Guotai Junan Securities: Continuously optimistic about the new product cycle in the gaming sector, seizing bottom opportunities in film and television content and AI applications

According to the Zhitong Finance APP, Guosen Securities released a research report stating that the media sector outperformed the market in September. A total of 145 domestic games and 11 imported games were approved in September, with a cumulative issuance of 1,275 game licenses from January to September, a year-on-year increase of 23.2%. The firm continues to be optimistic about the opportunities in the sector driven by policies, prosperity, and AI applications. The total box office during the National Day holiday declined year-on-year. Underlying technologies continue to break through, and AI video is progressing rapidly, with major leaders launching applications. Guosen Securities' main points are as follows: Outperformed the market in September In September 2025, the media sector (Shenwan Media Index) rose by 4.96%, outperforming the CSI 300 Index by 1.76 percentage points, ranking 5th among the 31 industries in Shenwan's first-level classification; 2) Giant Network, Mango Excellent Media, ST Huatong, and Happy Blue Sea had the highest gains, while Youzu Interactive, Jishi Media, Shandong Publishing, and Tom had the largest declines; 3) In terms of valuation, the current Shenwan Media Index corresponds to a TTM-PE of 46.5x, which is at the 95.9 percentile over the past five years. Game market revenue in August increased by 0.6% month-on-month, continuing to be optimistic about opportunities driven by policies, prosperity, and AI applications In September, a total of 145 domestic games and 11 imported games were approved, with a cumulative issuance of 1,275 game licenses from January to September, a year-on-year increase of 23.2%; the issuance of game licenses in September was relaxed, and imported licenses continued to be issued; 2) In August, the revenue of China's game market was 29.3 billion yuan, with year-on-year/month-on-month changes of -13.0%/+0.6%; the actual sales revenue of the mobile game market was 21.5 billion yuan, with year-on-year/month-on-month changes of -4.2%/+0.8%; 3) Under the new product cycle, regulatory policy shift, and AI application drive, the sector has the potential for sustained upward movement in the medium to long term, with a focus on new product performance. National Day box office declined year-on-year, with Mango performing excellently in the variety show market In September 2025, the total box office was 2.661 billion yuan, a year-on-year increase of 82.8%; the box office during the National Day holiday declined by 12.8% to 1.84 billion yuan, mainly due to the lack of compelling new films; 2) In the drama market, "Sheng Wan Wu" topped the charts with 1.5 billion views, followed by "Fan Ren Xiu Xian Zhuan" and "Jin Yue Ru Ge," which achieved 1.022 billion and 948 million views, respectively; 3) In the variety show market, Mango's "Pi Jing Zhan Qi" had a market share of 9.72%, Tencent's "Xin Dong De Xin Hao" ranked second with a market share of 7.95%, and Tencent's "Di Qiu Chao Xin Xian" had a market share of 6.02%; among online variety shows, Mango/Tencent/iQIYI occupied 3/6/2 spots in the top ten. AI applications: Underlying technologies continue to break through, and AI video is progressing rapidly Meta's Super Intelligence Lab has broken through the RAG technology bottleneck, with the core innovation being the compression of lengthy contextual content into concise summaries through a lightweight model, thereby reducing the amount of information the decoder needs to process; 2) Google launched the "Inference Memory" framework, allowing AI agents to achieve "self-evolution"; 3) OpenAI released Sora2, supporting the generation of high-quality video and audio; 4) Kuaishou released the Kegong 2.5 Turbo, with video generation costs decreasing by 30% Risk Warning: Performance below expectations, technological advancements below expectations, regulatory policy risks, etc