Guosen: Continue to be optimistic about the new product cycle in the gaming sector and pay attention to the opportunities in IP licensing and AI application layout.

Guosen released a research report stating that the media sector (Shenwan Media Index) rose by 10.70% in August, outperforming the Shanghai and Shenzhen 300 Index by 0.37 percentage points. In terms of games, market revenue continued to grow rapidly from January to July, with a positive outlook on sector opportunities driven by policy attention, economic conditions, and AI applications. In the film and television industry, total box office in August was 5.99 billion RMB, a year-on-year increase of 48.6%; the variety show market was dominated by Ai Teng Mang. In addition, the download volume of AI applications in August increased by 7% compared to the previous month, with continuous breakthroughs in AI models. The release and implementation of relevant policies will further regulate the industry. Key points from Guosen: Outperforming the market in August 1) In August, the media sector (Shenwan Media Index) rose by 10.70%, outperforming the Shanghai and Shenzhen 300 Index by 0.37 percentage points, ranking 9th out of 31 industries in the Shenwan primary level; 2) Jishi Media, Guomai Culture & Media, Leo Group Co., Ltd., ST Huicheng, Genimous Technology led the gains, while ST Huayang, Guangzhou Jinyi Media Corporation, Shanghai Film, Beijing Jingxi Culture & Tourism posted losses; 3) in terms of valuation, the current TTM-PE ratio for the Shenwan Media Index is 47.9x, at the 87th percentile over the past 5 years. Continuous rapid growth in gaming revenue from January to July, with a positive outlook on sector opportunities driven by policy attention, economic conditions, and AI applications 1) In August, a total of 166 domestic games and 7 imported games were approved, with a total of 1119 game licenses issued from January to August, a year-on-year increase of 20.8%; the number of game licenses issued in August hit a new high and imported licenses continued to be issued; 2) In July, the revenue of the Chinese gaming market was 29.1 billion RMB, a year-on-year increase of 4.7%; the actual sales revenue of the mobile gaming market was 21.4 billion RMB, a year-on-year increase of 0.9%; 3) with valuations at a low level, under the drive of new products, regulatory policies, and AI applications, the sector has the potential for upward recovery, with a focus on the performance of new products. Conclusion of the summer box office season with year-on-year growth, with Ai Teng Meng leading the variety show market 1) In August, the total box office revenue was 5.99 billion RMB, a year-on-year increase of 48.6%, with a focus on the performance of new films such as "731"; 2) In the drama market, "Shengwanwu" topped the list with 1.5 billion views. This was followed by "Fanren Xiuxian Chuan" and "Jin Yue Ru Ge", which achieved 1.022 billion and 948 million views respectively; 3) In the variety show market, Tencent's "Xindong de Xin Hao Di Ba Ji" accounted for 12.35% of the overall network market share, Tencent's "Diqiu Chaonianxian" accounted for 6.74% of the overall network market share, ranking second, and Tencent's "Wang Pai Dui Wang Pai Di Jiu Ji" accounted for 6.20% of the overall network market share; in terms of online variety shows, the top ten shows were occupied by Mango/iQiyi/Tencent with 4/2/5 respectively. AI applications: AI application downloads increased by 7% in August, with continuous breakthroughs in AI models 1) "2025 Global Unicorn List" released, with SpaceX, ByteDance, and OpenAI ranking in the top three; 2) DeepSeek-V3.1 large model released, with Tencent and Tesla already connected; 3) Google launched the third-generation general world model Genie3, and released Nano Banana, which can convert 2D images into 3D; 4) "Regulations on the Management of AI Services Security" 2.0 released, and the "Regulations on the Identification of AI-generated Synthetic Content" implemented, the domestic AI industry will be more regulated. Risk warning: underperformance of performance, lower than expected technological progress, regulatory policy risks, etc.