Huayuan Securities: The structural growth of the 25Q1 media industry showed more focus on differentiation and opportunities

The Zhitong Finance App learned that Huayuan Securities released a research report saying that the overall revenue of the media industry in 2024 showed strong resilience, but the profit side was affected by tax policies and industry changes, etc., and structural growth was prominent. As investment in AI technology and new product businesses deepened, sales expenses and management expenses increased in some industries, and the overall cost ratio level increased, resulting in a significant year-on-year decline in the industry's net interest rate level. The 25Q1 structural growth was even more evident. Traditional media companies achieved a total net profit of 3.393 billion yuan in 25Q1, an increase of 33.95% over the previous year. 25Q1 local state-owned publishing groups improved their apparent profits a lot due to changes in tax policies, and their revenue side performance was relatively steady.

The main views of Huayuan Securities are as follows:

Differentiation and opportunity: In structural growth, product capabilities and operational capabilities are prominent. The overall revenue of the media industry in 2024 showed strong resilience, but the profit side was affected by tax policies and industry changes, etc., and structural growth was prominent. As investment in AI technology and new product businesses deepened, sales expenses and management expenses increased in some industries, and the overall cost ratio level increased, resulting in a significant year-on-year decline in the industry's net interest rate level. The 25Q1 structural growth was even more evident.

Looking at the molecular industry, the first is the cyclical impact of products. The strong performance of “The Demon Boy in the Sea” shows the rigid characteristics of operating costs in the movie line sector. Strong box office introduction has made most theaters generate good profits. At the same time, game companies' resilience is reflected, and old products continue to contribute to profits. Second, traditional media, especially the publishing sector, are being compensated by better growth on the reporting side due to changes in tax policies.

Game: Long-term operation shows resilience, and high-quality products go out to sea to win. Looking at the revenue side of listed companies, in 2024, the revenue side of game industry companies distributed game versions at a pace, and new products were launched one after another. The overall revenue scale recovered significantly, and 25Q1 also showed the resilience of the long-term operation of old products. Currently, there are actually few new products launched in 25Q1, but at present, some companies' key products have entered the critical testing period and scheduling cycle one after another. The supply of subsequent products is still quite abundant, and the scale of the industry is actually expected to accelerate.

Marketing: Audience is expected to strengthen integration, and AI and overseas travel will become the main lines. FanZhong Media is promoting the integration of the elevator media market. On the one hand, the density and structure of mass media resource coverage can be further optimized, and the coverage of offline brand marketing networks can be expanded, thereby enhancing the comprehensive competitiveness of advertisers in customer development and service; on the other hand, the two sides can achieve business collaboration in markets, development channels, distribution management, etc., to enhance comprehensive service capabilities and effectively reduce service costs.

Film and television IP and cinema: The strong box office performance of “The Demon Boy in the Sea” led to a high increase in the performance of cinema companies. “The Demon Boy in the Sea” was launched during the Spring Festival in '25. As of March 31, 2025, the cumulative box office reached 15.073 billion yuan, setting a record box office record for Chinese movies. Strong single film performance also drove the 25Q1 movie box office market to a record high, thus driving cinema companies to record high profits in a single quarter.

Traditional media: favorable implementation of tax policies, steady dividends. Traditional media companies achieved a total net profit of 3.393 billion yuan in 25Q1, an increase of 33.95% over the previous year. 25Q1 local state-owned publishing groups improved their apparent profits a lot due to changes in tax policies, and their revenue side performance was relatively steady. Judging from the financial reports of several key companies, the main focus is on the stability of dividends and business expansion based on geographical characteristics.

Internet and others: AI business progress is worth watching. For example, Focus Technology grasped the opportunities for AI technology transformation and took the lead in launching Michael, an AI assistant to Chinese suppliers in the foreign trade B2B scenario in 2023. The number of paid members on the 25Q1 China Manufacturing Network platform was 28,118, and the total number of members who purchased AI Michael exceeded 11,000.

Investment analysis opinion: The disclosure of the quarterly reports of A-share listed companies has been completed one after another, the summer movie schedule has begun, some companies' key games have also been scheduled one after another, and AI+ companion products have also made new progress. Trendy Play Cards have broken through more IPs and forms. It is recommended to focus on the opening of the new content product cycle. At the same time, leading Hong Kong equity/US stock internet companies have welcomed financial disclosure points to focus on industry trends.

Risk warning: New movie launches fall short of expectations, new technology development falls short of expectations, industry competition intensifies, and new product development and launch and performance fall short of expectations.