Summary of Key Points from the Conference Call Industry Overview - The gaming industry is experiencing performance divergence in 2024, with Kaiying Network achieving impressive revenue of 1.35 billion and turning a profit, while 37 Interactive Entertainment and Taiyue Information fell short of expectations due to marketing expenses and product competition, indicating intensified industry competition [1][2][3] Core Companies and Their Performance - Kaiying Network and Huatuo are expected to have a higher success rate in the future. Jibite is anticipated to grow due to its reserve products like "Warship Legend" and "Nine Woods in the Wild," maintaining a relatively stable market position [3][1] - In Q1 2025, Kaiying's revenue was approximately 510 to 520 million, Perfect World reported 300 million, and Jibite achieved 283 million. ST Huadong performed exceptionally well at 1.35 billion, while Youzu managed to turn a profit [2] Emerging Technologies and Trends - The integration of AI and gaming shows promising prospects. Successful cases include 1V1 games that utilize AI models and VR/XR technologies, enhancing user experience through 3D AR scene construction. For instance, "Love and Deep Space" helped increase Zhe Paper's revenue from 1.4 billion to 7 billion [4][5] - The combination of AI, AR, and virtual human technologies is expected to further enhance immersion and user experience in gaming [4][5] Notable Game Genres - MMORPG, SLG, and casual gaming are highlighted as important areas to watch. MMORPG and SLG have long lifecycles and can integrate various gameplay styles, while casual games are performing well in the Western markets, with increased fragmented time in China providing opportunities [6][7] - The lifecycle of successful JSR games can reach 8 to 10 years, attracting high ARPU users and forming stable player communities [6] Upcoming Game Releases - A significant number of new games are set to launch in 2025, with Kaiying Network having the most reserves, including "Douluo Dalu: The Legend of the Exorcist" and "Tomb Raider: The Journey." Other companies like 37 Interactive Entertainment, Tencent, and NetEase also have substantial reserves [8][9] - Key products from Kaiying Network include "Douluo Dalu: The Legend of the Exorcist," which features deep design for combo attacks, and "Tomb Raider: The Journey," which combines Dungeons & Dragons and ARPG elements [10] Company-Specific Highlights - Jibite is launching "Sword Legend," a JRPG that incorporates a pet-catching system, and "Nine Woods in the Wild," which enhances real-time strategy gameplay [13] - Giant Network's new titles include "Supernatural Action Group," a Chinese horror-themed game, and "5000 Years," a historical strategy game [12] - Mingchen Health's core product is "Realm of the Blade," an ARPG featuring a death god IP, designed for cooperative play [11] Market Dynamics - The casual gaming sector is thriving in Western markets, with titles like "Candy Crush Saga" maintaining a long presence in the top sales charts. The increasing fragmented time in China due to longer working hours also benefits casual games [7] - The market may polarize into heavy games like MMORPG and SLG, and lighter casual games [7] Conclusion - The gaming industry is poised for significant developments in 2025, with numerous new titles and innovative technologies shaping the landscape. Companies like Kaiying Network, Jibite, and Giant Network are at the forefront of these changes, leveraging their unique products and market strategies to capture growth opportunities.

Investment Rating - The report maintains a "Buy" rating for the company, expecting the stock price to outperform the industry index by more than 15% in the next six months [4]. Core Views - The company experienced pressure on its performance in Q1 2025, with a year-on-year revenue decline of 10.67% to 4.243 billion yuan, and a net profit decrease of 10.87% to 549 million yuan. This was attributed to the early promotional phase of several new games and the natural decline in revenue from mature products [2][3]. - The company has a rich product pipeline, with new games like "Time Grocery Store" and "Heroes No Flash" showing strong market performance, indicating potential for future growth [3]. - The company is expected to achieve revenues of 19.033 billion yuan, 20.533 billion yuan, and 21.769 billion yuan for the years 2025, 2026, and 2027 respectively, with corresponding net profits of 2.839 billion yuan, 3.156 billion yuan, and 3.482 billion yuan [3][4]. Financial Summary - For 2023, the company reported a revenue of 16.547 billion yuan, with a projected growth rate of 0.9% year-on-year. The net profit for the same year was 2.659 billion yuan, reflecting a year-on-year decline of 10% [1][2]. - The company's return on equity (ROE) is projected to be 20.6% in 2023, gradually decreasing to 17.4% by 2027 [1][3]. - The price-to-earnings (P/E) ratio is expected to decrease from 13.0 in 2023 to 9.9 by 2027, indicating a potentially more attractive valuation over time [1][3].

