Market Overview - The gaming sector experienced a decline of 0.23% on September 30, with G-bits leading the drop [1] - The Shanghai Composite Index closed at 3882.78, up 0.52%, while the Shenzhen Component Index closed at 13526.51, up 0.35% [1] Individual Stock Performance - Kunlun Wanwei (300418) saw a significant increase of 7.40%, closing at 48.59 with a trading volume of 1.2963 million shares and a transaction value of 6.222 billion [1] - ST Dazheng (600892) increased by 5.03%, closing at 4.18 with a trading volume of 168,400 shares [1] - G-bits (603444) led the decline with a drop of 3.43%, closing at 568.00 with a trading volume of 24,900 shares and a transaction value of 1.403 billion [2] Capital Flow Analysis - The gaming sector experienced a net outflow of 252 million from institutional investors, while retail investors saw a net inflow of 294 million [2] - Major stocks like Kunlun Wanwei and Starry Entertainment had varying net inflows and outflows from different investor types, indicating mixed investor sentiment [3] Notable Stock Movements - Starry Entertainment (300043) had a net inflow of 27.34 million from institutional investors but a net outflow of 49.14 million from retail investors [3] - The overall capital flow indicates a cautious approach from institutional investors while retail investors showed more activity in certain stocks [3]

Core Viewpoint - The company is actively exploring and developing short drama and interactive gaming projects, indicating a strategic focus on new trends and technologies in the entertainment industry [1] Company Developments - The company has established internal project teams to investigate short dramas and interactive gaming [1] - The sub-IP "Shangyuan Huan" of the seasonal IP has already launched its short drama [1] - The same-name short drama project for "Seasonal IP" has been fully initiated [1]

Core Insights - The issuance of game licenses in September remains high, covering various types of products, with notable approvals including miHoYo's "Honkai: Star Rail" [1][2] - The overall supply of games continues to be released, indicating a normalization trend in license issuance and ongoing industry recovery [1][2] Game License Issuance - A total of 1,195 domestic games have been approved since the beginning of the year, with 145 games approved in September, including titles from Tencent, miHoYo, and NetEase [2] - For imported games, 80 have been approved year-to-date, with 11 approved in September, including titles from Chuangmeng Tiandi and Xinghui Games [2] Market Trends - miHoYo's "Honkai: Star Rail" focuses on large-world sprite collection and has garnered significant attention, with over 4.09 million pre-registrations by September 25 [3] - The competitive landscape is intensifying as various companies, including Tencent and Manjiu, are entering the sprite cultivation genre, indicating a crowded market ahead [3]

Core Viewpoint - The stock of Kaiying Network has shown significant growth in 2023, with a year-to-date increase of 110.95%, indicating strong market performance and investor interest [1][2]. Financial Performance - For the first half of 2025, Kaiying Network reported a revenue of 2.578 billion yuan, representing a year-on-year growth of 0.89%, while the net profit attributable to shareholders was 950 million yuan, up 17.41% compared to the previous year [2]. - Cumulatively, the company has distributed a total of 1.212 billion yuan in dividends since its A-share listing, with 852 million yuan distributed over the last three years [3]. Shareholder and Market Activity - As of September 10, 2025, the number of shareholders for Kaiying Network decreased to 53,800, a reduction of 13.28%, while the average number of circulating shares per person increased by 15.31% to 35,081 shares [2]. - The stock price reached 28.50 yuan per share with a market capitalization of 60.889 billion yuan, and the trading volume was 578 million yuan, reflecting active trading [1]. Business Overview - Kaiying Network, established on January 3, 2000, and listed on December 7, 2010, primarily engages in game development and operation, with mobile games accounting for 73.03% of its revenue [1]. - The company operates in the media and gaming industry, focusing on cloud gaming, Tencent concepts, online games, mobile games, and e-sports [1]. Institutional Holdings - As of June 30, 2025, the second-largest circulating shareholder is Hong Kong Central Clearing Limited, holding 110 million shares, an increase of 4.262 million shares from the previous period [3]. - Other notable institutional shareholders include Huaxia CSI Animation Game ETF and Southern CSI 500 ETF, both of which have increased their holdings [3].

