Core Viewpoint - Bilibili's stock price increased by over 3%, reaching $30.89, following the successful launch of its game "Escape from Duckkov," which sold over 1 million copies in its first week globally [1] Group 1: Game Performance - "Escape from Duckkov," developed by Carbonated Squad and published by Bilibili, launched globally on October 16 [1] - The game achieved a significant milestone by surpassing 1 million copies sold within the first week of its release [1] Group 2: Revenue Projections - Everbright Securities maintains a "Buy" rating for Bilibili, projecting that "Escape from Duckkov" could ultimately sell over 3 million copies [1] - The expected revenue from the game is estimated to exceed 150 million yuan [1]

Core Viewpoint - The media sector has shown a notable performance this week, ranking 7th among all sectors in terms of price changes, with a 4.20% increase, outperforming the CSI 300 but underperforming the ChiNext Index [3]. Group 1: Industry Performance - The media industry increased by 4.20% during the week of October 20-24, 2023, outperforming the CSI 300's 3.24% but underperforming the ChiNext Index's 8.05% [3]. - The top gainers in the media sector included Rongxin Culture, Youzu Interactive, Haikan Co., and Jiayun Technology, while the biggest losers were Vision China, Tianxiaxiu, Xinghui Entertainment, and Gehua Cable [3]. Group 2: Key Events and Innovations - Significant events include the launch of OpenAI and Oracle's $15 billion Lighthouse Park, expected to be completed by 2028 [3]. - The introduction of the MoGA long video generation model by the University of Science and Technology of China and ByteDance, capable of producing high-quality videos with a resolution of 480p at 24 frames per second [3]. - ByteDance's Seed team has launched the 3D generation model Seed3D1.0, which can create high-quality simulation-level 3D models from a single image [3]. - Bilibili's "Escape from Duckkov" achieved over one million sales in its first week [3]. Group 3: Investment Recommendations - The company maintains a positive outlook on the gaming sector, IP toys, and the potential for policy shifts in the film industry, recommending stocks such as Giant Network, Kaiying Network, and Gigabit [5]. - For IP toys, Pop Mart is highlighted as a key recommendation [5]. - The media sector is advised to monitor potential economic recovery, with a focus on companies like Focus Media [5]. - The shift in content policies and AI application opportunities are emphasized, recommending platforms like Mango TV and Bilibili, as well as content providers such as Light Media and Huace Film [5].

Core Viewpoint - Bilibili's self-developed game "Escape from Duckkov" has achieved significant sales success shortly after its global release, indicating strong market demand and potential revenue growth for the company [1] Sales Performance - The game was launched on October 16, with a price of 58 yuan in the domestic market and an 88% discount during the initial release period [1] - Within just three days of its launch, the game sold over 500,000 copies, with a peak of over 220,000 online players [1] - As of the evening of October 22, sales surpassed 1 million copies, receiving 8,465 reviews on Steam, with 96% positive feedback [1] Revenue Projections - The research report from Everbright Securities estimates that the game's total sales could exceed 3 million copies, potentially generating over 150 million yuan in revenue [1]

Group 1 - The Hong Kong stock market indices experienced a decline, with the Hang Seng Tech Index dropping over 0.5% [1] - The largest ETF in the A-share sector, the Hang Seng Tech Index ETF (513180), followed the index's adjustment, with leading stocks such as ASMPT, Xiaomi Group, Li Auto, and Tongcheng Travel declining [1] - Bilibili, Kingsoft, and Xpeng Motors saw gains, with Bilibili rising over 7% [1] Group 2 - The game "Escape from Duckkov" achieved over 500,000 sales within three days of its release and surpassed 1 million sales in just one week [1] - The game received a 96% approval rating on the Steam platform, reaching "overwhelmingly positive" status, with peak online players nearing 520,000 [1] - "Escape from Duckkov" is published by Bilibili Games and developed by its in-house team "Carbonated Squad," featuring a duck-themed single-player top-down looting and evacuation shooting gameplay [1] Group 3 - Future market outlook suggests that significant policies, the APEC summit, and potential interest rate cuts by the Federal Reserve may lead to renewed market interest and increased trading activity [2] - The tech sector in Hong Kong is expected to benefit from current trends in AI, with foreign capital inflow potentially exceeding expectations due to the backdrop of interest rate cuts [2] - Investors without a Hong Kong Stock Connect account may consider the Hang Seng Tech Index ETF (513180) for exposure to core Chinese AI assets [2]

