Guosen: Evolution of Open Models and Agent Applications; Bullish on AI Applications, Film and Television Content, and IP Trendy Toy Opportunities

Guosen released a research report stating that it is watching for bottom-fishing opportunities across three main lines: AI applications, games, and IP trendy toys. In the AI application direction, it recommends paying attention to companies with IP/copyright resources, content production scenarios, traffic entry points, computing power optimization, and operational capabilities; in the game direction, after the sector's earlier pullback, valuations and trading crowding are at low levels, and combined with the normalization of game approvals and the summer-season new product cycle, the sector has good medium-term positioning value. It recommends a bottom-up approach to capture companies with strong product cycles, earnings delivery, and AI product implementation capabilities; in the IP trendy toy direction, it remains bullish on POP MART (09992). The company has strong IP incubation capabilities, a stable new product launch cadence, and advantages in overseas channel expansion, and its product cycle and globalization dividend remain the core drivers of medium-term earnings growth. Guosen's main views are as follows: The industry fell 1.48%, outperforming the CSI 300 and the ChiNext Index. This week (10.12-10.18), the media industry fell 1.48%, outperforming the CSI 300 (-3.40%) and the ChiNext Index (-8.90%). Among them, the top gainers were Ciwen Media Co.,Ltd., Guomai Culture & Media, Xinhua Winshare Publishing & Media, Thinkingdom Media, etc., while the top decliners were Threes, Easy Click Worldwide Network Technology, Sichuan Xunyou Network Technology, Zhejiang Century Huatong Group, etc. In a horizontal comparison, this week the media sector ranked 8th among all sectors in terms of price performance. Open weights and multimodal capabilities upgraded, browser control and AI programming continue to be implemented. 1) Large models: Google released Gemini4Argon, Meta opened Muse Spark Open weights; 2) Products and Agents: ChatGPT enhanced Chrome operation capabilities, FLUX.3 improved controllable image generation, ClaudeCode disclosed code review practices; 3) Commercialization: xAI integrated subscriptions, Modal disclosed revenue and financing progress; 4) Governance: adjustments to AI-related technology export management were opened for comment, and the risk of models exceeding authority received attention. Key data tracking this week: box office was RMB 263 million this week, with "Resident Evil: Outbreak Night" in first place. 1) This week (October 12-October 18), movie box office was RMB 263 million, with the top three being "Resident Evil: Outbreak Night," "Traces of the Detective," and "What Does It Mean, Couple"; 2) in online dramas, "Marrying the Golden Hairpin," "Mei Ren Yu," and "Lan Xiang Ru Gu" ranked at the top; 3) in variety shows, "Let's Go Now Season 4," "Call Me by Fire 2026," and "Flower Less World Tree Adventure Party" ranked at the top; 4) in games, "Honor of Kings" and "Peace Elite" ranked at the top of the iOS game bestseller list, while "Heartbeat Town" and "Phigros" ranked at the top of the Android game popularity list. Investment recommendation: watch for bottom-fishing opportunities across the three main lines of AI applications, games, and IP trendy toys. 1) In the AI application direction, it recommends paying attention to companies with IP/copyright resources, content production scenarios, traffic entry points, computing power optimization, and operational capabilities, with focus on Kunlun Tech, CHINA LIT, Bilibili, Zhejiang Huace Film & TV, Zhejiang Daily Digital Culture Group, Tianyu Digital Technology Group, etc. 2) In the game direction, after the sector's earlier pullback, valuations and trading crowding are at low levels, and combined with the normalization of game approvals and the summer-season new product cycle, the sector has good medium-term positioning value. It recommends a bottom-up approach to capture companies with strong product cycles, earnings delivery, and AI product implementation capabilities, with attention to Perfect World, Giant Network Group, Zhejiang Century Huatong Group, Kingnet Network, XD INC, 37 Interactive Entertainment Network Technology Group, etc. 3) In the IP trendy toy direction, it remains bullish on POP MART. The company has strong IP incubation capabilities, a stable new product launch cadence, and advantages in overseas channel expansion, and its product cycle and globalization dividend remain the core drivers of medium-term earnings growth. Risk warnings: regulatory policy risk; performance risk; goodwill and asset impairment risk; shareholder reduction risk, etc.