Shenwan Hongyuan Group: AI+IP dual-wheel drive, the explosive development of the animation industry is just in time.

Shenwan Hongyuan Group released a research report stating that, based on the data from Ju in August, the scale of manhua dramas has increased 12 times in the past six months; the number of related companies is rapidly expanding exponentially, with an expected breakthrough of several tens of thousands; the market size is expected to exceed 20 billion. In terms of technological breakthroughs, multi-modal large models have made significant progress in character consistency, smooth actions, and AI technology is now applied throughout the entire process of manhua drama production, greatly reducing production cycles and costs. In terms of content expansion, there is an acceleration in adapting more high-quality novels, comics, and live-action short dramas into manhua dramas, as well as actively expanding into scarce subject matter to achieve content diversification and high quality, in order to attract a wider range of users. From an investment perspective, it is recommended to focus on companies that are advantageous in the AI manhua drama industry chain. Shenwan Hongyuan Group's main points are as follows: The manhua drama market is experiencing a boom after 25 years Manhua dramas are micro short dramas in animated form, including emoji micro dramas, comic micro dramas, and AIGC micro dramas. According to the data from Ju in August, the scale of manhua dramas has increased 12 times in the past six months; the number of related companies is rapidly expanding exponentially, with an expected breakthrough of several tens of thousands; the market size is expected to exceed 20 billion. Shenwan Hongyuan Group believes that the boom in the manhua drama market is mainly due to three reasons: 1) Incremental demand. Manhua dramas combine the characteristics of short drama and traditional animation, satisfying users' strong demand for plot, highlights, and fragmented content, while offering a richer variety of subject matter. Currently, it mainly targets young men in first-tier cities, creating a niche separate from the competition for middle-aged women in live-action short dramas. 2) Technological breakthroughs. Multi-modal large models have made significant progress in character consistency, smooth actions, and AI technology is now applied throughout the entire process of manhua drama production, greatly reducing production cycles and costs. After the introduction of the HuoShan Engine AI into manhua drama production, production cycles have been reduced by 80-90%, and production costs have decreased by 70-90%. 3) Platform support. For online literature and comic platforms with a large amount of intellectual property (IP), manhua dramas can quickly and cost-effectively transform a large number of IP into videos for monetization. For video platforms, manhua dramas are a new form of content that can help maintain user stickiness, and can utilize the infrastructure channels, business models, and review management models of live-action short dramas. The manhua drama market is currently in the initial growth phase, which may later transition from technological dominance to content competition; IP derivative content and overseas expansion offer a larger market potential in the long term. The manhua drama industry chain is continuously improving, forming a value chain of IP scriptsadaptation productioninvestment flow operationplatforms 1) The current bottleneck in the manhua industry lies mainly on the supply side. The key to breaking this bottleneck lies in two main directions: 1) Content expansion: Accelerate the adaptation of more high-quality novels, comics, and live-action short drama resources into manhua dramas, as well as actively expand into scarce subject matter to achieve content diversification and high quality, in order to attract a wider range of users. 2) Enterprise expansion: Attract various roles such as rights holders of animation, short drama, professional animation production teams, technology providers, and distributors to participate, jointly building a more prosperous manhua drama industry ecosystem. 2) AI video models and tools are advancing rapidly, providing a solid foundation for the development of AI manhua dramas. Video model capabilities of AI such as Fasthand Ke Ling, Google Veo, RunwayGen, and Sora2 have advanced rapidly and their prices have decreased, which is conducive to reducing costs and increasing efficiency in the AI manhua drama industry chain. Regarding investment targets: Key focuses are Mango Excellent Media (300413.SZ), BILIBILI-W (09626), CHINA LIT (00772), and Shanghai Film (601595.SH), and it is recommended to focus on companies that are advantageous in the AI manhua drama industry chain. 1) IP content: COL Group Co., Ltd. (300364.SZ), IReader Technology (603533.SH), Beijing Jetsen Technology (300182.SZ); 2) Production: H&R Century Union Corporation (000892.SZ), Bona Film Group (001330.SZ), Zhejiang Huace Film & TV (300133.SZ); 3) Tools: MEITU (01357), Visual China Group (000681.SZ), Giant Network Group (002558.SZ); 4) Investment flow: Easy Click Worldwide Network Technology (301171.SZ); 5) Platforms: BILIBILI-W, KUAISHOU-W (01024), Mango Excellent Media. Risk Warning: Early-stage AI technology carries implementation risks; content companies may not be able to adapt to the changes of the AI era in a timely manner and may be at a competitive disadvantage; industry risks related to intellectual property rights may arise.