Investment Rating - Investment rating for the media industry is optimistic (maintained) [1] Core Insights - The MCP agreement and the "Network Publishing Technology Innovation Leading Plan" are driving industry development, with a focus on AI applications and IP development [5] - The collectible card game market in China is expected to grow significantly, with a projected market size increase from 2.8 billion RMB in 2019 to 26.3 billion RMB in 2024, reflecting a CAGR of 56.6% [6][14] - The report emphasizes the importance of high-quality IP and the rise of domestic IP in driving growth in the collectible card and related industries [21][22] Summary by Sections Section 1: Collectible Card Games - The collectible card game market is projected to grow from 2.8 billion RMB in 2019 to 26.3 billion RMB in 2024, with a CAGR of 56.6% [6][14] - The leading company in this sector, 卡游, achieved revenues of 22.9 billion RMB in 2021, 41.3 billion RMB in 2022, and is expected to reach 100.6 billion RMB in 2024 [22] - The report highlights the increasing participation of female consumers and the rise of domestic IP as key growth drivers [21][22] Section 2: Industry Data Overview - The game "和平精英" ranked first in both the iOS free and best-selling charts in mainland China as of April 19, 2025 [31][35] - The film "向阳·花" achieved a weekly box office of 0.39 billion RMB, totaling 1.83 billion RMB [45] - The web drama "无忧渡" performed well with a broadcasting index of 82.5 [46] Section 3: Company Performance - 卡游's revenue from collectible card games is expected to continue growing, supported by a strong IP matrix and effective supply chain management [22][23] - The company has launched numerous toy series and collectible card series, indicating robust product innovation [22][23] - The report recommends continued investment in companies like 腾讯控股 and 快手-W, which are positioned to benefit from the growth in AI and gaming sectors [5]

Domestic News - Huqin Technology responded to NVIDIA's H20 trade restrictions, stating that the company has made sufficient preparations for uncertainties and that business operations are proceeding normally [2] - WeChat Pay partnered with international payment giant Stripe to accelerate internationalization, enabling businesses in 20 countries to seamlessly integrate WeChat Pay for online and offline transactions [3] - The National Supercomputing Internet Platform launched a long-text multimodal model to assist in AI agent development [4] - Keling AI released version 2.0 of its base model, allowing the generation of videos using "text + images + videos," significantly enhancing its capabilities [5] - Xiaogoods City signed a strategic cooperation agreement with Alibaba Cloud to build a digital trade system integrating AI and cloud computing [7] - Zhixiang Future announced the open-source of its image generation model HiDream-I1, which has achieved top rankings in image quality and semantic understanding [8] - Yuanfudao Group launched "Xiaoyuan AI," an intelligent teaching solution based on its self-developed models [9] - Shanghai Metro officially opened 5G public signals across its entire network, covering 21 lines and 896 kilometers [10] - Alipay launched the first domestic "Payment MCP Server," allowing AI developers to integrate payment services using natural language [11] - ByteDance's Seedream 3.0 model has matched the performance of the leading image generation model GPT-4o, entering the global top tier [12] Corporate Developments - ADM responded to rumors of closing its trade business in China, clarifying that adjustments only affect a small part of its operations [13] - China General Nuclear Power Corporation established a new manufacturing technology company focusing on smart robotics [15] - Tencent Cloud announced the establishment of a new availability zone in Osaka, Japan, expanding its global service network [21] - Figma submitted documents for a potential IPO to the U.S. SEC, with details on share quantity and pricing yet to be determined [28] - Hugging Face acquired Pollen Robotics to enter the physical robotics sector, marking its largest personnel acquisition to date [30] - JD Cloud Computing increased its registered capital by 60% to 800 million RMB [31] - Dongyi Technology completed over 100 million RMB in angel financing to advance its humanoid robot technology [32] Policies & Trends - Xi Jinping emphasized the need for China and Malaysia to deepen cooperation in AI, digital economy, and green economy [33] - Nanjing announced that all primary and secondary schools will offer AI courses by 2025 [34] - The Ministry of Education and nine other departments released opinions to accelerate digitalization in education, including promoting international cooperation [36] - Tianjin aims for AI core enterprises to achieve over 100 billion RMB in revenue by 2027 [39] - Shanghai Xuhui District launched six AI governance scenarios, collaborating with ten companies to enhance urban management [40] - The Ministry of Industry and Information Technology (MIIT) announced plans to promote the integration of AI and industrial internet [46] - MIIT reported that as of March 2023, China has built and opened 4.395 million 5G base stations [49]