Core Insights - The average annual salary of A-share chairpersons shows a significant concentration in the range of 1 million to 2 million yuan, with 1,402 individuals, accounting for one-third of the total [1][4] - The total disclosed annual salary for 4,231 listed companies reached 5.789 billion yuan, with 13 chairpersons earning over 10 million yuan [1][4] - The number of chairpersons with annual salaries exceeding 10 million yuan has decreased from 27 in 2022 to 16 in 2023, and further down to 13 in 2024 [4] Salary Distribution - The top three highest-paid chairpersons are from the biopharmaceutical industry, with WuXi AppTec's chairman earning 41.8 million yuan, followed by Mindray Medical's chairman at 24.939 million yuan, and BeiGene's chairman at 20.1938 million yuan [2][3] - The salary distribution is characterized by an olive-shaped curve, with fewer individuals earning higher salaries; for instance, there are 381 individuals earning between 2 million and 3 million yuan, and only 67 earning between 4 million and 5 million yuan [6] Salary Changes - A total of 3,765 chairpersons had comparable salaries from 2023 to 2024, with 1,377 experiencing a decrease (37%) and 1,985 seeing an increase (58%) [8] - Notable salary reductions were observed among high-earning chairpersons, with some experiencing declines of over 90% due to poor company performance [9][10] Industry Performance - The salary trends reflect a dichotomy in industry performance, with high salaries in thriving sectors like media, electronics, and pharmaceuticals, while industries like real estate and finance are facing salary cuts [11][13] - The average salary for chairpersons in the media industry was 1.78 million yuan, the highest among 31 sectors, while the average salary in the construction and defense sectors was below 1 million yuan [12][13]

Core Viewpoint - Sanqi Interactive Entertainment has faced continuous pressure on its performance, with its revenue and market value lagging behind ST Huatuo in 2024, losing its position as the leader in the A-share gaming industry [1][4]. Group 1: Financial Performance - In Q1 2025, Sanqi Interactive reported a revenue of 42.43 billion yuan and a net profit attributable to shareholders of 5.49 billion yuan, representing a year-on-year decline of 10.67% and 10.87% respectively [4][11]. - For the full year 2024, the company achieved a revenue of 174.41 billion yuan, marking a new high but with a significant slowdown in growth; net profit remained flat at 26.73 billion yuan [4][11]. - The company's overseas revenue in 2024 was 57.22 billion yuan, a decrease of 1.47% year-on-year, reducing its share of total revenue from 35.1% to 32.81% [4]. Group 2: Market Position and Competition - ST Huatuo's revenue surged by 70% in 2024, surpassing 200 billion yuan for the first time, thus taking the lead in the industry [4]. - Sanqi Interactive's gaming business shows a clear trend of "heavy on user acquisition, light on R&D," with over 90% of its sales expenses attributed to internet traffic costs, amounting to 91.51 billion yuan, which is 14 times its R&D expenses [9]. Group 3: Regulatory Issues - Sanqi Interactive is under investigation by the China Securities Regulatory Commission (CSRC) for suspected violations of information disclosure laws, with no conclusive results as of now [10][11]. - The company's stock price has plummeted from a high of 33.94 yuan in June 2023 to below 12 yuan, reflecting a loss of nearly half its market value in less than two years [11]. Group 4: R&D and Employee Trends - The number of R&D personnel at Sanqi Interactive has decreased from 1,654 in 2022 to 1,318 in 2024, a decline of 10.40%, while the proportion of R&D staff in total employees fell from 46.57% to 40.57% [9]. - In contrast, ST Huatuo maintained a stable number of R&D personnel at around 2,200, with an increasing proportion of R&D staff [9].

Group 1: AI and Technology Integration - The company has established a comprehensive AI architecture that enhances game development and operations, with over 80% of 2D art assets generated using AI technology [3] - AI-assisted 3D asset generation has reached over 30%, indicating a mature application in character and prop modeling [3] - In 2024, AI-generated video content accounted for over 70% of promotional materials for games [3] - The company is actively exploring AI applications in gaming, including AI-driven gameplay innovations and intelligent NPC systems [12][17] Group 2: Financial Performance and Shareholder Returns - In Q1 2025, the company reported a revenue of 4.243 billion yuan, a 3.45% increase from the previous quarter, with a net profit of 549 million yuan [11] - Cumulative cash dividends over the past three fiscal years reached 5.778 billion yuan, with share buybacks totaling over 700 million yuan [5][14] - The current dividend yield exceeds 6%, reflecting the company's commitment to enhancing shareholder returns [5] Group 3: Market Strategy and Product Development - The company employs a "localized" strategy for global market expansion, tailoring game releases and marketing to regional preferences [7] - Key successful titles contributing to revenue include "Puzzles & Survival" and "斗罗大陆：魂师对决," among others [13] - The company has over 20 upcoming games in development, focusing on MMORPG, SLG, and card game genres [16] Group 4: Corporate Governance and Investor Relations - The company emphasizes enhancing corporate governance and internal value to improve market perception [5] - Various investor engagement formats have been implemented, including online and offline events, to provide insights into company strategy and performance [5] - The company is committed to transparent communication regarding its operations and market strategies [9]

