Key investment points:
Market review: from January 17 to January 21, the media sector fell 2.89%, underperforming the weekly rise and fall of the Shanghai and Shenzhen 300 index (1.11%) 4pct; Underperformed the Shanghai Composite Index by 2.93pct (0.04%) in a single week; Underperformed the growth enterprise market index by 0.17pct (- 2.72%) in a single week, ranking 20th in the weekly rise and fall of CITIC’s first-class industry. It is located in the back of the middle, and the ranking has increased by 2 compared with the previous period.
Investment suggestion and rating: after two months of obvious rise, the market of the media sector has adjusted recently. We believe that it may be that the performance of some companies in Q4 is not up to expectations due to short-term factors and the profit departure of early mobilization funds jointly promote the volatility of the sector. However, we are still optimistic about the future performance of the media sector in the medium and long term. From the perspective of policies, from the “14th five year plan” China Film Co.Ltd(600977) development plan “, the” 14th five year plan “period development plan of the publishing industry, and the” 14th five year plan “digital economy development plan The “14th five year plan” for copyright work and other policies have been issued one after another to clarify the development path and provide guidance for all fields of the media sector. Among them, the 14th five year plan for the development of digital economy focuses on accelerating the construction and application of 5g network, accelerating the integration of digital technology and various industries, and the added value of core industries of digital economy should account for 10% of China’s GDP (7.8% in 2020). Specific development goals such as virtual reality, 8K high-definition video, interactive video, immersive video and cloud games should be developed. In the medium and long term, there is a large space for digital transformation of various industries in China, and the media sub field represented by landing application scenarios may continue to benefit. In terms of valuation, as of January 21, 2022, the valuation of the sector was 22.28 times (TTM, overall method, excluding negative values), 80% of the average p / E ratio of the past five years and 86% of the median, which was close to the valuation level of Q4 in 2018 and still at a low level. Therefore, the investment rating of “stronger than the market” is maintained.
It is recommended to pay attention to:
1) game section. For the game sector, it is recommended to grasp the main investment lines such as sea going strategy, cloud games, VR / AR, game product launch cycle and market performance. Tencent, byte beat and other Chinese Internet companies accelerate the layout of VR / AR field in the form of hardware + software. Virtual reality may usher in rapid development after 2022. As the distribution of Chinese version numbers has been suspended for nearly half a year, Chinese game manufacturers may increase investment in overseas incremental markets while developing the Chinese game market. According to sensortower data, 42 Chinese mobile games earned more than $100 million in the overseas market in 2021, an increase of 5 compared with 2020. The total revenue of the top 30 mobile games at sea was $11.5 billion, a year-on-year increase of 24%. As the product form closest to the concept of meta universe, game products can be reused for the construction of meta universe platform in the future. Microsoft recently acquired the game giant Activision Blizzard with us $68.7 billion. Based on the net profit of US $2.642 billion in the past four quarters announced by Activision Blizzard, the corresponding P / E ratio is 26 times, which is about 19 times higher than that of the company before the announcement of the acquisition news. Microsoft’s acquisition of Activision Blizzard at a premium will promote more high-quality studios and well-known game IP under Activision Blizzard to join the Microsoft platform and speed up the layout progress of metauniverse. The scarcity of high-quality content R & D companies in the market will be reflected. It is suggested to pay attention to the head game companies with R & D technical advantages, which have strong competitiveness in expanding overseas markets, product R & D and dealing with supervision.
2) the film sector is about to usher in the Spring Festival: the shuimen bridge of Changjin lake has recently been set for the first day of the new year. As a derivative sequel of the film with the highest box office in China, the release of the shuimen bridge of Changjin lake is expected to further boost the demand for film viewing during the holiday. In addition to “shuimen bridge of Changjin Lake”, the spring festival film market also has films covering various themes, including “miracle stupid child”, “Four Seas”, “the killer is not too calm”, “sniper” and “bear haunt” series animated films that can create good box office results over the years. Up to now, the pre-sale box office of the Spring Festival has been close to 130 million yuan, showing a pattern of one super and many strong as a whole. Referring to the trend of “Celebrating the new year on the spot” in 2021, the Spring Festival has reached a record high. We believe that the “Celebrating the new year on the spot” mode continued in 2022 is also expected to create better box office results, but the repeated epidemic in some parts of China may have a certain negative impact.
3) virtual human technology: at present, virtual human technology has been tested in large-scale programs on mainstream media platforms. Although at present, virtual human technology is still mainly used in Pan entertainment fields such as virtual idol, e-commerce live broadcast, short video and news variety shows, in the future, the application scenario of virtual human technology may be further expanded to intelligent office, social networking, finance, education, medical treatment and other fields. As one of the underlying technologies of the meta universe, virtual human technology has relatively large application space.
It is recommended to pay attention to the head companies in the subdivided field of the media sub section: 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) , Beijing Enlight Media Co.Ltd(300251) , Focus Media Information Technology Co.Ltd(002027) , Mango Excellent Media Co.Ltd(300413) , Beijing Zhidemai Technology Co.Ltd(300785) , Citic Press Corporation(300788) , Guomai Culture & Media Co.Ltd(301052) .
Risk warning: repeated epidemic situation and virus mutation risk; 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
