Ping An Securities: National favorable policies and incentives will continue to drive the repair and growth of the media industry.

Ping An Securities issued a research report stating that due to the boost of favorable national policies, the cultural and entertainment industry supply side will show a diverse growth trend, and the media industry will continue to recover and move upward. Based on the steady recovery logic of optional consumption, the media industry's segmented areas may usher in upward opportunities. It is recommended to focus on industry leaders with strong earnings certainty, high dividend yields, and stable dividend payout ratios. Ping An Securities recommends focusing on: POP MART (09992), Focus Media Information Technology (002027.SZ), Mango Excellent Media (300413.SZ), Beijing Enlight Media (300251.SZ). Ping An Securities' main points are as follows: Due to the boost of favorable national policies, the cultural and entertainment industry supply side will show a diverse growth trend, and the media industry will continue to recover and move upward. Based on the steady recovery logic of optional consumption, the segmented areas of the media industry may usher in upward opportunities. It is recommended to focus on industry leaders with strong earnings certainty, high dividend yields, and stable dividend payout ratios. Specifically: 1) Games and IP: Due to the support of government policies encouraging cultural and entertainment consumption, the game sector may usher in a new round of product cycles. At the same time, with the support of technologies such as AIGC, game companies are expected to achieve cost reduction and efficiency improvement. We are optimistic about the operating performance of industry-leading game companies, and recommend focusing on 37 Interactive Entertainment Network Technology Group, Perfect World, G-bits Network Technology, etc. 2) Film and TV theaters: Industry supply side is gradually recovering, with a good growth trend in the number of films, and the performance of top companies is gradually recovering after continuous repair and adjustment. We believe that the continuous support from policies and the encouragement of national cultural and entertainment consumption will help boost the industry. In addition, the valuation of the film and TV theater industry is relatively high, and we are optimistic about the steady recovery of leading theater companies and production leaders, and recommend focusing on Wanda Film Holding and Beijing Enlight Media. 3) Advertising and marketing: Due to the fact that advertising and marketing investment lags slightly behind the overall economic recovery cycle, it will still take time for advertising and marketing investment to recover. Elevator and station advertising has recovered quickly, while other channel advertising has a slower recovery pace, leading to performance differentiation among companies in the industry. We believe that leading companies with excellent client structure, strong channel resources, and room for improvement in profit margins will recover first. We are optimistic about the wide "moat" of leading advertising and marketing companies, especially blue-chip stocks with the potential for improved profitability, and recommend focusing on Focus Media Information Technology and BlueFocus Intelligent Communications Group. 4) Digital media and publishing: On the one hand, looking at the digital media sector, long-form videos have entered a stable period with room for improvement in market share for leading companies. It is recommended to focus on leading companies in the digital media industry, especially those with large scale and new business expansion, and recommend focusing on Mango Excellent Media. On the other hand, looking at the publishing sector, in terms of retail sales of books, educational and children's categories are experiencing positive growth, and it is recommended to focus on publishing companies related to the education sector. Weekly Performance: Review of the week: Last week, the media sector rose by 6.16%, while the Shanghai and Shenzhen 300 Index rose by 2.14%. Among the first-level industries in the Shenwan industry, all sectors rose, with no sectors falling, and the media industry ranked 2nd in terms of the rate of increase and decrease among the 31 first-level industries. Key Companies to Focus on: Key companies to focus on in the industry: POP MART: China's leading company in the IP trend and toy industry. In the medium to long term, the company's brand strength continues to increase, with further room for market share improvement. In the short term, the company continues to iterate and upgrade its IPs, which is conducive to the sustained growth of the company's performance. In addition, the company's overseas business is growing rapidly, with excellent performance levels in individual stores. At the same time, the independent development of new game formats enhances the synergy between online promotion channels and physical product sales. Focus Media Information Technology: A company with a solid leading position in elevator media with scale advantages. The company occupies more point resources in the industry, and has a high penetration rate in major cities, with its main businesses including building media and cinema media. In terms of revenue, elevator media contributes the vast majority of revenue, with cinema pre-roll ads providing supplementary revenue. In terms of costs, the company's costs are relatively fixed, and the gross margin is affected by the scale of revenue. In terms of expenses, the company's management and R&D expenses are relatively fixed, while sales expenses are more flexible and the sales expense ratio is relatively stable. Mango Excellent Media: Business centered around Internet video, continuously expanding full industry chain layout. The company is backed by state-owned qualifications, with its main businesses including Mango TV Internet video business, new media interactive entertainment content fund plus content e-commerce business, etc. In the long run, the long-form video race track is stable, and the company is in the top tier, with high-quality production content. The company's long-form video business profitability will steadily improve. In the short term, the company is developing short dramas and new media content to explore new growth curves, which will bring a certain amount of additional volume to its performance. Beijing Enlight Media: The leading company in the domestic film and television industry, a leader in animated films. The company's main business sectors include film and TV business, animation business, content production, and industry investment business. Among them, the film business is the core of the company, with a prominent advantage in animated films. The overall gross profit margin of the company is highly correlated with the fluctuations in revenue of various business sectors.