CITIC Securities: The prosperity of the entertainment industry is still continuing. It is recommended to select targets from two dimensions.

The report from Citic Securities stated that, driven by the rise of independent apps and the iteration of large model technology, the animation industry continues to experience high-quality growth momentum. On the platform side, independent platforms have achieved breakthroughs of tens of millions of users by successfully replicating short drama models, with extremely high user stickiness. On the technological side, the significant progress of video large models such as Seedance 2.0 has greatly improved the supply quality of 3D and animated drama content, shifting the market focus from low-quality content filling to high-quality IP development. In the global market, with the increasingly mature short drama overseas channels, animated dramas have become a new growth point for Chinese content companies to expand overseas. It is recommended to select targets from two dimensions: 1) companies with a reserve of high-quality content IP and animation content production capacity, as well as related companies with full-chain layouts of IP, production capacity, and distribution channels; 2) companies in the content platform, animation investment and flow direction, etc., that achieve commercial value through participating in the commercialization process of animated dramas.