Summary of Earnings Call for China Games & Entertainment Sector Industry Overview - The Games & Entertainment sector has shown strong year-to-date (YTD) performance, with most companies experiencing growth between 60-100% [1][2] - Recent performance has diverged since the second quarter results, indicating potential volatility [1] - Future growth is expected to depend on earnings delivery, upward revisions in earnings per share (EPS), and new growth engines, particularly in AI initiatives [1] Key Companies Discussed NetEase (NTES) - **Rating**: Buy - **YTD Performance**: +69% - **3Q Metrics**: Game revenue increased by 18% year-over-year (YoY), operating profit up 23% YoY, and deferred revenue up 22% YoY [4][17] - **Catalysts**: 1. Progress in AI integration into existing and new games [4][17] 2. New game testing and launch timelines [4][17] 3. Potential primary listing in Hong Kong [4][17] - **Outlook**: Expected to enter a new product cycle with two blockbuster titles targeted for launch in 2026, which could significantly impact revenue and market perception [21] Bilibili (BILI) - **Rating**: Buy - **YTD Performance**: +63% - **3Q Metrics**: Advertising sales up 20% YoY, game revenue down 16% YoY, operating profit at RMB646 million, up 137% YoY [8][32] - **Catalysts**: 1. New game "Sanguo Ncard" testing in late October with a launch expected by Chinese New Year 2026 [8][33] 2. AI initiatives rolling out in the Bili community [8][33] - **Outlook**: Anticipated reversal of game revenue decline and integration of AI to enhance advertising and user engagement, with operating profit margin expected to reach 10% by 4Q25 and 15%+ in 2026-27 [38][36] Kuaishou - **Rating**: Buy - **YTD Performance**: +86% - **3Q Metrics**: Advertising revenue up 13% YoY, GMV up 15% YoY [9][51] - **Catalysts**: 1. Updates on Kling revenue guidance and monthly grossing trends [9][51] 2. Capex and AI revenue outlook for 2026 [9][51] - **Outlook**: Expected to deliver in-line results for 3Q25, with focus on AI integration and eCommerce growth despite competition [56][52] Tencent Music (TME) - **Rating**: Buy - **YTD Performance**: +100% - **3Q Metrics**: Music service revenue up 23% YoY, average revenue per user (ARPU) up 11% YoY [9][10] - **Catalysts**: 1. Completion of Ximalaya deal and business consolidation [10] 2. Upside potential from SVIP and enhanced content offerings [10] - **Outlook**: Continued growth expected from the proliferation of the fans economy and K-pop resurgence in China [10] iQIYI - **Rating**: Neutral - **YTD Performance**: +8% - **3Q Metrics**: Subscription revenue down 3% YoY, adjusted operating profit at -RMB22 million [10][11] - **Catalysts**: 1. Details on new drama policy and potential regulatory tailwinds [11] 2. Updates on secondary listing in Hong Kong [11] - **Outlook**: Challenges remain with subscription growth and profitability, requiring close monitoring of policy impacts [11] Additional Insights - The gaming industry is projected to grow at a low teens percentage YoY in 2025, driven by a loosening of game supply regulations [3] - AI initiatives are expected to enhance advertising effectiveness and user engagement across platforms, particularly for Bili and Kuaishou [3][36] - The easing of content regulations is anticipated to positively impact companies like IQ and TME, potentially fostering a more supportive environment for international artists [3] Conclusion The China Games & Entertainment sector is poised for continued growth, driven by strategic initiatives in AI, new game launches, and regulatory support. Companies like NetEase, Bilibili, and Kuaishou are expected to leverage these opportunities to enhance their market positions and financial performance in the coming quarters.

Core Viewpoint - Bilibili's stock price saw a significant increase, rising nearly 6% in early trading, attributed to the successful launch of the game "Escape from Duckov," which achieved over 1 million sales in its first week [1] Group 1: Stock Performance - Bilibili's stock price rose by 4.96%, reaching 241.2 HKD, with a trading volume of 425 million HKD [1] Group 2: Game Launch and Performance - The game "Escape from Duckov," developed by Carbon Squad and published by Bilibili, was launched globally on October 16 [1] - The game achieved over 1 million sales in its first week, highlighting its unique gameplay and high-quality content [1] - The game's core mechanics combine PVE looting and nurturing elements, appealing to a wide range of global players [1]

Core Viewpoint - Bilibili-W (09626.HK) experienced a significant increase in stock price, rising nearly 6% in early trading and currently up 4.96% at 241.2 HKD with a trading volume of 425 million HKD [1] Summary by Category - **Stock Performance** - The stock price of Bilibili-W rose nearly 6% in early trading [1] - As of the latest update, the stock is up 4.96% at 241.2 HKD [1] - The trading volume reached 425 million HKD [1]

