Guosen: Continue to be optimistic about the application of AI and IP trend play, seize the opportunity to layout after the oversold.

Guosen released a research report stating that it continues to be optimistic about the application of AI and IP in new consumer goods, and advises seizing the opportunity to layout after the market correction. 1) Focus on performance, in the short term there are good layout opportunities in the IP trend, gaming, publishing, and advertising fields after the market correction; in the medium to long term, new technologies represented by AI and new consumer trends represented by IP trends/AI toys are expected to open up long-term growth space in the industry; 2) From a business perspective: a) IP trend; b) grasp product cycles and performance in the gaming sector from bottom up; c) anticipate recovery in the film sector, recommend channels and content; focus on advertising growth brought about by economic recovery from the media end; at the same time, pay attention to opportunities for the publishing sector from high dividends and low valuations; 3) Deepseek accelerates the arrival of AI applications on Android, focusing on scenario applications and directions such as AI toys. Key points from Guosen: March underperformed the market 1) In March, the media sector (Shanghai Media Index) fell by 1.3%, outperforming the Shanghai and Shenzhen 300 Index by 1.23 percentage points, ranking 22nd out of 31 industries in the Shanghai Composite Index; 2) AI multimodal and state-owned media performed relatively well, with Ronshin Group, Guomai Culture & Media, Hubei Radio & Television Information Network, Shanghai Film, and DuZhe Publishing&Media leading the gains; Fujian Zitian Media Technology, Wuxi Boton Technology, QITIAN Technology Group, FS Development Investment Holdings, and H&R Century Union Corporation leading the losses; 3) In terms of valuation, the Shanghai Media Index currently corresponds to a TTM-PE of 40 times, which is at the 63rd percentile over the past 10 years. The gaming market continues to grow at double-digit rates, focusing on sector opportunities driven by policies, economic conditions, and AI applications 1) In March, a total of 129 domestic games and 5 imported games were approved, bringing the total number of approvals since the beginning of the year to 383, maintaining a high level; key products such as "Shanhai Qilv," "Swordsman World 4: Infinity," and "Xuezhong Handao Xing" were approved; 2) In February 2025, the size of the Chinese game market was 27.935 billion yuan, a year-on-year increase of 12.3%, with continued double-digit growth; China Mobile Limited's gaming market size was 20.842 billion yuan, a year-on-year increase of 14.18%. New products "Endless Winter" and "Dungeon and Warrior: Origins" contributed to the main increment; 3) In terms of AI applications, AI company Anuttacon, founded by Cai Haoyu, founder of Mihoyo, officially announced its first new game "Whispers From The Star" and began recruiting for closed testing overseas. The box office market in March was weak in new releases, while the variety show market continued to perform well on Mango TV 1) Total box office in March reached 1.925 billion yuan, a 31% year-on-year decline, with weak performances from new releases; continued attention to the repair of domestic film content supply; 2) In the drama market, in March, the top 10 full-played series on the whole network, "Nan Hong," topped the list with 974 million plays. This was followed by the suspense drama "Beishang" and the costume drama "S Jn," achieving 830 million and 818 million views, respectively; 3) In the variety show market, the full-played market share of Mango TV's "Chngfng 2025" was 8.38% across the entire network; among the top six variety shows, Mango TV's variety shows accounted for five of them, showing a significant lead over other video platforms. AI applications: Monica/Zhipu releases Agent, GPT-40 native image generation goes live 1) Monica released an AI intelligence agent that can not only answer questions but also autonomously analyze task requirements, and complete the entire process of data collection to results delivery by using tools in a virtual environment (such as a browser, code editor, file processor, etc.); 2) Zhipu released AutoGLM Meditation, with deep research capabilities (Deep Research) and practical operation (Operator), pushing AIAgent into the stage of "thinking and doing at the same time"; 3) GPT-40's native image generation goes live, with a "Studio Ghibli-style" exploding on the entire network. Key recommended portfolio: In March, the recommended portfolio consists of POP MART, Kingnet Network, Focus Media Information Technology, Giant Network Group, and Bilibili, while in April, the investment portfolio consists of POP MART, Kingnet Network, Focus Media Information Technology, Bilibili, and Southern Publishing and Media. Risk warning: Performance may be below expectations, technological progress may be below expectations, regulatory policy risks, etc.