China beats US box office in Q1 and is entering new growth cycle: HSBC

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People walk by a movie poster for Chinese action flick “Wolf Warrior 2” in Beijing, China.

As more people head to the cinemas, one additional factor likely to contribute to growth is the development of more channels of revenue that rely on intellectual property rights from movies, Guo said.

“The expanding number of of sequels is one of the key factors behind the enduring success of Hollywood. Marvel, Transformers and Mission Impossible have all become strong IPs … The same pattern is emerging in China,” he said, citing local film franchises like “Monster Hunt,” “Wolf Warror” and “Detective Chinatown.”

Against that backdrop, HSBC Qianhai Securities initiated coverage on three companies operating in the mainland film and television industry: Huayi Brothers and entertainment company Enlight Media, which it has buy calls on, and a hold rating on China Film.

Huayi Brothers, a film and television production house, is behind blockbuster releases such as “The Ex-File 3: The Return of the Exes,” which outshone “Star Wars: The Last Jedi” during its opening weekend in China, and the Feng Xiaogang-directed “Youth.”

Beijing-based entertainment company Enlight Media, which backs online ticketing platform Maoyan, is responsible for “Lost in Thailand” and “The Mermaid,” once the top-grossing film in China. Meanwhile, China Film is involved in multiple areas in the film business, including production, distribution and screening.