Group 1 - The domestic AI industry chain is accelerating, with significant developments in large models, computing power, and applications [1] - The online consumption ETF fund (159793) is positioned to benefit from the explosion of AI applications, having recently increased by 0.18% [1] - As of October 27, 2025, the online consumption ETF fund has seen a cumulative increase of 3.01% over the past week [1] Group 2 - As of September 30, 2025, the top ten weighted stocks in the CSI Hong Kong-Shenzhen Online Consumption Theme Index (931481) account for 55.76% of the index [2] - The top ten stocks include Alibaba-W (09988), Tencent Holdings (00700), Kuaishou-W (01024), Meituan-W (03690), and JD Health (06618) [2] - The weightings of the top stocks are as follows: Alibaba-W (11.77%), Tencent Holdings (10.24%), and Kuaishou-W (6.37%) [4]

Core Viewpoint - Bilibili's stock price saw a nearly 6% increase in early trading, reflecting positive market sentiment following the successful launch of its game "Escape from Duckov," which achieved over 1 million sales in its first week [1] Group 1: Stock Performance - Bilibili's stock (09626) rose by 4.96%, reaching HKD 241.2, with a trading volume of HKD 425 million [1] Group 2: Game Launch Success - The game "Escape from Duckov," developed by Bilibili's in-house team Carbonated Squad and published by Bilibili, launched globally on October 16 [1] - The game achieved over 1 million sales within its first week, indicating strong market demand and player interest [1] - The unique gameplay combining PVE looting and nurturing elements has been recognized for its high quality and differentiation, appealing to a global audience [1]

Summary of Key Points from the Conference Call Industry Overview - The conference call primarily discusses the **China online entertainment industry**, focusing on mobile gaming, online video, and online music sectors. Mobile Gaming Insights - **Overall Market Performance**: Q3 2025 saw a **4% YoY decline** in mobile game grossing due to a high base in 2024, but a **2% QoQ increase**. This is softer than typical Q3 vs Q2 seasonality, attributed to fewer new launches in summer compared to previous years [2][10]. - **Key Players**: - **Tencent**: Achieved a **9% QoQ growth** in grossing, driven by strong performance from **Delta Force** (estimated **Rmb1.5 billion** in September). Other stable titles include **Honor of Kings**, **Peacekeeper Elite**, and **DNF Mobile** [2][9]. - **NetEase**: Reported a **5% QoQ growth** in mobile grossing, with notable contributions from **Eggy Party** and **Where Winds Meet**, although this was partially offset by declines in **Sword of Justice** and **Identity V**. It is noted that only about **40%** of NetEase's reported mobile revenue is tracked, indicating potential revenue from non-app store channels [2][6]. - **Bilibili**: Launched **Escape From Duckrov**, achieving a peak of **222,000 concurrent players**, ranking it as the **5 most played game globally on Steam** [2][6]. Online Video Sector - **Kuaishou** launched **Kling 2.5 Turbo**, which is now the **1** in text-to-video and image-to-video generation, maintaining a cost advantage over competitors like Google's Veo 3 [3][4]. - **iQiyi**: Experienced a **10% MoM/YoY decline** in MAUs but is expected to see low-single-digit QoQ growth in membership revenue for Q3, aided by summer traffic improvements [3][4]. - **Tencent Video** and **Youku** have seen some recent successes with new content releases, while **Mango TV** maintained flat MAUs YoY [3][4]. Online Music Trends - The online music industry saw a **2% YoY increase** in MAUs, but time spent remained stable. **TME** (Tencent Music Entertainment) reported a **7% decline** in combined MAUs, with QQ Music and Kugou Music showing significant drops [6][7]. - **NetEase Cloud Music** showed a slight recovery with a **2% YoY increase** in MAUs, while **Soda Music** outperformed with a **91% YoY increase** in MAUs, likely benefiting from ByteDance's traffic [6][7]. Future Content Pipeline - Upcoming major content releases include titles from **Tencent Video**, **iQiyi**, **Youku**, and **Mango TV**, with several anticipated to launch in late October and throughout November and December [7][8]. Investment Outlook - The report remains positive on the online entertainment sector, citing: 1. Healthy consumer spending on leisure activities. 2. Supply-side improvements due to a more favorable regulatory environment and innovations in business models [4][5]. Additional Insights - The report emphasizes the importance of AI in content production and the potential for new business models to drive growth in the online entertainment sector [4][5]. This summary encapsulates the key insights and data points from the conference call, providing a comprehensive overview of the current state and future outlook of the online entertainment industry in China.