Guosen Securities: Seize Bottom Opportunities in Gaming Leaders and Position for New AI Application Cycle

Stock News12-16

Guosen Securities released a research report highlighting opportunities in the media sector, focusing on policy shifts and AI applications. Key points include:

1) **Tracking High-Growth Segments**: - The gaming sector is expected to see sustained earnings and valuation upgrades driven by strong product cycles. Investors should monitor company-specific performance and expanding overseas markets. - Media platforms may benefit from advertising recovery as the economy bottoms out.

2) **Policy Shifts & AI Applications**: - Content policies are showing favorable turns, potentially boosting entertainment demand. - AI applications present opportunities, particularly in AI-generated animation/short dramas, advertising, gaming, and toys.

**Sector Outlook**: - Game approvals hit a 3-year high in November (178 domestic + 6 imported titles), with 1,625 licenses issued year-to-date (+26.8% YoY). - China's gaming revenue rose 7.8% YoY in October to RMB31.4 billion, led by major publishers' product cycles. Mobile gaming grew 2.4% to RMB22.6 billion. - Long-term upside depends on new releases, regulatory support, and AI adoption.

**Entertainment Market Highlights**: - November box office surged 89.3% YoY to RMB3.55 billion, driven by *Zootopia 2*. - Top dramas included *Strange Tales of Tang Dynasty: Chang'an* (1.5 billion views), *Water Dragon Chant*, and *Four Joys*. - Variety shows dominated by Tencent (*Let’s Go Now S3*, 24.96% market share) and Mango TV (3 of top 10 programs).

**AI Developments**: - O1 video model (by Ke Ling AI) publicly launched, generating 3-10s clips from text prompts. - PixVerse V5.5 became China’s first AI model supporting multi-angle shots with audio sync. - Google’s Gemini 3 Pro advanced multimodal reasoning, while Nano Banana Pro combined web search/image generation. - Alibaba’s Tongyi Qianwen surpassed 10M weekly downloads, powering new AI glasses with camera/translation features.

**Risks**: Underperformance vs. estimates, slower tech progress, and regulatory changes.

Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

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