Core Points - The Shanghai Composite Index is at 3994.82 points, above the five-day moving average, with a slight increase of 0.17% [1] - The total trading volume of A-shares today is 10539.94 billion yuan, with 290 A-shares breaking through the five-day moving average [1] Summary by Category Stock Performance - Notable stocks with significant deviation rates above the five-day moving average include: - Digital Human (证券代: 920670) with a price increase of 15.55% and a deviation rate of 12.04% [1] - Sanxiang Technology (证券代: 920195) with a price increase of 14.32% and a deviation rate of 11.23% [1] - Kangzhi Pharmaceutical (证券代: 300086) with a price increase of 14.80% and a deviation rate of 9.06% [1] Trading Activity - The trading turnover rates for the top stocks include: - Digital Human at 10.89% [1] - Sanxiang Technology at 8.85% [1] - Kangzhi Pharmaceutical at 26.97% [1] Additional Stocks - Other stocks with notable performance include: - Fulongma (证券代: 603686) with a price increase of 9.98% and a deviation rate of 8.13% [1] - Sifang Holdings (证券代: 601126) with a price increase of 10.01% and a deviation rate of 7.47% [1] - Yuanda Intelligence (证券代: 002689) with a price increase of 10.07% and a deviation rate of 7.42% [1]

Core Insights - The report indicates that as of October 28, 2025, 40 institutional investors hold a total of 256 million shares of Sanqi Interactive Entertainment, accounting for 11.56% of the company's total share capital [1] - The top ten institutional investors collectively hold 10.98% of the shares, which represents a decrease of 0.52 percentage points compared to the previous quarter [1] Institutional Holdings - Among the institutional investors, notable names include Hong Kong Central Clearing Limited and China Minsheng Bank, with significant holdings in various ETFs focused on animation and gaming [1] - The report highlights that there are 8 public funds that increased their holdings, with a total increase of 0.44% [2] - Conversely, 12 public funds reduced their holdings, with a slight decline in their overall share [2] Foreign Investment - The report notes that one foreign fund, Hong Kong Central Clearing Limited, reduced its holdings by 0.20% compared to the previous quarter [2]

Core Viewpoint - Sanqi Interactive Entertainment (002555.SZ) has seen a significant stock price increase, nearing the daily limit, driven by multiple positive news, with a current price of 21.28 yuan and a total market capitalization of 47 billion yuan [1] Financial Performance - In Q3 2025, Sanqi Interactive achieved an operating revenue of 3.975 billion yuan and a net profit attributable to shareholders of 944 million yuan, representing a year-on-year growth of 49.24% [1] - The successful launch of several games this year, including "Time Explosion," "Heroes Don't Flash," and "Douluo Continent: Soul Hunting World," has significantly contributed to the company's revenue growth [1] Analyst Commentary - CICC commented that the company's profits exceeded expectations and highlighted a rich reserve of new products. They raised the target price by 6.8% to 25.1 yuan while maintaining an "outperforming the industry" rating [1] Strategic Investment - Recently, Sanqi Interactive completed a $20 million investment in Strong Brain Technology, which is recognized for its leading capabilities in the global brain-computer interface industry. This investment is seen as a key move for the company in the brain-computer interface sector and an important practice in exploring a positive cycle of "technology research and development - scenario implementation - ecosystem empowerment" [1]

Group 1: Gaming Industry - The gaming sector showed strong performance with stocks like G-bits hitting the limit up, and others like 37 Interactive Entertainment, Kying Network, and Perfect World also rising, while the gaming ETF (159869) increased by 2.80% [1] - As of October 28, the gaming ETF (159869) reached a product scale of 11.005 billion yuan, facilitating investors in easily allocating to A-share gaming leaders [1] - The National Press and Publication Administration announced the approval of 159 domestic games and 7 imported games as of October 22, maintaining a high issuance level, second only to August's 173 games, indicating a positive trend in the gaming industry supported by policies [1] - The gaming industry is experiencing an upward trend in prosperity due to policy support, with an increase in quality supply boosting market confidence in the sector's development [1] - Several A-share gaming companies reported significant growth in performance or turned losses into profits in the first three quarters, driven by AI empowerment, content supply, and operational model adjustments [1] Group 2: Film and Television Industry - The television industry is benefiting from policy reversals that create trading opportunities, with the National Radio and Television Administration issuing 21 reform measures aimed at enhancing content supply [2] - The "21 Measures" reflect the government's emphasis on quality content supply, supporting the production of long-form content to improve capital efficiency and optimize video platform business models [2] - The ongoing upgrade of large model capabilities in AI allows for rapid generation and intelligent optimization of script drafts based on keywords, enhancing production efficiency while reducing costs [2]