Investment Rating - The report maintains a "Buy" rating for the company, with a target price of HKD 77.61 per share based on a 16x PE valuation for 2025 [2][6]. Core Views - The report highlights the successful launch of the Kuaishou Keling 2.0 model, which is expected to empower various industries such as advertising, UGC, and film creativity [1][4]. - The company has shown significant growth in its AI capabilities, with a user base exceeding 22 million and a monthly active user (MAU) growth of over 25 times since the launch of Keling AI [4]. - The Keling 2.0 model has improved semantic response capabilities, dynamic quality, and visual aesthetics, positioning the company as a leader in the global video generation market [4]. Financial Forecast and Investment Recommendations - The adjusted net profit forecast for the company is projected to be CNY 177 billion, CNY 194 billion, and CNY 229 billion for the years 2024, 2025, and 2026 respectively [2][5]. - The company's revenue is expected to grow from CNY 113.47 billion in 2023 to CNY 153.30 billion in 2026, reflecting a compound annual growth rate (CAGR) of approximately 11.1% [5][8]. - The report anticipates a gross margin improvement from 50.6% in 2023 to 56.2% in 2026, indicating enhanced operational efficiency [5][8]. Valuation Metrics - The report uses a PE valuation method, maintaining a 16x PE for 2025, leading to a reasonable valuation of CNY 3,107 billion or HKD 3,345 billion [6][7]. - The company's earnings per share (EPS) is projected to increase from CNY 1.48 in 2023 to CNY 4.96 in 2026, demonstrating strong earnings growth potential [5][8].

Core Insights - Keling AI has launched its 2.0 video generation model and 2.0 image generation model, focusing on enhanced multimodal editing capabilities [1][2] - The global user base of Keling has surpassed 22 million, with cumulative revenue exceeding 100 million yuan since commercialization [1][11] - The competition in the AI market is intensifying, with companies racing to establish dominance and secure future opportunities [1] Product Features - The new multimodal editing function allows users to input keywords and incorporate images, videos, or other modalities, enabling direct editing of generated videos [2][4] - Keling 2.0 demonstrates improved semantic understanding and detail capture compared to the previous 1.6 model, enhancing the quality of generated content [4][5] - The transition from the 1.6 model to the 2.0 model shows significant improvements in visual style, action amplitude, and detail presentation [5][6] Market Position and Strategy - Keling AI's revenue model includes both consumer subscriptions and B2B API services, with partnerships established with major companies like Xiaomi and Amazon Cloud [10] - The CEO of Kuaishou anticipates a significant revenue increase for Keling AI by 2025, indicating strong growth potential [11][12] - Kuaishou plans to invest heavily in capital expenditures and R&D to enhance Keling AI's capabilities and maintain its leading position in the short video production market [12] Industry Implications - Content creation platforms are expected to be the primary beneficiaries of advancements in video generation technology, as they possess relevant user bases and large audiences [8] - The integration of AI tools like Keling is anticipated to improve content quality on Kuaishou's platform, attracting more users and diversifying revenue streams [12]

Group 1 - The rapid development of artificial intelligence (AI) technology is creating widespread opportunities in the market [2] - Keling AI announced the global release of its upgraded Keling 2.0 video and image generation models, which maintain a leading position in dynamic quality and semantic response [3] - AMD plans to expand its AI chip and server production in the U.S. by utilizing TSMC's expanding Arizona factory [3] Group 2 - Apple will analyze user data stored on devices to improve its AI platform while ensuring user privacy by not directly using this data for training [4][7] - Elon Musk stated that a comprehensive and pure general AI solution for full self-driving will soon be available, requiring only cameras and Tesla's AI chips [5] - The price of graphics cards has surged in the secondary market, with some models doubling in price compared to the manufacturer's suggested retail price [5] Group 3 - Analyst Ming-Chi Kuo indicated that U.S. tariff issues may lead to a significant slowdown in business activity expectations in the second half of 2025, potentially resulting in stagnant or declining revenues [6] - Meta Platforms announced it will utilize publicly available content from EU users to train its AI models while ensuring compliance with EU regulations [8][9] - Meta aims to create AI that reflects the diversity and complexity of European communities, incorporating various dialects and cultural nuances [9]

Core Insights - The company announced the global release of the upgraded Keling 2.0 video generation model and Ketu 2.0 image generation model during the "Inspiration Realized" 2.0 model launch event [1] Group 1: Model Upgrades - The Keling 2.0 model maintains a global leading position in dynamic quality, semantic responsiveness, and visual aesthetics [1] - The Ketu 2.0 model shows significant improvements in instruction adherence, cinematic quality, and artistic style representation [1]