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]

Core Viewpoint - The company emphasizes the urgent need for composite talents skilled in AI technology to drive innovation and growth in the gaming industry, as demonstrated by its recruitment efforts at top universities [1][4][13]. Group 1: Recruitment and Talent Development - The company is actively recruiting at prestigious universities like Tsinghua University, Peking University, and Zhejiang University, showcasing its commitment to integrating AI technology with talent cultivation [1][11]. - The recruitment strategy focuses on high-level talents who possess both technical skills and innovative thinking, particularly those with a background or interest in AI [13]. - The company offers competitive salaries, with technical positions reaching up to 650,000 yuan and non-technical positions up to 400,000 yuan, along with various benefits to support new hires [15]. Group 2: AI Integration and Industry Strategy - The company has invested heavily in AI capabilities, acquiring over a thousand high-performance GPUs and achieving a total computing power of 312 PFLOPS, with nearly 100 million yuan invested since 2022 [4]. - The development of the proprietary industry model "Xiao Qi" has led to the creation of nearly 400 intelligent agents, significantly enhancing operational efficiency [4]. - AI applications have improved productivity, with AI-generated 2D drawings exceeding 2 million per month and AI video production reaching over 40,000 clips annually [4]. Group 3: Global Expansion and Cultural Promotion - The company has been executing a global strategy since 2012, establishing the 37GAMES brand and expanding its gaming business to over 200 countries, positioning itself among the top Chinese gaming companies in international markets [8][10]. - The company utilizes games as a medium to promote Chinese culture, integrating traditional elements into its products to bridge cultural gaps [8][10]. - AI is also employed in localization and operational processes, achieving a 95% accuracy rate in AI translation for overseas markets [8]. Group 4: Future Directions and Industry Trends - The company aims to focus on "premium, diversified, and global" product development, expanding into various game genres to meet diverse user needs [10]. - The company believes that the future of the gaming industry lies in composite talents who can leverage AI and innovation to drive growth [13]. - The company is committed to fostering a dynamic relationship between academia and industry through initiatives like the Global University Game Innovation Competition, which includes a funding pool exceeding 1 million yuan [13].

Group 1 - The core point of the news is that Sanqi Interactive Entertainment experienced a 5.06% drop in stock price, reaching 22.13 CNY per share, with a trading volume of 1.517 billion CNY and a turnover rate of 4.23%, resulting in a total market capitalization of 48.957 billion CNY [1] - Sanqi Interactive Entertainment is primarily engaged in the research, development, publishing, and operation of mobile and web games, with mobile games accounting for 97.09% of its revenue, web games 2.08%, and other sources 0.83% [1] Group 2 - From the perspective of major fund holdings, one fund under Taiping Fund has a significant position in Sanqi Interactive Entertainment, with the Taiping Reform Dividend Selection Fund (005270) holding 380,000 shares, representing 4.87% of the fund's net value, ranking as the tenth largest holding [2] - The Taiping Reform Dividend Selection Fund (005270) has a total size of 135 million CNY and has achieved a year-to-date return of 37.09%, ranking 2398 out of 8171 in its category, with a one-year return of 66.81%, ranking 1736 out of 8004 [2] - The fund manager, Xu Chuang, has been in position for 2 years and 85 days, with the fund's total assets currently at 885 million CNY, achieving a best return of 61.44% and a worst return of 19.67% during his tenure [2]

Group 1 - The gaming sector experienced a decline at the beginning of trading, with companies such as Gigabit, Xinghui Entertainment falling over 5% [1] - Other companies like Xunyou Technology, 37 Interactive Entertainment, and Shenzhou Taiyue saw declines of over 3% [1] - Additional companies including Dihun Network, Kaiying Network, and Tom Cat also faced downward movement in their stock prices [1]

Core Insights - The article highlights the stable approval process for domestic game licenses in China, with a significant increase in the number of licenses issued in 2025 compared to the previous year [1][3] - The gaming market in August 2025 showed stable performance, with notable revenue contributions from high-quality products, indicating a positive outlook for game development companies [2][3] Group 1: License Approval and Supply - On September 24, 2025, the National Press and Publication Administration approved 145 domestic games and 11 imported games, indicating a robust supply of game licenses [1] - The total number of domestic game licenses issued in 2025 has reached 1,195, significantly higher than the 959 licenses issued in the same period last year, with an average monthly issuance of 132.8 licenses [1] Group 2: Market Performance - In August 2025, the domestic gaming market generated revenue of 29.263 billion yuan, reflecting a month-on-month growth of 0.61% but a year-on-year decline of 13.01% due to a high base from the previous year [2] - Mobile game revenue was 21.521 billion yuan, with a month-on-month increase of 0.85% and a year-on-year decrease of 4.25%, while client game revenue was 6.563 billion yuan, showing a month-on-month decline of 1.11% but a year-on-year increase of 17.59% [2] Group 3: Investment Outlook - The stable approval rhythm for game licenses and the rich supply of game products lead to a favorable investment outlook for companies with strong content reserves and solid fundamentals [3]

Core Viewpoint - The gaming sector in A-shares has seen significant gains following the approval of multiple domestic and imported game licenses, indicating a positive trend for the industry [1][3]. Group 1: Market Performance - On September 25, several gaming stocks surged over 5%, including Kunlun Wanwei (300418.SZ), Icefire Network (300533.SZ), and Gigabit (603444.SH) [1]. - The gaming sector's valuation recovery is attributed to various factors, including the continuous issuance of game licenses, with 145 domestic games and 11 imported games approved recently [1][3]. - As of September 25, 2025, the A-share gaming sector comprises 24 listed companies, with some stocks achieving remarkable performance this year [7][8]. Group 2: Regulatory Environment - The National Press and Publication Administration has approved a total of 1,275 games in 2025, significantly higher than the 959 games approved in the same period last year, with an average monthly issuance increasing from 88.8 in 2023 to 132.8 in 2025 [3]. Group 3: Financial Performance - The domestic gaming market's actual sales revenue reached 168 billion yuan in the first half of 2025, marking a 14.08% year-on-year increase, setting a historical record [5]. - The A-share gaming sector reported a 22.8% year-on-year revenue growth in the first half of 2025, indicating a strong industry fundamental [5]. Group 4: Company Highlights - ST Huatuo's stock price has increased over 300% this year, making it the highest market cap company in the A-share media sector, with a total market value exceeding 160 billion yuan [9]. - Gigabit's stock rose by 5.67%, with a market value of approximately 47.69 billion yuan, and the company reported a 28.49% year-on-year revenue growth in the first half of 2025 [10][11].

