Key investment points:
Market review: in February 2022, the media index fell by 1.39%, underperforming the wind all a index by 4.2pct, ranking 26th among the 28 sub industries of Shenwan; The market value of TV broadcasting, publishing, marketing, digital media, games and film and television theaters rose or fell by 4.77%, – 5.61%, 1.67%, – 2.87%, – 4.4% and – 6.92% respectively
Valuation: as of the end of February 2022, the PE (TTM, median) of the media (Shenwan) sector was 30.49 times (32.19 times the previous value), which was in the last 8.90% since 2010.
Industry tracking: 1) film: in February, the total box office of the country was 10.357 billion yuan (including service fees), down 15.60% year-on-year, mainly affected by the lower than expected performance of the Spring Festival; The number of film viewers and attendance decreased by 19.2% and 6.4pct respectively year-on-year; The average ticket price continued to rise, with a year-on-year increase of 4.78%; The attendance rate was 15%, with a year-on-year decrease of 6.4pct. 2) Games: according to Gamma data, the actual sales revenue of China’s mobile game market in January was 22.24 billion yuan, an increase of 20.25% month on month and 17.76% year on year, mainly due to the growth of old games stimulated by the warm-up of various games in the early spring festival and the incremental contribution of new online games such as civilization and conquest. 3) Advertising: according to CTR data, the overall national advertising market grew by 11.2% year-on-year in 2021, and the year-on-year growth rate of elevator LCD / Elevator poster reached 31.5% and 32.4% respectively. We believe that offline elevator media can still maintain a double-digit growth rate in the post epidemic cycle, which verifies the value of mainstream people of offline brand advertising channels; The year-on-year growth rate of cinema video reached 253.2%, mainly due to the low base of cinema advertising caused by the epidemic in 2020.
Investment strategy: Recently, affected by the international situation and peripheral markets, the trend of zhonggai Internet sector was in the doldrums, superimposed with the impact of some companies’ performance forecasts failing to meet expectations and the decline of yuancosmic popularity, the performance of the media sector was weak in February. However, we also see some positive changes in the industry. At present, the “policy bottom” of the Internet / Games / entertainment sector is gradually emerging, the performance of some game stocks is gradually warming up, and the marginal improvement of subsequent performance is expected to drive the gradual repair of sector valuation. In the medium and long term, we are optimistic about the leaders with high-quality content and mainstream platforms and core competitive advantages. We suggest to pay attention to Wuhu 37 Interactive Entertainment Network Technology Group Co.Ltd(002555) , Perfect World Co.Ltd(002624) , G-Bits Network Technology(Xiamen)Co.Ltd(603444) , Mango Excellent Media Co.Ltd(300413) , Focus Media Information Technology Co.Ltd(002027) , Wanda Film Holding Co.Ltd(002739) and Three’S Company Media Group Co.Ltd(605168) .
Risk warning: stricter policy supervision; Intensified market competition; The performance is lower than expected.
