CICC: The performance of film content companies in the first quarter varied, and the box office performance during the May Day holiday may be relatively flat.

The report released by Zhongjin Securities stated that in 2024, most film companies experienced a decrease in revenue due to fluctuations in industry box office, with profits declining even more due to rigid costs and asset impairment. In the first quarter of 2025, industry box office saw a year-on-year increase, leading to growth in revenue and profits for film investment companies, while performance varied for content companies due to differences in project box office performance. Since the beginning of the second quarter, the overall box office performance has been relatively weak. According to Maoyan Professional Edition, the films "Life's First Red," "Dumplings Queen," and "Hunting for Gold: The Game" were among the top performers during the Labor Day holiday, which is considered a minor box office period. This year, there are fewer commercialized top films during this period, resulting in relatively flat box office performance. Key points from Zhongjin Securities include: - 2024: Revenue decreased for most companies due to industry box office fluctuations and the impact of rigid costs and asset impairment on profits. - 1Q25: Industry box office growth was driven by "Ne Zha 2," leading to revenue growth for most film companies, with Beijing Enlight Media performing well and seeing an increase in revenue due to the film "Law of Survival 20," while China Film Co., Ltd. and Bona Film Group's main films had relatively flat performances. - Labor Day holiday was relatively flat, with attention turning to the progress of scheduling for the summer holiday season. Looking ahead, films scheduled for the summer holiday season include "Evil," "Lychee of Chang'an," and "Monsters of Mount Langlang," with other reserve films like "Dongji Island," "Wild Forbidden Area," "Assassinate the Writer 2," and "Liao Zhai: Lanruo Temple" to be monitored for scheduling and box office performance. Recommendations: - Positive outlook for Shanghai Film (601595.SH) and Beijing Enlight Media (300251.SZ), suggest monitoring Wanda Film Holding (002739.SZ) and MAOYAN ENT (01896). Risk factors include: unexpected content supply, piracy, tighter regulations, and higher-than-expected asset impairment losses.