China Securities Co., Ltd. expects that the release of the film will help the industry to recover, and highlights recommending MAOYAN ENT (01896) among others.

China Securities Co., Ltd. released a research report stating that the market expectations for the summer box office this year are low, but there is a lot of high-quality content available, which is expected to drive the recovery of movie-going demand. Currently, there are 52 films scheduled for release, with a large potential for additional releases. It is expected that during the Shanghai Film Festival in June, more films will be announced for release. The Dragon Boat Festival box office showed a slight rebound, with the industry attribute of quality supply driving box office recovery continuing to be confirmed. The company recommends investing in MAOYAN ENT (01896), ALI PICTURES (01060), and Shanghai Film (601595.SH). Key points from China Securities Co., Ltd. include: Market expectations for the summer box office this year are low, but there is a lot of high-quality content available, which is expected to drive the recovery of movie-going demand. In the 23rd summer box office, market expectations were similarly low, but surprise hits such as "Gone with the Bullets" and "The Vanished" helped the box office reach a record-breaking 20.6 billion yuan. In the 24th summer box office, there was a 43% year-on-year decrease to 11.6 billion yuan. Looking ahead to the 25th summer box office, with the low base from the same period last year, combined with an increase in content richness, the summer box office is expected to return to growth. 1) Scheduled releases. Currently, there are 52 films scheduled for release, with Chen Kaige's "Jiang Yuan Nong: The Suspense" kicking off the popular summer period at the end of June. In July and August, there are historical comedy films "Litchi in Chang'an", the IP-derived film "The Little Monster of Langlang Mountain", and the film produced by Chen Sicheng "Malice". The "anticipated to watch" index for the first two films is both over 200,000. 2) Large potential for additional releases. Currently, 14 films are scheduled for release in July and 7 in August, significantly lower than the usual over 30 films per month. It is predicted that during the upcoming Shanghai Film Festival in June, more films will be announced for release. Films that have not yet announced their release dates include Guan Hu's "Island of Eastern", Jiang Wen's "You Go You Go", "Dying to Survive 2/3", and "Wild Territories". The Dragon Boat Festival box office showed a slight rebound, with the industry attribute of quality supply driving box office recovery continuing to be confirmed. In the first quarter, the box office reached 24.4 billion yuan, a significant year-on-year increase of 49%, reaching 57% of the total box office for the whole year of 24,5 billion yuan, mostly due to the unexpected success of "Ne Zha 2". The box office for the Dragon Boat Festival increased by 20% year-on-year, becoming the second box office period of the year to achieve positive growth after the Spring Festival, with the top three box office films all being new releases. Investment recommendations: 1) Key recommendations MAOYAN ENT: It has the highest number of films scheduled for release, with the highly anticipated films "Jiang Yuan Nong" and "Litchi in Chang'an" both being distributed and invested in by the company; expected to benefit from the recovery of the box office. ALI PICTURES: The concert business and IP business are maintaining high-speed growth, and the film business is expected to benefit from the industry's recovery. The company's reserve films include "Dying to Survive 2/3" and "Island of Eastern". Shanghai Film: "The Little Monster of Langlang Mountain" is a key animated film in the summer box office, expected to contribute in various aspects such as IP sustainability and box office profit elasticity. 2) Focus on Companies such as Wanda Film Holding, CHINA RUYI, and Beijing Enlight Media, which are releasing films during the summer box office; also pay attention to ticketing and cinema companies such as Hengdian Entertainment and China Film Co., Ltd., which are expected to benefit from the overall improvement in the film market outlook.