China Securities Co., Ltd.: The policy emphasizes the strategies of building a strong nation in sports and tourism, and triple leverage to boost the profitability of commercial sports events.

China Securities Co., Ltd. released a research report stating that the country's Fifteenth Five-Year Plan emphasizes the strategies of building a strong nation in sports and tourism for the first time. With a natural correlation between culture, tourism, and sports, along with the advancement of sports-related policies and the diversified development of sports and recreational activities for residents, the foundation for the development of sports event economy is gradually becoming more complete. This is expected to become an important driver for stimulating domestic consumption and enriching the spiritual and cultural lives of residents. Drawing from the huge success of F1 events in commercialization, participants in the sports industry are expected to gradually move towards professional operation, coordinated industry chain, and realization of commercial value. Key points from China Securities Co., Ltd. include: - Strong support for the sports industry at the national level, with the Fifteenth Five-Year Plan continuing to promote the strategy of building a strong nation in sports. - The Fifteenth Five-Year Plan emphasizes the strategies of building a strong nation in sports and tourism, and in recent years, with the social and external impacts of popular sports events such as the Super League, Winter Olympics, and F1, the feasibility of stimulating economic vitality and promoting consumption circulation through event economy, ticket economy, and other new methods is continuously being verified. The sports industry is expected to become a key leader in the modern service sector. - The success of F1's commercialization comes from its globalization layout and marketing breakthroughs. After Liberty Media acquired the F1 event, it focused on expanding the potential group of viewers in China and the United States, expanding the global site layout of F1 events, and quickly expanding the incremental reach of young and female groups through cultural derivatives such as social media DTC and film and television IP authorization. The expansion of the event's influence promoted the growth of its commercial value. - Ample commercialization potential for sports events, with three leverage factors driving profitability. The growth of sessions and audience in F1 event operation has a continuous driving effect on average revenue per session; fan operation and multi-format linkage of events have led to the increase of premium for broadcasting rights and cultural derivatives; deep value shaping alliances have been formed between teams and industry chains, continuously enhancing the profitability of commercial sponsorship and ancillary services. These three factors contribute to considerable profit potential for F1 events. Investment recommendations: - The firm believes that with China's leading position in the automotive industry and new energy vehicles, it will also strengthen its voice in competitive events. Many mature foreign events have cultivated a large number of potential customers domestically, and the domestic sports event economy is expected to usher in a flourishing development opportunity. It is recommended to actively pay attention to listed companies related to the sports industry chain. Risk analysis: - Currently, the commercialization of sports in China is still in its early stages, and the profit potential of sports events still needs to be developed, leading to uncertainty about the future return rate of related assets. The profit distribution mechanism and pricing mechanism of sports events are still in the exploration stage, and there may be risks of commercial disputes. - Sporting events have a distinct fashion attribute, and popular projects change frequently with public preferences. There have been cases in the past where a sport that rose in popularity due to a major event quickly shifted from niche to mainstream and back to niche, which may bring operational risks due to changes in consumer preferences for individual events. - Competitive sports events generally have operational safety risks, and there may be risks of public opinion involving participants in the events.