Investment Rating - The report maintains a "Positive" investment rating for the gaming industry [7]. Core Insights - The issuance of game licenses in September, with approvals for companies like Kaiying, Giant Network, and Point Point, indicates a positive trend in the new game cycle and overall industry prosperity. The performance of several new games, such as Giant Network's "Supernatural Action Group" and G-bits' "Staff Sword Legend," is expected to drive the product cycle and industry sentiment upward. The combination of new game cycles, favorable policies, and AI catalysis suggests that the gaming sector still has upward valuation potential, warranting continued attention to investment opportunities in this area [2][4][6]. Summary by Sections Game License Issuance - In September, a total of 156 game licenses were issued, including 145 domestic and 11 imported games. This brings the total number of domestic game licenses issued this year to 1,195, nearing the annual total of 1,306 from 2024 [6][9]. Market Performance - The gaming market in China showed a month-on-month growth, with August revenues reaching 29.263 billion yuan, a 0.61% increase from the previous month. The mobile gaming market accounted for 21.541 billion yuan, reflecting a 0.85% month-on-month growth [9]. New Game Launches - Several new games are set to launch or have recently launched, including Kaiying's "The Legend of the Adventure" and Heartbeat's "Yise," which quickly topped the iOS and TapTap charts. The report highlights a rich pipeline of upcoming games from major developers, indicating potential for revenue growth [6][9].

Investment Rating - The report maintains an "Outperform" rating for the media sector [1] Core Viewpoints - The media sector has shown significant performance with favorable policies and AI-driven growth, particularly in the gaming segment [1][4] - The gaming sector is experiencing robust growth, with a year-on-year revenue increase of nearly 24% and net profit growth of approximately 75% [4][13] - The report highlights a divergence in performance among sub-sectors, with gaming showing strong growth while publishing and film sectors face challenges [4][12] Summary by Sections Investment Recommendations - The media sector's H1 2025 report indicates record-high revenue and significant profit growth, with a positive outlook on gaming, publishing, and IP derivative products [4][12] - The gaming sector benefits from favorable policies and AI advancements, leading to improved valuations and sustained performance [4][13] Market Review - From August 18 to September 26, 2025, the media sector rose by 11.76%, underperforming the ChiNext index by 12.60 percentage points but outperforming the CSI 300 and Shanghai Composite indices [3][16] - Among sub-sectors, the gaming sector increased by 28.36%, while the publishing sector declined by 2.19% [3][16] Industry News - Recent government policies, such as the "Artificial Intelligence +" initiative, are expected to enhance the media sector's growth prospects [25] - The gaming industry saw the approval of 145 domestic game licenses in September 2025, indicating a healthy regulatory environment [50] Monthly Data - In August 2025, the domestic film market generated a box office of 5.991 billion yuan, a year-on-year increase of 48.59% [26][27] - The gaming market's actual sales revenue in August 2025 was 29.263 billion yuan, with a year-on-year decline of 13.01% [44]

Group 1 - The core viewpoint of the article highlights that the approval volume of game licenses in September remains high, covering various types of products and well-known manufacturers [1] - From the beginning of the year to date, a total of 1,195 domestic games have been approved, with 145 games approved in September, including titles from Tencent, miHoYo, NetEase, and others [1] - For imported games, a total of 80 games have been approved this year, with 11 games approved in September, including titles from Chuangmeng Tiandi and Xinghui Games [1] Group 2 - The game ETF (516010) tracks the animation and gaming index (930901), which selects listed companies involved in animation production, game development, platform operation, and related industry chains to reflect the overall performance of the sector [1] - The index focuses on innovation and growth in the animation and gaming field, covering the entire industry chain from content creation to distribution channels, showcasing distinct industry representation and market vitality [1]

Investment Rating - The report maintains an "Outperform" rating for the media and internet sector [5][42]. Core Views - The report expresses optimism regarding opportunities in the gaming and film industries, particularly with the upcoming National Day holiday and the recent issuance of game licenses [1][4]. - The gaming sector is expected to benefit from a new product cycle, while the film industry is anticipated to experience a bottom reversal [4][42]. - AI applications are highlighted as a significant area for investment, with various companies making advancements in AI technologies [2][4][42]. Summary by Sections Industry Performance - The media sector saw a weekly increase of 0.47%, underperforming compared to the CSI 300 (1.15%) and the ChiNext Index (1.80%) [1][12]. - Notable gainers included Guomai Culture and Guiguang Network, while Jin Yi Film and China Film experienced significant declines [1][12]. Key Developments - In September, over 100 game licenses were issued, including 145 domestic and 11 imported games [2][17]. - Major AI advancements were reported, including Alibaba's Wan2.5 model and Meta's Code World Model [2][19]. Box Office and Content Performance - The box office for the week of September 22-28 reached 354 million yuan, with "731" leading at 1.065 billion yuan, accounting for 87.9% of the total [3][20]. - Popular TV shows included "Earth Super Fresh" and "Flowers and Youth" [27][25]. Investment Recommendations - The report recommends focusing on gaming stocks like Kaiying Network and Jiubite, as well as media companies such as Mango Super Media and Bilibili [4][42]. - The report emphasizes the importance of AI applications across various sectors, including gaming, education, and advertising [4][42]. Company Earnings Forecasts - Key companies such as Kaiying Network and Mango Super Media are projected to have earnings per share (EPS) of 1.01 yuan and 0.81 yuan for 2025, respectively [5][45]. - The report provides a detailed valuation table for several companies, all rated as "Outperform" [5][45].

