New Year's box office blockbusters are "assisting" the movie market to recover, are film and television stocks preheating ahead of time?

Due to the shortage of high-quality supply and the impact of the high base number from the previous year, the year 2024 is considered a challenging year for China Film Co., Ltd. in the market. As of the time of writing, although the box office for China Film Co., Ltd. has surpassed 40 billion yuan in 2024, this data is not only lower than the same period last year, but also with only just over ten days left until 2025, it also means that this year's annual box office is almost impossible to exceed last year's 54.953 billion yuan. In terms of monthly performance, China Film Co., Ltd.'s market has seen a decrease in box office year-on-year for 7 consecutive months from April to October this year. However, with the continuous efforts of the New Year's film lineup, the film industry finally seems to show signs of marginal improvement this winter. Data shows that the total national box office in November was 11.77 billion yuan, an 11.4% increase year-on-year, returning to growth after more than half a year. As we enter December, the warmth continues to spread. Take the critically acclaimed film "Good Things" for example, the cumulative box office of the film has exceeded 600 million yuan, and market forecasts predict that its total box office is expected to reach 721 million yuan, significantly exceeding previous market expectations. Recent secondary market trends also reflect positive feedback to the gradually warming film market. It is noted that MAOYAN ENT (01896) has rebounded by 50% since September 11, while related concept stocks like ALI PICTURES and IMAX China (01970) have also shown some performance. Will the New Year's film lineup help the industry pass the turning point? As one of the traditional four major box office periods in the film market, the New Year's film lineup is suitable for the release of major films of all genres and has always been valued by the market. And this year's New Year's film lineup may be more significant than in previous years. In the film and television industry, there is a saying of "big and small years." In 2023, benefiting from a wave of "little spring" due to the concentrated release of high-quality films that were held back during the epidemic, the Chinese film and television industry experienced a period of recovery. However, as films have production cycles, with the inventory of films reaching its lowest after a round of releases, and the production of high-quality new films has not been completed, the film industry, especially since the second quarter of this year, has experience a rapid "cooling down." Take MAOYAN ENT as an example, influenced by industry trends, the company's total revenue in the first half of this year decreased by 1.2%, while net profit plummeted by 29.7%, indicating significant profit pressure. However, after a half-year of adjustments, at the turn of the old and new year, the film industry seems to be showing many new positive signals. First, from a policy perspective, according to official reports, the State Film Administration launched the "New Year's Celebration and Spring Festival Celebrations - National Film Consumption Season" on December 9th. This consumption season covers important film release periods such as New Year's, New Year's Day, and Spring Festival, with relevant institutions investing a total of no less than 600 million yuan to benefit audiences nationwide. Beyond stimulating policies, supply factors that have suppressed industry performance during the year may also see positive changes. With the success of "Good Things," this year's New Year's film lineup (including sneak previews and pre-sales) has already exceeded 14 billion yuan. More importantly, there are still over 20 films that will be released in the remaining time of this month. Looking further ahead, films such as Xu Ke's directed martial arts film "The Legend of the Condor Heroes: Heroes of Heroes," Ulan Shaw's epic fantasy sequel "The Second Part of the Gods: The War of Xiqi," and the sequel to the phenomenal animated film "Ne Zha: The Demon Child Comes to the World," titled "Ne Zha: The Demon Child Makes Trouble at Sea," are all scheduled to be released during the 2025 Spring Festival. This will undoubtedly set a positive tone for the film market in the coming year. In addition, films such as "Operation Jiaolong," "Detective Chinatown 1900," and "Welcome to the Dragon Restaurant" are also expected to further enrich the film supply in 2025. With expectations of stabilization, will film and television stocks reach a turning point? As 2025 approaches, the marginal improvement in supply and the stimulating effect of policies may enhance the certainty of the recovery of China Film Co., Ltd. market next year given the low base number. However, even under the expectation of industry stabilization and recovery, whether related companies will reach a turning point in performance may still require a specific analysis of the particular issues. Let's first take a look at MAOYAN ENT, whose online entertainment ticketing business is the cornerstone of the company and can be seen as a key factor determining the trend of the company's overall performance. In this, the ticketing revenue from movies is the largest component of Maoyan's online entertainment ticketing revenue. Breaking it down, Maoyan's movie ticketing revenue primarily depends on the number of viewers, online penetration rate, market share of the company, and service fee per ticket. Among these, the online penetration rate and company market share are in a stable state, with relatively small changes; therefore, the main influencing factor on the scale of this business for Maoyan lies in the service fee per ticket and the number of viewers. It is understood that an increase in service fees for movie tickets requires negotiation and coordination with upstream producers and nearly 12,000 cinemas, and considering that consumers are more price-sensitive in the current market environment, the logic of price increases is apparently less effective than in previous years. Based on the above analysis, it can be determined that the number of viewers in the future will be the most important variable affecting Maoyan ENT's movie ticketing business. Furthermore, the quality and reputation of the movies will directly affect the number of viewers, thereby having a significant impact on the company's related businesses. It is for this reason that the company's movie ticketing business is expected to fluctuate with the overall movie market. With the return of enthusiasm in the film market since the New Year's film lineup, coupled with the upcoming release of major films, it can be expected that the performance of companies such as MAOYAN ENT will see a recovery after a period of low base numbers. However, given that the logic of raising movie ticket prices has been episodically refuted this year, unless there are continuous films that surpass the market's expectations, the upside space for the performance of related companies may lack significant room for imagination. Furthermore, it is worth mentioning that, beyond the traditional movie ticketing business, companies like ALI PICTURES and MAOYAN ENT are also cultivating new growth drivers to enhance growth certainty. Taking ALI PICTURES as an example, the company has been exploring new business lines in the film and television industry, including online and offline integration, and has been investing in production and distribution. Besides, the company has also increased its marketing and promotion efforts to attract more audiences to its platform, which will provide additional revenue sources for the company in the future.Currently, ALI PICTURES has already assembled a B and C-end product matrix consisting of Taopiaopiao, Phoenix Cloud Intelligence, and Damai, successfully building an offline entertainment flagship platform. At the same time, ALI PICTURES is also increasing its investment in innovative technologies such as AI, DIGIHUMAN, and virtual shooting, as well as forward-looking development of IP derivatives and innovative businesses. Under the long-term strategic guidance of "content + technology", relying on a diversified business layout, perhaps it can be expected that ALI PICTURES can cultivate more new growth points outside of its traditional core business.In conclusion, the recovery of the film market is undoubtedly a big boon for companies in the industry chain. However, in the face of an increasingly complex market environment, related companies need to enhance their growth certainty and resilience. In addition to hoping for a stable rebound in the overall market, they also need to tap into more internal growth potential.