies have a rich reserve of games, such as Kaiying Network's "Douluo Dalu: Zhu Xie Chuan Shuo," "Tomb Raider: The Journey," "Nazarick: Rise," etc.; G-bits' "Aito" and "Staff Sword Legend"; and 37 Interactive's "Douluo Dalu: Hunting Soul World," "Zhui Xu," etc. We believe that A-share gaming manufacturers have a rich product reserve, and with the improvement of the issuance window since September, the competitive pressure from mature games may gradually stabilize, while the schedule for new game releases may accelerate, making it likely for the gaming sector's performance growth to enter a recovery phase starting in Q4. Recommended to pay attention to: [Kaiying Network, Shenzhou Taiyue (joint coverage with the computer group), Yaoji Technology (joint coverage with the light industry and textile group), G-bits, Perfect World, Giant Network].

In terms of mergers and acquisitions, on September 24, CSRC Chairman Wu Qing announced the introduction of "Six Guidelines for Mergers and Acquisitions," mainly including strong support for listed companies to transform and upgrade towards new productive forces and encouraging listed companies to strengthen industrial integration. Recommended to pay attention to: [Shanghai Film, Tangde Film and Television, Zhongguang Tianze, Guomai Culture, Dianguang Media, Qitian Technology].

In terms of IP derivatives, according to a report by Zhaoshang Consulting, the market size of China's collectible card game industry has increased from 700 million yuan in 2017 to 12.2 billion yuan in 2022, and it is expected to grow rapidly at a compound annual growth rate of 20.6% to 31 billion yuan by 2027. Pay attention to companies involved in IP card games and related layouts. It is recommended to track the landing situation of card game companies' Hong Kong stock listings in the future [Yaoji Technology (joint coverage with the Light Industry and Textile Group), Aofei Entertainment, Shanghai Film].

Risk Warning: Subsequent game launch revenue may not meet expectations; risks of repeated domestic epidemics; slowdown in domestic economic growth; insufficient effects of policy stimulus