Summary of the Gaming Industry Conference Call Industry Overview - The gaming industry in China has maintained high activity levels since the summer, with a market size of approximately 29 billion yuan in July, reflecting a year-on-year growth of nearly 5% [1][4] - Mobile game revenue showed a slight increase, with several new games performing well, such as "Douluo Dalu: Soul Master World," which generated over 100 million yuan in its first month [1][4] - The market size remained stable in August compared to July, but there was a year-on-year decline, with mobile game revenue decreasing by 4% [1][4] Key Insights - The overall performance of the gaming industry has been positive this year, supported by a relaxation of policies and an acceleration in supply growth [2] - The industry is in an upward trend, with new game launches significantly boosting company performance [2] - The release of 156 game licenses in September, including 145 domestic and 11 imported, indicates a healthy regulatory environment [6][7] Company-Specific Developments - Huatuo's core overseas products have shown strong performance, leading to an 11% month-on-month increase in revenue for Diandian Interactive [8] - Giant Network's game "Supernatural" has exceeded expectations in revenue stability, with plans to launch an overseas version next year [8] - Key products approved include new titles from Tencent, NetEase, and miHoYo, indicating strong competition among major players [6][7] International Market Performance - Chinese self-developed games generated nearly 1.7 billion USD in overseas revenue in July, with a year-on-year growth in single digits [5] - Despite a 10% year-on-year decline in August due to high base effects, some products like KingShow's "Frost Knight" maintained strong growth, with a 20% month-on-month increase [5] Future Trends - The legendary game market is substantial, with annual revenues of 30-40 billion yuan, and more legendary games are expected to enter the market [9] - Future growth will come from expanding partnerships with larger companies, the introduction of 25 key legendary games, and enhancements in PC, live streaming, and item trading functionalities [9] Product Development and AI Initiatives - Kaiying Network is entering a new product cycle, with "Blood of the River and Lake" launched in South Korea and plans for several new titles by 2025-2026 [10] - The AI product EVE is expected to launch by the end of the year, and the AI gaming platform Soon may begin commercialization [10] Performance of Key Companies - Gigabit has consistently outperformed expectations, with "Sword of the Hero" showing strong overseas revenue growth of 14% month-on-month in August [11] - Perfect World and Shenzhou Taiyue have new titles in development, with Perfect World's "Yihuan" showcased at the Tokyo Game Show [12] Overall Market Sentiment - The gaming industry remains strong, with companies performing well even in the traditionally slower month of September [13] - Continued investment opportunities are recommended in companies such as Giant Network, Kaiying Network, ST Huatuo, Perfect World, Gigabit, Shenzhou Taiyue, and Sanqi Interactive [13]

Investment Rating - The report maintains a "Positive" investment rating for the media industry [1] Core Insights - The gaming sector is expected to experience a high prosperity cycle driven by stable game license approvals and upcoming holiday promotions, with a recommendation to increase allocations in gaming stocks [4] - AI applications are gaining momentum with significant investments in infrastructure, suggesting a strong growth trajectory for AI-related companies [5] Summary by Sections Industry Data Overview - "Plants vs. Zombies 3" ranks first in the iOS free game chart, while "Honor of Kings" leads the iOS revenue chart as of September 27, 2025 [11][15] - The domestic client game market revenue in August saw a year-on-year increase of 17% [29] Industry News Overview - Nvidia's investment of $100 billion in OpenAI aims to enhance AI infrastructure, indicating a robust future for AI applications [30] - In September, 156 game licenses were issued, with major companies like Tencent, NetEase, and miHoYo receiving approvals [33] Company Recommendations - The report suggests focusing on companies such as Xindong Company, Kaiying Network, Shenzhou Taiyue, Giant Network, and Tencent Holdings for potential investment opportunities in the gaming sector [4] - For AI applications, companies like Huizhong Technology, Kuaishou, and NetEase Cloud Music are highlighted as key players to watch [5]