Summary of Earnings Preview for China Internet and Other Services Industry Overview - The report focuses on the China Internet and Other Services sector, particularly highlighting companies involved in gaming and entertainment, such as Damai Entertainment, 37 Interactive Entertainment, G-bits, Perfect World, IQIYI, JOYY, Huya, and Focus Media [2][10]. Key Company Insights Damai Entertainment (1060.HK) - Forecasted 27% YoY total revenue growth in 1HF26, driven by 90% growth in IP business and 13% growth in offline entertainment [3]. - Expected net profit growth of 45% YoY [3]. 37 Interactive Entertainment (002555.SZ) - Anticipated 14% YoY revenue growth and 30% YoY adjusted net profit growth, attributed to new game releases [4]. G-bits (603444.SS) - Forecast aligns with preliminary announcements, with a focus on deferred revenue and 2026 pipelines [4]. Perfect World (002624.SZ) - Expected 34% revenue growth with a shift from a net loss of Rmb189 in 3Q24 to a net profit of Rmb326 in 3Q25 [5]. IQIYI (IQ.O) - Total revenue expected to be largely flat QoQ (-7% YoY), with a forecasted non-GAAP operating loss of Rmb23 million [6]. - Membership revenue projected to increase by 3% QoQ [6]. JOYY (JOYY.O) - Total revenue expected to grow 6% QoQ (-4% YoY), with net income remaining flat [7]. - Focus on advertising revenue and expense control [7]. Huya (HUYA.N) - Anticipated total revenue rebound in 3Q25 with an 11% YoY increase and a narrowing net loss [7]. Focus Media (002027.SZ) - Forecasted revenue growth of 4% YoY, driven by stronger demand from internet advertisers [8]. - Expected net profit growth of 10% YoY [8]. Financial Metrics and Projections - **Damai Entertainment**: Total revenue projected at Rmb3,879 million for 1HF26, with a normalized net profit margin of 12.8% [14]. - **37IE**: Revenue expected at Rmb4,674 million for 3Q25, with a gross margin of 79% [15]. - **G-bits**: Revenue forecasted at Rmb1,631 million for 3Q25, with a gross margin of 92% [17]. - **Perfect World**: Revenue expected at Rmb1,766 million for 3Q25, with a gross margin of 65% [18]. - **IQIYI**: Total revenues projected at Rmb6,688 million for 3Q25, with a gross profit margin of 18% [20]. - **Huya**: Total revenues expected at USD 1,710 million for 3Q25, with a gross profit margin of 13% [21]. - **JOYY**: Total revenues projected at USD 537 million for 3Q25, with a gross margin of 36% [24]. Additional Insights - The report emphasizes the importance of management comments on revenue growth momentum and normalized margin levels across companies [3][4][5]. - The potential for upside surprises in revenue growth for several companies, particularly in the context of new game releases and advertising demand, is highlighted [12][13]. - The overall industry view remains attractive, with a focus on the evolving landscape and potential regulatory impacts [10]. This summary encapsulates the key points from the earnings preview, providing a comprehensive overview of the anticipated performance and strategic focus of the highlighted companies within the China Internet and Other Services sector.

Investment Rating - The report maintains a "Buy" rating for the company [7] Core Insights - The company has shown strong performance with new game releases such as "Douluo Dalu: Hunting Soul World" and "Guangda Dazha," which have significantly contributed to revenue growth [2][4] - The company is enhancing its operational efficiency through refined long-term product management and marketing strategies, leading to improved resource allocation [3] - The integration of AI capabilities into game development and operations is a key focus, with the development of over 40 AI functionalities through its proprietary model "Xiao Qi" [4] Financial Overview - For the first three quarters of 2025, the company reported a revenue of 12.461 billion yuan, a year-on-year decline of 6.59%, while the net profit attributable to shareholders was 2.345 billion yuan, an increase of 23.57% [1] - The third quarter of 2025 saw a revenue of 3.975 billion yuan, down 3.23% year-on-year, but net profit rose by 49.24% to 944 million yuan [1] - The profit distribution plan for Q3 2025 proposes a dividend of 2.1 yuan per 10 shares [1] Product Development and Strategy - The company is focusing on long-term operations of existing products and has developed a diverse product matrix with over 20 quality games across various genres [3] - The successful launch of "Douluo Dalu: Hunting Soul World" as a 3D MMORPG has been a significant milestone, achieving over 10 million player reservations prior to its release [2][4] Profit Forecast - The profit forecast has been adjusted upwards, with expected net profits of 3.069 billion yuan, 3.308 billion yuan, and 3.579 billion yuan for 2025, 2026, and 2027 respectively, reflecting growth rates of 14.8%, 7.8%, and 8.2% [4]

