Northeast: AI+IP opens a new growth curve, focusing on the three main themes of the publishing sector.

Northeast released a research report stating that while the current book publishing business is relatively stable, publishing companies also have new growth curves in AI + education and IP development and operation, with significant growth potential. The current publishing sector is a high-quality sector that combines offense and defense: it has the stability of dividend attributes and at the same time can benefit from the application of AI technology, providing significant growth potential. The three main themes of the publishing sector are: 1. Targets with dividend advantages and demographic advantages in their regions (main business stability), solid performance, sufficient cash reserves, stable dividend policies, and high investment value; 2. Leading targets in AI + education, with active R&D investment and a high degree of digital transformation; 3. Leading targets in IP derivative product development and operation, with sufficient IP reserves and a mature commercialization model. Key points from Northeast: Continued implementation of tax incentive policies, revenue under pressure, profits growing against the trend Despite the industry's total revenue declining, in the first half of 2025, the total net profit attributable to the parent of the publishing industry as a whole achieved growth against the trend (+16.41%), mainly benefiting from the continued implementation of tax incentive policies. SOEs in the publishing industry have generally enjoyed income tax exemptions, providing substantial support to their profit margins. Looking at net profit attributable to the parent, the vast majority of companies in the industry are profitable, with most companies experiencing profit growth. AI empowering education, IP derivative products opening up new growth curves Under AI empowerment, educational publishing products are becoming increasingly diverse, from printed books to electronic publications, virtual simulation platforms, and intelligent teaching aid systems. Publishing companies are breaking traditional content boundaries through technological means to achieve multidimensional innovation in educational publishing. In recent years, the publishing industry has shown strong growth potential in IP content development, especially in terms of commercialization and cross-industry cooperation, extending the value chain of IPs significantly. Compared to other sectors of the publishing and media industry in recent years, the publishing industry has risen while others have fallen The bank believes that after May 2023, due to the relatively small pullback in the publishing sector, the valuation of the publishing industry is higher than that of other sectors in the media industry. As of 2025, after the rise of other sectors, the publishing sector has returned to the overall price center of the media industry, and in terms of valuation, the publishing industry is significantly below the average level of various media sectors, offering high investment value. 2026 is the year of large-scale AI application. The bank believes that the media industry will benefit from the rise in AI applications, leading to a new uptrend, with the publishing sector following the primary uptrend in the media industry due to its historical characteristic of rising when others fall, and with a small pullback at high levels, it has extremely high long-term holding value. Related targets 1) Targets with dividend advantages and demographic advantages in their regions. Including Jiangsu Phoenix Publishing & Media Corporation, Zhejiang Publishing & Media, Central China Land Media, Time Publishing And Media, China South Publishing & Media Group, Shandong Publishing & Media, Changjiang Publishing & Media, Southern Publishing and Media, etc. 2) Leading targets in AI + education. Including Southern Publishing and Media, China South Publishing & Media Group, Astro-century Education & Technology, Anhui Xinhua Media, Jiangsu Phoenix Publishing & Media Corporation, etc. 3) Leading targets in IP development and operation. Including COL Group Co., Ltd., Citic Press Corporation, Ronshin Group, Central China Land Media, etc. The above-mentioned targets not covered are not recommended for investment. Risk warning: Adjustment of cultural industry policies, risks of changes in preferential policies for state-owned enterprises; copyright and legal risks; risks of AI technology progress or new business expansion falling short of expectations; risks of declining birth rates affecting student numbers.