Core Viewpoint - The gaming industry in China is experiencing a significant increase in the issuance of domestic game licenses, with a total of 1,195 licenses granted in the first nine months of the year, surpassing the 959 licenses issued during the same period last year [1][3]. Group 1: License Issuance - In September, 145 domestic games were approved, contributing to a total of 1,195 domestic licenses issued this year, which is significantly higher than the 959 licenses issued in the same period last year [1][3]. - The average monthly issuance of licenses has increased from 88.8 in 2023 and 108.8 in 2024 to 132.8 in the first nine months of this year [1][3]. Group 2: Market Performance - The gaming market in August recorded a revenue of 29.263 billion yuan, showing a month-on-month growth of 0.61%, although it experienced a year-on-year decline of 13.01% due to high revenue from a major game in the previous year [4]. - Mobile game revenue reached 21.521 billion yuan, with a month-on-month increase of 0.85% and a year-on-year decline of 4.25%, while client game revenue was 6.563 billion yuan, showing a month-on-month decrease of 1.11% but a year-on-year increase of 17.59% [4]. Group 3: Key Products and Companies - Tencent's game "Delta Action" saw its daily active users rise to 30 million in September, topping the iOS sales chart, indicating strong profit contributions [4]. - The new game "Valorant: Energy Action" is expected to generate over 300 million yuan in its first month [4]. - Companies such as Tencent, NetEase, and Giant Network are highlighted for their strong product performance and market presence [4][5].

Investment Rating - The report assigns an "Increase" rating for the gaming industry, indicating a positive outlook compared to the CSI 300 index, with expected growth exceeding 15% [13]. Core Insights - In September, a total of 145 domestic games received approval, contributing to a total of 1,195 domestic game licenses issued this year, significantly higher than the 959 licenses issued in the same period last year [6][8]. - The gaming market in August showed stability, with a total revenue of 29.263 billion yuan, reflecting a month-on-month growth of 0.61% but a year-on-year decline of 13.01% [6][8]. - The report highlights the strong performance of leading products, such as Tencent's "Delta Action," which reached 30 million daily active users in September, and the anticipated revenue of over 300 million yuan for the new game "Valorant: Energy Action" in its first month [6][8]. Summary by Sections Game License Approvals - In September, 145 domestic games and 11 imported games received approval, with notable titles from Tencent, NetEase, and others included in the list [6][8]. - The approval rate for domestic game licenses has increased, with an average monthly issuance of 132.8 licenses in 2023, up from 88.8 in 2021 and 108.8 in 2022 [6][8]. Market Performance - The gaming market's revenue for August was 29.263 billion yuan, with mobile games generating 21.521 billion yuan and client games 6.563 billion yuan [6][8]. - The report notes that client games are experiencing growth due to cross-platform products, which enhances their profitability compared to mobile games [6][8]. Investment Recommendations - The report recommends companies with strong content reserves and solid fundamentals, including Kain Network, 37 Interactive Entertainment, Giant Network, Perfect World, and others [6][8]. - Specific stock recommendations include Kain Network (28.94 yuan), 37 Interactive Entertainment (22.49 yuan), and Giant Network (44.87 yuan), all rated for "Increase" [7][8].

Core Viewpoint - The article highlights the approval of 145 domestic online games in September 2025, indicating a supportive regulatory environment for the gaming industry in China, with a total of 1,275 game licenses issued so far this year [3][4]. Game Approval Summary - In September, 145 domestic online games were approved, including 93 mobile games, 42 mobile-casual games, 7 mobile-client games, 2 client games, and 1 mobile-web game [3]. - Additionally, 11 imported online games were approved, with 6 being mobile games [3]. Financing and Investment Insights - The article lists game stocks with significant net purchases by financing clients in September, with three stocks exceeding 100 million yuan in net purchases: Kunlun Wanwei (760 million yuan), Sanqi Huayu (544 million yuan), and Giant Network (153 million yuan) [5]. Company Performance Overview - Kunlun Wanwei reported a revenue of 3.733 billion yuan in the first half of the year, a year-on-year increase of 49.23%, focusing on AI game product optimization [7]. - Sanqi Huayu achieved a revenue of 8.486 billion yuan, a year-on-year decrease of 8.08%, but its net profit increased by 10.72% to 1.4 billion yuan [7]. - Key games in the pipeline for Sanqi Huayu include several titles under development, indicating a strategy for diversified gaming experiences [7]. Profitability Rankings - The top companies by net profit in the first half of the year include ST Huatuo (2.656 billion yuan), Sanqi Huayu (1.4 billion yuan), and Kaiying Network (950 million yuan) [8][9]. - Notably, ST Huatuo experienced a significant year-on-year profit increase of 129.33% [10]. Profit Growth Analysis - Companies like Sheng Tian Network and Youzu Network showed remarkable profit growth, with increases of 1186.02% and 989.31% respectively, while others like Perfect World and Glacier Network turned losses into profits [10].