Soochow: The profit of the media sector in the third quarter of 25Q3 increased significantly year-on-year, and the growth of the gaming sector was outstanding.

Soochow released a research report stating that the media sector saw a slight increase in revenue and high year-on-year profit growth. In Q3 2025, the total revenue of the media sector reached 127.9 billion yuan, a year-on-year increase of 7%. By industry, the gaming sector performed well in Q3 2025, mainly driven by popular products, while advertising and digital media revenue saw a slight increase, and film, publishing, and radio and television experienced varying degrees of decline. The industry achieved a net profit attributable to shareholders of 10.1 billion yuan in Q3 2025, a year-on-year increase of 40%, with the gaming sector's net profit increasing by 76%. Soochow's main points are as follows: Gaming: Performance exceeded expectations, optimistic about the start of a new game cycle In Q3 2025, the actual sales revenue of the domestic gaming market reached 88.03 billion yuan, a yoy decrease of 4.1% and a qoq increase of 7.0%. Century Huatong's popular mobile games "Endless Winter" and "Kingshot" performed well, boosting the sector's growth. As of the end of Q3 2025, A-share gaming companies had a total contract liability of 7.65 billion yuan, an increase of 0.78 billion yuan year-on-year and 0.29 billion yuan quarter-on-quarter, reflecting a steady growth trend for A-share gaming companies. A-share gaming companies achieved a net profit attributable to shareholders of 5.59 billion yuan in Q3 2025, a yoy increase of 76% and a qoq increase of 20%. The bank is optimistic about the easing of competition in the 2025 market buying volume, the continuation of the new game cycle driving performance growth, and expects AI catalysis to boost sector valuations. It recommends Giant Network Group, Kingnet Network, Perfect World, Gigabit, 37 Interactive Entertainment Network Technology Group, Wuxi Boton Technology, and is watching Zhejiang Century Huatong Group, Hubei Century Network Technology Inc., Shanghai Yaoji Technology, among others. Marketing: Macro economy recovering, top companies showing strong resilience The marketing industry achieved revenue of 45.33 billion yuan in Q3 2025, a 9% year-on-year increase. Revenue growth has increased for two consecutive quarters, with the macroeconomy showing signs of recovery and advertisers increasing their spending. There are structural highlights in specific areas: AI technology is improving ad efficiency, and high-frequency consumer categories such as the internet, food and beverage, and daily chemical ads show strong resilience, with top advertising companies consolidating market share based on data accumulation and AI technology. The marketing industry achieved a net profit attributable to shareholders of 1.63 billion yuan in Q3 2025, a 14% year-on-year increase, reversing the previous loss trend. Industry leader Focus Media Information Technology benefited from increased advertising for internet flash sales, boosting revenue growth and accelerating profit quality improvement, maintaining a "buy" rating. Film and Television: Quality improvement and efficiency enhancement, the film market is expected to continue its positive trend The film and television industry achieved revenue of 8.61 billion yuan in Q3 2025, a 2% year-on-year decline. The total gross profit of the film and television industry in Q3 2025 was 2.05 billion yuan, a 30% year-on-year increase, with a gross profit margin of 23.8%, a 5.9 percentage point increase year-on-year. The total net profit attributable to shareholders of the film and television industry in Q3 2025 was 0.9 billion yuan, turning around from a loss. As of October 30, 2025, the total national box office revenue for the year reached about 44.5 billion yuan, surpassing the total annual box office revenue for 2024. With the release of more high-quality domestic and foreign films, the China Film Group market is expected to continue its positive trend. Recommended companies include Shanghai Film, Wanda Film Holding, Beijing Enlight Media, with a focus on H&R Century Union Corporation, Beijing Jetsen Technology, Zhejiang Huace Film & TV, Hengdian Entertainment, among others. Digital Media: Revenue growth of 8%, slight decrease in net profit margin In Q3 2025, the revenue of the digital media industry increased by 8% to 6.5 billion yuan, while the net profit attributable to shareholders decreased by 28% to 0.32 billion yuan, and the net profit margin decreased by 2.4 percentage points to 4.9%. Mango Excellent Media achieved a single-season revenue of 3.1 billion yuan in Q3, a 6.6% increase year-on-year. The core business of Mango TV saw stable revenue growth, with advertising revenue showing positive growth. Net profit in Q3 was 0.25 billion yuan, a 33.5% year-on-year decrease. With the marginal improvement in the advertising market and the launch of high-quality content driving membership revenue growth, the company is expected to return to a growth trajectory in 2026, maintaining a "buy" rating for the company. Publishing and Newspapers: Revenue growth under pressure In Q3 2025, the revenue of the publishing and newspapers industry decreased by 5% year-on-year to 29.84 billion yuan, while the net profit attributable to shareholders increased by 13% to 2.47 billion yuan, mainly due to the impact of income tax policies. Considering financial stability and dividend yield, companies recommended include Southern Publishing and Media, Shandong Publishing & Media, with a focus on Central China Land Media, China South Publishing & Media Group, Jiangsu Phoenix Publishing & Media Corporation, Changjiang Publishing & Media, Anhui Xinhua Media, among others. In other publishing areas, COL Group Co., Ltd. is recommended. Risks: Economic recovery falling short of expectations; policy risks; products failing to meet expectations, etc.