Core Viewpoint - Major gaming stocks reported strong performance for Q3 2025, with net profit growth accelerating compared to Q2 2025 [1] Group 1: Company Performance - Giant Network's Q3 2025 revenue increased by 115.63% to 1.706 billion yuan, with net profit rising by 81.19% to 640 million yuan, and non-recurring net profit up by 73.88% to 678 million yuan [2] - G-bits reported a Q3 2025 revenue growth of 129.19% to 1.968 billion yuan, net profit surged by 307.70% to 569 million yuan, and non-recurring net profit increased by 273.72% to 564 million yuan [3] - 37 Interactive Entertainment experienced a revenue decline of 3.23% to 3.975 billion yuan in Q3 2025, while net profit grew by 49.24% to 944 million yuan, and non-recurring net profit rose by 44.97% to 873 million yuan [3] Group 2: Dividend Distribution - G-bits plans to distribute 60.00 yuan per 10 shares (including tax) for Q3, totaling approximately 430.5 million yuan, with a total cash dividend for the first three quarters expected to be 904.1 million yuan, representing 74.47% of net profit [4] - 37 Interactive Entertainment intends to distribute 2.10 yuan per 10 shares (including tax) for Q3, amounting to approximately 461.9 million yuan, maintaining the same dividend for Q1 and H1 2025 [4] Group 3: Stock Performance - Despite strong earnings, gaming stocks have underperformed the market, with significant declines in stock prices from September 30 to October 28, 2025: Giant Network down 18.12%, G-bits down 22.11%, 37 Interactive down 9.20%, ST Huatuo down 15.62%, and Kaiying Network down 14.55% [4] - As of the report, G-bits saw a limit-up in early trading, while 37 Interactive rose over 7%, Kaiying Network increased nearly 5%, and Giant Network was up over 3% [5]

Core Insights - The company reported a total revenue of 12.461 billion yuan for Q3 2025, a decrease of 879 million yuan compared to the same period last year, representing a year-on-year decline of 6.59% [1] - The net profit attributable to shareholders was 2.345 billion yuan, with net cash inflow from operating activities amounting to 2.967 billion yuan [1] Financial Performance - The latest debt-to-asset ratio stands at 36.29%, an increase of 0.11 percentage points from the previous quarter and an increase of 1.68 percentage points from the same period last year [3] - The gross profit margin is reported at 76.76%, down by 2.36 percentage points compared to the same period last year [3] - The return on equity (ROE) is recorded at 17.42% [3] Earnings and Ratios - The diluted earnings per share (EPS) is 1.07 yuan [4] - The total asset turnover ratio is 0.61 times, a decrease of 0.08 times, reflecting an 11.87% year-on-year decline [4] - The inventory turnover ratio is reported at 6.26 times [4] Shareholder Information - The number of shareholders is 159,300, with the top ten shareholders holding a total of 1.089 billion shares, accounting for 49.22% of the total share capital [4] - The largest shareholder is Li Weiwei, holding 14.61% of the shares, followed by Zeng Kaitian at 11.14% and Hu Yuhang at 9.11% [4]

Core Insights - Sanqi Interactive Entertainment has completed a $20 million investment in Qiangnao Technology, marking a strategic move into the brain-computer interface sector [1] - Qiangnao Technology, established in February 2015, is recognized as China's first unicorn in the brain-computer interface field and is the first Chinese team selected for Harvard Innovation Lab [1] - The company holds over 480 authorized patents and has core products certified by FDA and CE, demonstrating its leading position and technological barriers in the global brain-computer interface industry [1] Company Overview - Qiangnao Technology's core team primarily consists of graduates from top institutions such as Harvard and MIT, showcasing its strong academic foundation [1] - The founder and CEO, Han Bicheng, has been appointed as an advisor in the "Innovation and Entrepreneurship" sector by the Chief Executive of the Hong Kong Special Administrative Region, highlighting his recognized leadership in the industry [1] Strategic Implications - The investment by Sanqi Interactive Entertainment is not only a financial move but also a critical step in establishing a presence in the brain-computer interface sector, aligning with its strategy of "technology research and development - scenario implementation - ecological empowerment" [1] - Sanqi Interactive Entertainment plans to explore diverse applications of brain-computer interface technology in entertainment, education, and healthcare, aiming to foster innovation and create immersive experiences for users [1] - The initiative seeks to provide personalized services for different demographics and inject new momentum into the entertainment and related sectors through technological innovation [1]

Group 1: Sanqi Interactive Entertainment - The company reported a net profit of 944 million yuan in Q3 2025, with a proposed cash dividend of 462 million yuan [1] - For the first nine months of 2025, the company achieved a revenue of 12.461 billion yuan, a year-on-year decrease of 6.59%, while net profit increased by 23.57% to 2.345 billion yuan [1] - The growth in Q3 was attributed to the long-term operation of existing products and the successful launch of new games such as "Time Explosion" and "Heroes Without Flash" [1] Group 2: Gigabit Network - The company reported a net profit growth of 307.70% in Q3 2025, reaching 569 million yuan, with a revenue of 1.968 billion yuan, up 129.19% year-on-year [2] - For the first three quarters of 2025, the company achieved a revenue of 4.486 billion yuan, a year-on-year increase of 59.17%, and a net profit of 1.214 billion yuan, up 84.66% [2] - The significant growth was driven by new game launches and a 59.46% increase in overseas business revenue [2] Group 3: Giant Network - The company reported a revenue of 1.706 billion yuan in Q3 2025, a year-on-year increase of 115.63%, with a net profit of 640 million yuan, up 81.19% [3] - For the first three quarters of 2025, the company achieved a revenue of 3.368 billion yuan, a year-on-year increase of 51.84%, and a net profit of 1.417 billion yuan, up 32.31% [3] - The growth was primarily due to an increase in game revenue, indicating the effectiveness of its product line operation strategy [3]