Guosen: Bytedance may launch a large emotional support model, focusing on AI applications and IP layout opportunities.

Guosen released a research report stating that the media sector outperformed the market this week. They recommend focusing on AI applications and IP layout opportunities in the medium to long term, and paying attention to the box office performance during the Lunar New Year holiday in the short term. The report suggests that ByteDance may soon launch a large emotional model, and they continue to be optimistic about opportunities in AI applications, with a focus on the bean bag industry chain, AI emotional support/toys, and vertical application areas. With the Lunar New Year holiday approaching and the recovery of the supply, the media and entertainment sector is expected to see bottom-line recovery, with a potential improvement in economic advertising investment return stocks. Key points from Guosen: Media sector performance this week: Industry rose by 6.21%, outperforming the Shanghai and Shenzhen 300 and the ChiNext board. From January 11th to January 17th, the media industry rose by 6.21%, outperforming the Shanghai and Shenzhen 300 (2.14%) and the ChiNext board (4.66%). Companies with the highest increase include Inmyshow Digital Technology, Foshan Yowant Technology, Fuchun Technology, and KAISA JiaYun Technology Inc.; while companies with the highest decline include Huayang OURGAME, Anhui Xinhua Media, Chinese Universe Publishing And Media Group, and China South Publishing & Media Group. Comparing horizontally, the media sector ranked second in terms of rises and falls among all sectors this week. Focus areas: AI-generated videos, continuous breakthroughs in emotional support models, TikTok halts service in the US, Lunar New Year holiday movie presales begin. 1) Kinetix launches new AI video technology to precisely control character actions, simplifying the animation creation process; 2) Runway introduces the new AI image generator Frames for cinematic visual effects; 3) ByteDance may soon launch a large emotional model, known for its strong emotional recognition and expression capabilities; 4) TikTok ceased operations in the US on the night of the 18th; 5) Presales for Lunar New Year holiday movies began on the 19th, with box office sales exceeding 100 million yuan, with good performance from "The Legend of the Condor Heroes", "Ne Zha", and "Tang Detective 1900". Tracking important data this week: As the Lunar New Year approaches, January box office sales continue to recover. 1) From January 13th to January 19th, movie box office revenue reached 325 million yuan. The top three movies were "A Murderer 3" (102.73 million, 31.5% box office share), "Deceiving to be Loved" (64.16 million, 19.7% box office share), and "Little Me" (52.70 million, 16.1% box office share); 2) Popular TV shows include "Blooming Flowers All the Way", "The Voice of the Bay Area Season", "Farewell My Love Season 4", "Start Now Season 2", and "Run the Tea Horse Old Road"; 3) In terms of games, the top three mobile game revenues in December 2024 were DianDian Interactive's "Whiteout Survival", Tencent's "PUBG Mobile", and Tencent & Activision Blizzard's "Call of Duty Mobile". Investment recommendations: Focus on AI applications and IP layout opportunities in the medium to long term, and monitor box office performance during the Lunar New Year holiday in the short term. 1) Stay optimistic about AI application opportunities with the launch of new technologies such as AI video technology and AI image generator, and focus on the bean bag industry chain, AI emotional support/toys, and vertical application areas. Pay attention to marketing services and e-commerce operations with the launch of "Gifts" function on WeChat's mini-programs; with the hot subscription of BLOKS, the IP industry's prosperity continues to rise, so consider investing in Pop Mart (09992) and other related stocks in the industry chain. Also look into VR/AR, data elements, and cultural overseas exploration in the broader technology theme. 2) With the approaching Lunar New Year holiday and the recovery of supply, the film and television sector is expected to see bottom-line recovery. Recommended stocks include Wanda Film Holding (002739.SZ) and content-focused companies like Beijing Enlight Media (300251.SZ) and Zhejiang Huace Film & TV (300133.SZ); for improving economic advertising investment returns, consider stocks like Focus Media Information Technology (002027.SZ) and Bilibili; also, pay attention to the publishing sector from a high dividend, low valuation perspective. Risk warning: Regulatory policy risks, performance risks, goodwill and asset impairment risks, etc.