Investment Rating - The investment rating for the media and internet industry is "Positive" (maintained) [4] Core Views - The strong performance of quality new products is driving companies to have strong elastic trading opportunities in the current market. Short-term product performance impacts dynamic adjustments to company earnings expectations, while long-term performance leads to a reassessment of company capabilities and value. It is recommended to seize opportunities in the summer blockbuster period by focusing on the performance of key new game tests and launches, film releases, and the performance of new card and trendy toy products [4] Summary by Sections Gaming Sector - Perfect World’s key product "Yihuan" will begin closed beta testing on June 26, and Xishanju’s key product "Jiexianji" is scheduled for global public testing on July 2. AI companion product "EVE" will also start testing soon. It is suggested to pay attention to leading gaming companies exploring the AI + gaming paradigm, as exceeding expectations in related game product performance may lead to a reassessment of the value of listed companies [5] Film Sector - The animated film "The Legend of Luo Xiaohei 2" is officially scheduled for release on July 18, 2025. Currently, over 60 domestic and foreign films have been scheduled for the summer blockbuster period. The summer period is expected to drive steady growth in the box office market due to the release of quality films [6] Card and Trendy Toy Sector - The sector shows high prosperity, with companies continuously expanding. New products are being released, including "Runeterra: League of Legends Battle Cards" and new card products from various brands. Companies are increasingly focusing on the "Guzi economy" and enhancing their products' integration with trendy toys, indicating a continuous expansion of the industry chain [7][8] Internet Sector - On June 10, Tencent Music Entertainment Group announced a merger agreement to acquire Ximalaya for a total consideration of $1.26 billion, which includes cash and shares. This indicates an acceleration in the consolidation of the audio entertainment market. It is recommended to continue monitoring leading companies' strategic adjustments and the potential for value reassessment in the AI development sector [9] AI Application Sector - The Volcano Engine FORCE conference announced that the daily token usage of the Doubao large model exceeded 16.4 trillion, a 137-fold increase year-on-year. Companies embracing new technologies with data, user, and application advantages are expected to benefit from a new paradigm in AI applications [10] Publishing Sector - State-owned publishing companies have disclosed their 2024 financial reports, with some exploring new business models in education and enhancing dividend sustainability. Attention is drawn to state-owned media companies actively promoting industry mergers and acquisitions [11] Market Review - From June 9 to June 13, 2025, the Shanghai Composite Index decreased by 0.25%, while the media sector (Shenwan) increased by 1.55%, ranking fourth among all industries [12][15]

Group 1 - The A-share market shows a significant phenomenon of localized stock gathering, with sectors like controllable nuclear fusion, innovative drugs, and "unmanned vehicle" concepts gaining recent market attention [1] - The digital currency sector has surged, becoming a new hotspot in the A-share market, with the digital currency index rising by 7.66%, ranking third among Wind concept indices [1] - The overall market saw a rise, with the Shanghai Composite Index up by 0.7%, the Shenzhen Component Index up by 1.24%, and the ChiNext Index up by 1.37%, with over 4,400 stocks rising and a total market turnover of 1.21 trillion yuan [1] Group 2 - The Hong Kong stock market saw a significant increase in digital currency concept stocks, with Zhong An Online rising by 31.56% at the close, after peaking at over 36% during the day [3] - The Hong Kong Legislative Council passed the "Stablecoin Regulation Draft" on May 21, establishing a licensing system for fiat-backed stablecoin issuers, which aims to enhance the regulatory framework for virtual asset activities and promote financial innovation [5] - UBS reported that the Hong Kong Monetary Authority has launched a regulatory "sandbox" for stablecoin issuers, with RD InnoTech, in which Zhong An Online holds an 8.7% stake, being one of the three participating institutions [5] Group 3 - The card game and trendy toy sectors are experiencing high levels of prosperity, with companies expanding their operations and focusing on IP development and commercialization [8] - Companies are increasingly paying attention to the "grain economy" and enhancing its integration with their products, leading to continuous expansion in the related industrial chain [8]

Summary of Key Points from the Conference Call Industry Overview - The card game industry, particularly the collectible card segment, has experienced significant fluctuations since 2019, with a notable reliance on the Ultraman card series, which peaked at 85% market share in 2021 but has since declined sharply due to strategic missteps in 2023 [1][2][4]. Company Performance and Strategy - In 2023, the company faced a substantial decline in performance due to the mismanagement of the Ultraman card series, which was exacerbated by the decision to reissue rare cards, leading to a loss of consumer confidence and increased secondary market sell-offs [2][4]. - The company attempted to diversify its product offerings by introducing other IPs such as Naruto and Douluo Dalu, but these efforts did not yield the expected results [5][11]. - By the end of 2023, the company shifted its strategy to support distributors in establishing live streaming bases to promote the My Little Pony IP, which quickly gained market acceptance and contributed approximately 60% of revenue in Q1 and Q2 of 2024 [1][3][5]. Sales and Market Dynamics - Sales data for the summer of 2024 showed a decline, prompting the company to implement incentive policies during distributor meetings to maintain sales momentum [3][5]. - In 2025, a concentrated purchasing strategy by distributors for the My Little Pony product led to supply-demand imbalances and inflation, resulting in a 15% overall sales decline in Q4 [1][6]. - The company’s revenue composition for 2024 indicated that My Little Pony accounted for 8% of annual revenue, while Ultraman-related products contributed 10% [1][9]. Future Outlook and IP Potential - The company is optimistic about potential IPs for 2025, including Detective Conan, Crayon Shin-chan, and Sanrio series, which are expected to appeal to a diverse consumer base across age groups [2][15]. - The domestic card market is anticipated to transition towards Trading Card Games (TCG) in the next two to three years, with the company planning to leverage offline channels for dedicated card operations [11][12]. Competitive Landscape - The leading competitor in the industry is Jikasha, with a market size of approximately 500 million yuan, focusing primarily on online sales without significant offline expansion [30][31]. - Other notable competitors include Shanyanxia, which has a market share of around 300 million yuan, and various smaller companies that primarily operate online [30][34]. Challenges and Risks - The company faces challenges related to inventory management, with an average turnover period of 20 days for distributors, and a need to balance new product launches with existing inventory levels [6][8]. - The competitive landscape is intensifying, with the need for effective IP management and consumer engagement strategies to mitigate risks associated with market fluctuations and changing consumer preferences [22][30]. Conclusion - The card game industry is at a critical juncture, with the company adapting its strategies to navigate challenges and capitalize on emerging opportunities. The focus on diverse IPs and the potential shift towards TCGs could provide avenues for growth in the coming years [11][12][18].