The Zhitong Finance App learned that according to a research report released by CICC, in 2023, the media industry will be mainly guided by the normalization of content, continuous implementation of cost reduction and efficiency, and the development of new technologies, and the development of new technologies, and the development of new technologies, and the development of new technologies, and interactive dramas, etc., and sectors driven by new technologies, new applications, and new forms, such as AI, skits and interactive dramas, etc., are more active in thematic growth. Looking ahead to 2024, first of all, after years of in-depth governance and adjustment of the industry, content production and service capabilities have been improved and enhanced; the profits of leading companies have gradually entered a stable release period in the context of normalization; and the media sector is at a moderate level of valuation after many years of correction. It is recommended to focus on investment opportunities brought about by the advantages of the business models of leading companies and their potential for profit growth.

The views of CICC are as follows:

Looking ahead to 2024, it is recommended that investment opportunities in the media sector focus on the following four major development points:

1) Content supply: External disruptors such as regulatory policies are gradually stabilizing, content production and launch are back on track. Continuous production capacity for large-scale, industrialized quality content has become key and is expected to accelerate implementation, while multi-modal monetization around core IP may enter a period of rapid development.

2) Profit leverage: The transformation of cost reduction and efficiency in the past two years has come to an end or is nearing its end. The marginal profit release brought about by cost reduction has declined, and the industry has returned to focus on the revenue-side growth brought about by the business itself and the profit leverage of the business model.

3) AI empowerment: AI applications may enter the implementation period, gradually extending from empowering content production to improving the consumer experience of users. Focus on the progress of media industry-related companies from AI technology reserves to implementation of application scenarios and business boundary expansion.

4) M&A integration: Considering that IPOs for media companies are still difficult and that the industry has entered a stage of slow development, industry integration in the form of corporate mergers and acquisitions or talent flows may enter a period of acceleration.

Based on the above analysis, the bank believes that leading companies in various industry segments continue to have advantages in terms of business scale, technical reserves, and capital operation. Looking at industry comparisons, digital media and online games have an overall advantage in terms of business models. Under mature business formats, the appeal and monetization capacity of high-quality content continues to expand, and new technology applications are also expected to be the first to be implemented; social communities are gradually balancing profit and loss and moving towards a normalized profit range; the marketing and advertising sector focuses on leading performance of high-quality media channels in a pro-cyclical manner; film and television theaters focus on quality content and service supply and channel integration opportunities; book publishing focuses on steady growth, high dividend value, and flexible space for education informatization; cable radio and television focuses on development opportunities under the “Article 181” policy.

Risk warning: declining macroeconomic sentiment, changes in industry regulatory policies, and changes in preferential tax policies.