Key investment points:
Market review: from March 28 to April 1, the media sector rose 4.98%, while the CSI 300 index, Shanghai Composite Index and gem index rose or fell by 2.43%, 2.19% and 1.10% respectively in the same period. The media sector ranked sixth in the weekly rise and fall of CS first-class industry classification, which was in the top range, and the ranking increased by 1 compared with the previous period.
Investment advice and rating: after March, the epidemic in China began to repeat again, and some provinces and cities began to carry out relatively strict personnel mobility control measures, which may have a certain negative impact on the economy in the short term, and offline cinemas and advertising may be under pressure. According to the data of Lighthouse professional edition, the national box office in March 2022 was 913 million yuan, a year-on-year decrease of 63.5%, the cinema operation rate decreased to 47.8%, and the number of screenings was 7.638 million, which was only equivalent to the number of screenings in a single month at the beginning of the resumption of cinema work in August 2020. Under the influence of the epidemic, the films in the Qingming Festival are basically removed from the archives. In April, the national cinemas may continue to face the situation of insufficient supply. It is expected that the cinemas will gradually recover from May on the premise that the epidemic gradually subsides. The current epidemic prevention policy is still guided by the strict goal of clearing, and will continue to be strictly supervised in the short term, which may accelerate the elimination rhythm of inefficient cinemas in China, and the market share of leading cinemas with business advantages and capital advantages and film investment companies may be further improved.
Shanghai, Jilin and other provinces have recently adopted strict home isolation in the face of repeated epidemics, which may bring traffic increment to the game industry in the short term. At present, the problem of game version number is still an important factor that puzzles the development of the industry and suppresses the valuation of listed game companies. If the version number is reissued, it will drive the online rhythm of game companies to return to normal and promote the repair of performance. At present, under the dilemma of edition number, we continue to pay attention to the market performance of stock games and the layout in overseas markets. Under the general trend of high-quality game products, we focus on game companies whose production ability has been verified.
According to the data released by IDC, the global VR head display volume was 11.23 million units in 2021, with a year-on-year increase of 92.1%. It is expected to reach 15.73 million units in 2022, with a year-on-year increase of 43.6%. According to metacoeceo Zuckerberg, when the volume of VR heads reaches the singularity of 10 million units, the virtual reality ecology will enter a healthier virtuous cycle stage. At present, virtual reality is still in the early stage in China. The number of VR applications is growing rapidly, with large growth space and wide application scenarios. VR games can be used as an entry point to gradually expand to C-end application fields such as social networking, live broadcasting, film and television, consumption and so on. It is suggested to focus on the development of VR industrial chain.
In the longer-term stage, in terms of top-level policy planning, from the perspective of the “14th five year plan” policies in some areas that have been released, the core development path and guidance have been defined for film, publishing, digital economy, copyright work and TV series, including virtual reality, 8K HD video, interactive video, immersive video, cloud games, film and TV series Book publishing and other applications in the field of cultural consumption will achieve benign and standardized development in the medium and long term.
Entering April will usher in the intensive period of annual report and first quarter report, which may have a certain fluctuation impact on the sector. It is suggested to pay close attention to it. In terms of valuation, based on the closing calculation on April 1, 2022, the valuation of the media sector is 20.48 times (TTM, overall method, excluding negative values), which is 74% of the average p / E ratio of the sector since January 1, 2017 and 78% of the median. It is close to the valuation level of Q4 in 2018 and is in a historically low position, maintaining the investment rating of “stronger than the big market” of the media sector.
It is recommended to pay attention to the leading companies in the sub segment of the media sub segment: Perfect World Co.Ltd(002624) , Wuhu 37 Interactive Entertainment Network Technology Group Co.Ltd(002555) , G-Bits Network Technology(Xiamen)Co.Ltd(603444) , Wanda Film Holding Co.Ltd(002739) , Mango Excellent Media Co.Ltd(300413) , Guomai Culture & Media Co.Ltd(301052) .
Risk warning: international political situation risk; The risk of repeated outbreaks and virus mutation; The tightening of regulatory policies exceeded expectations; Intensified market competition; Goodwill impairment risk; The quality of output content is lower than expected; The characteristics of project system lead to the fluctuation of the company’s performance
