Dongguan Securities·2025-04-17 07:32Investment Rating - The report maintains an "Overweight" rating for the media industry, particularly focusing on the textbook and educational materials sector [1]. Core Insights - The industry benefits from strong policy barriers and a favorable competitive landscape, with regional monopolies forming due to stringent publishing qualifications [4][27]. - The demand for educational materials is inelastic, with stable performance expected in the coming years despite a slight decline in student numbers [31]. - Companies in the sector exhibit high dividend yields and robust cash flows, highlighting their defensive investment value [44][50]. Summary by Sections 1. Strong Policy Barriers and Competitive Landscape - The publishing and distribution of educational materials are subject to strict regulatory requirements, creating high entry barriers for new competitors [4][19]. - Major publishers include both central and local entities, with a trend towards regional monopolies in textbook distribution [21][27]. 2. Inelastic Demand and Steady Growth - The number of students in schools is projected to remain stable, with estimates of 195 million, 191 million, and 186 million students from 2025 to 2027, reflecting slight declines of 0.66%, 2.07%, and 2.89% respectively [31]. - The demand for textbooks and supplementary materials is consistent, with students requiring an average of 8 books in elementary school and 18 in middle and high school [31][38]. 3. High Dividends and Defensive Value - The median cash held by companies in the sector reached 5.27 billion, with a median cash-to-asset ratio of 40.13% in 2023, indicating strong liquidity [44][46]. - The median dividend payout ratio increased from 25.54% in 2014 to 45.32% in 2023, surpassing the median ratios of the broader media sector and the CSI 300 index [50].