Guosen: Continues to be optimistic about the performance of the gaming and IP industry, focusing on the opportunities at the bottom of the AI application.

Guosen released a research report stating that by 2026, the iteration speed of AI applications in major factories will accelerate, leading by OpenClaw, AI applications will shift from standalone tools to workflow agents; the gaming and IP wave in March-April will usher in a peak season under the drive of product and holiday effects, and the gaming and IP industries as well as the trends in the AI application industry are expected to remain strong. Key points from Guosen: Underperformance in March 1) In March 26, the media sector (CSI Media Index) fell by 15.02%, underperforming the Shanghai and Shenzhen 300 Index by 9.49 percentage points, ranking 28th out of 31 industries in the CSI First Level classification; 2) Looking at individual stock performance, Lians Technology, Guizhou BC&TV Information Network, Guangdong Guangzhou Daily Media, and China Sports Industry Group saw the highest gains, while Citic Press Corporation, Bona Film Group, Guangdong Brandmax Marketing, and QITIAN Technology Group saw the highest losses; 3) Valuation-wise, the TTM-PE of the CSI Media Index is currently 40.1x, at the 70.6 percentile of the past 5 years. Stable pace of license issuance, focus on sector opportunities driven by new product cycles, prosperity, and AI applications 1) In March, a total of 130 domestic games and 3 imported games were approved, with a total of 467 game licenses issued from January to March 2026, an increase of 21.9% year-on-year; the pace of domestic game license issuance continues, as well as the issuance of imported licenses; 2) In February, the actual sales revenue in the Chinese gaming market was 33.2 billion RMB, a year-on-year growth of 19.0%; the actual sales revenue for mobile games was 22.7 billion RMB, a year-on-year growth of 9.1%; 3) With new products, regulatory policies, and AI applications driving growth, the sector has long-term upside potential, with a focus on new product performance. Variety market led by Mango Tencent, animated dramas and AI-generated videos gaining popularity 1) According to Lighthouse Professional Edition data, total box office revenue in China in March was 2.122 billion RMB, a year-on-year increase of 10.2%; the box office revenue during the Qingming Festival was 305 million RMB, a year-on-year decrease of 19.3%, showing a relatively flat performance; 2) In the series market, among the top 10 full network series in March, "Zhu Yu" with 2.876 billion views led the list. Followed closely by "My Mountains and Seas" and "Love in an Innocent Age", achieving 413 million and 386 million views respectively; 3) In the variety market, iQiyi's "Blinking Universe, Please Note" had a market share of 11.60% nationwide, ranking first, while Youku's "Crazy Friday Night" had a market share of 7.40%, ranking second, and Mango's "The Eleventh Season of The Great Detective" had a market share of 6.28%, ranking third; in web variety, among the top ten shows, Mango/Tencent/Youku/iQiyi each had 4/4/1/1. AI applications: AIAgent being widely implemented, rapid progress in the AI video race 1) Alibaba's QoderWork desktop Agent is fully open, integrating DingTalk, WeChat, and Feishu, allowing for remote access to the full capabilities of the desktop AI assistant to complete tasks such as file organization, data processing, and document generation; 2) OpenAI plans to release a desktop "super app" that integrates its ChatGPT application, professional coding platform Codex, and built-in browser deeply; 3) Tencent officially released the "Lobster" browser QBotClaw, supporting users to freely configure various mainstream large models; 4) Alibaba's HappyHorse topped the AIVideo Arena, leading in both text-to-video and image-to-video races. Investment perspectives AI applications: GEO reconstructing traffic and content service ecosystem, multi-modal technology accelerating AI in animated dramas, games, etc. GEO's marketing direction focuses on targets such as Zhewen Interactive Group, MOBVISTA; in AI animated dramas, it is optimistic about IP and platforms, focusing on targets such as IReader Technology, Kunlun Tech, CHINA LIT, Bilibili, Kuaishou, among others; 2) New product cycles are expected to drive continued performance in the gaming sector, with good mid-term value proposition in the gaming sector under the backdrop of low valuation and crowding, focusing on targets with AI product implementation, such as Giant Network Group, Zhejiang Century Huatong Group, Kingnet Network, XD INC, 37 Interactive Entertainment Network Technology Group, Hangzhou Shunwang Technology, Hubei Century Network Technology Inc., among others; the key focus in IP waveplay is on product performance and overseas expansion of core players like POP MART. Key recommended portfolio: The March investment portfolio includes Giant Network Group, POP MART, Bilibili, Kunlun Tech, MOBVISTA performing well overall, while the April investment portfolio consists of Giant Network Group, POP MART, Kunlun Tech, MOBVISTA, Hangzhou Shunwang Technology. Risk warning: Below-expectation performance, slower-than-expected technological progress, regulatory policy risks, etc.