CICC released a research report stating that most film companies in Q2 2025 experienced revenue declines due to lackluster overall box office performance, with profit margins declining even more significantly due to cost rigidity. The 2025 summer box office results came in slightly below previous expectations (13-16 billion yuan), primarily due to the late scheduling of major domestic commercial films. Since mid-to-late July, cinema demand has shown noticeable improvement following film releases. Some films' box office performance and IP derivative businesses may exhibit long-tail effects, and overall cinema demand is expected to continue. Additionally, National Day holiday films have been scheduled sequentially, and imported IP sequel films such as "Now You See Me 3," "Zootopia 2," and "Avatar 3" are expected to be introduced in Q4 2025, potentially providing support for full-year box office performance. The firm recommends monitoring domestic film box office performance and the pace of imported film introductions.

CICC's main viewpoints are as follows:

Q2 2025 Film Company Performance Generally Subdued Most film companies in Q2 2025 saw revenue declines due to weak overall box office performance, with profit margins declining even more significantly due to cost rigidity. Beijing Enlight Media Co.,Ltd. achieved YoY growth in both revenue and profits in Q2 2025, with "Nezha 2" derivative businesses likely being the main contributor, and the film's box office also demonstrating certain long-tail effects.

Q2 2025: Overall Box Office Under Pressure, Film Companies Focus on Cost Reduction and Efficiency Enhancement According to EntGroup, Q2 2025 national box office including service fees totaled 4.85 billion yuan, down nearly 35% YoY, creating pressure on all film companies' revenue. CICC believes that while the second quarter is typically the film industry's off-season, the causes of Q2 2025's weak performance also include top films' box office siphoning effects, limited industry content supply, and diversion to other entertainment formats. However, some film companies' Q2 2025 profit declines or loss margins were better than previously expected, mainly due to effective cost and expense control. Under current conditions, film companies may further deepen cost reduction and efficiency enhancement efforts to improve overall operational efficiency.

2025 Summer Season: Achieved 12 billion yuan Box Office with Positive YoY Growth According to EntGroup, the 2025 summer season achieved approximately 12 billion yuan in box office including service fees, up 2.9% YoY. Cinema attendance increased 12.8% YoY to 322 million people, while average ticket prices declined 8.8% YoY to 37.24 yuan. The top three films by box office for the season were "Nanjing Photo Studio," "Wolf Mountain Little Monster," and "Chasing the Wind."

CICC believes the 2025 summer box office results came in slightly below previous expectations (13-16 billion yuan), primarily due to the late scheduling of major domestic commercial films. Since mid-to-late July, cinema demand has shown noticeable improvement following film releases. Some films' box office performance and IP derivative businesses may exhibit long-tail effects, and overall cinema demand is expected to continue.

National Day Films Scheduled Sequentially, Focus on Q4 Imported Film Introductions According to Maoyan Professional Edition, as of September 1, key films scheduled for the 2025 National Day holiday include: "L.O.R.D: Legend of Ravaging Dynasties 2" (Huace Film & TV and MAOYAN ENT participating investment), "Jackie Chan's Panda Plan 2" (MAOYAN ENT participating investment and main distribution), and "Romance of the Three Kingdoms Starry Sky" (produced by Guomai Culture and Beijing Enlight Media Co.,Ltd.), all scheduled for October 1. Reserve films include "Catch the Spy," "The Volunteers Part 3," "Penghu Sea Battle," and "A Place to Fight."

Additionally, imported IP sequel films such as "Now You See Me 3," "Zootopia 2," and "Avatar 3" are expected to be introduced in Q4 2025, potentially providing support for full-year box office performance. The firm recommends monitoring domestic film box office performance and the pace of imported film introductions.

In terms of investment targets, the firm recommends Shanghai Film Co.,Ltd. (601595.SH) and Beijing Enlight Media Co.,Ltd. (300251.SZ), and suggests following Wanda Film Holding Co.,Ltd. (002739.SZ) and MAOYAN ENT (01896).

Risk Factors: Content supply falling short of expectations, key content box office performance below expectations, piracy distribution, and tightened regulations.