Group 1 - The Shanghai Composite Index opened high and the CSI 300 Media (secondary industry) Index reported 796.37 points [1] - The CSI 300 Media Index has decreased by 3.43% in the past month, 1.21% in the past three months, and 5.22% year-to-date [1] - The CSI 300 Index categorizes its 300 sample stocks into 11 primary industries, 35 secondary industries, over 90 tertiary industries, and more than 200 quaternary industries [1] Group 2 - The CSI 300 Media Index is entirely composed of stocks from the Shenzhen Stock Exchange, with a 100% allocation [1] - Within the CSI 300 Media Index, the industry composition includes 51.67% in Other Advertising and Marketing, 19.52% in Interactive Media, 16.74% in Gaming, and 12.07% in Video Media [1] - The index sample is adjusted biannually, with adjustments occurring on the next trading day after the second Friday of June and December [2]

Group 1 - The core viewpoint is that SLG (Simulation and Strategy Game) products have a long lifecycle and stable revenue, with successful SLG products contributing significantly to company performance. The global mobile gaming market has shown signs of improvement in 2024, with in-app purchase revenues rebounding [1] - In 2024, China's self-developed game export scale reached $18.556 billion, a year-on-year increase of 13.4%. Strategy games, including SLG, accounted for 41.38% of the top products, suggesting a market size of approximately $7.7 billion per year for strategy games [1] - The report suggests focusing on companies with strong R&D capabilities and quality product reserves in the SLG field, recommending companies such as ST Huatuo, Tencent, NetEase, 37 Interactive Entertainment, and Kaiying Network [1] Group 2 - The integration of various gameplay styles has attracted users and reduced customer acquisition costs. SLG games, characterized by construction and combat, have a high entry barrier for new players, making customer acquisition challenging. However, lighter gameplay can quickly convert users, enhancing acquisition efficiency [2] - The game "Kingshot" shows a clear growth trend and high monetization potential. Its combination of tower defense and SLG gameplay enhances user acquisition efficiency, and its early performance is comparable to "Whiteout Survival," indicating strong commercial potential [3]

Investment Rating - The report maintains an "Overweight" rating for the media industry [1] Core Insights - The overall performance of the media sector in Q1 2025 exceeded market expectations, driven by blockbuster films and games [5][11] - The publishing and periodicals sector is facing revenue declines due to regulatory impacts and tax policy changes, with expected revenue drops of 2% in 2024 and 4% in Q1 2025 [2] - The gaming sector showed strong performance with a revenue increase of 21% in Q1 2025, supported by successful new game launches [20][29] - The marketing sector is experiencing revenue declines due to cautious ad spending amid economic recovery challenges, but top companies are showing resilience [5][20] - The film industry is expected to have a strong start in 2025, with Q1 revenue growth of 41% driven by popular films [5][20] Summary by Sections Overall Performance - In Q4 2024, the media sector achieved a total revenue of 1,393 billion, a 2% year-on-year decline; however, in Q1 2025, revenue rose to 1,240 billion, marking a 5% year-on-year increase [11][12] Gaming Sector - The domestic gaming market's actual sales revenue reached 3,257.83 billion in 2024, with a year-on-year growth of 7.53%, and 857.04 billion in Q1 2025, growing by 17.99% [20][29] - A-share gaming companies reported total revenues of 873.7 billion and 248.2 billion for 2024 and Q1 2025, respectively, with year-on-year increases of 8% and 21% [29][37] Marketing Sector - The marketing industry faced revenue declines in Q4 2024 and Q1 2025, primarily due to cautious spending from advertisers; however, the sector showed signs of recovery with a 9% year-on-year increase in net profit in Q1 2025 [5][20] Film Industry - The film industry saw a revenue of 141.2 billion in Q1 2025, a 41% increase year-on-year, largely due to successful films like "Nezha: Birth of the Demon Child" [5][20] Digital Media - The digital media sector experienced slight revenue declines in both 2024 and Q1 2025, with major player Mango TV reporting a revenue of 140.8 billion in 2024, down 3.8% year-on-year [5][20] Publishing and Periodicals - The publishing sector is projected to see a revenue decline of 2% in 2024 and 4% in Q1 2025, influenced by regulatory changes in educational publishing [2][5]

Core Viewpoint - The A-share market has shown resilience and improvement in performance for 2024, driven by a series of growth policies and the impact of AI on technological innovation, with over half of listed companies achieving revenue growth and a significant number of new listings reporting both revenue and net profit increases [2][5][6]. Group 1: Market Performance - In 2024, among 5,403 listed companies, 3,035 achieved positive revenue growth, accounting for 56.17% [5] - Over half of the 100 newly listed companies in 2024 reported both revenue and net profit growth, with notable performances from companies like Kema Technology and Pioneer Precision [6][7] - The financial sector has accelerated recovery, with consumer spending and logistics showing significant improvement, contributing to the overall resilience of listed companies [2][3]. Group 2: Regulatory Impact - The introduction of new regulations, including the "National Nine Articles," has led to a significant reduction in the number of terminated IPO reviews, with only 2 terminations in April 2024 compared to 31 in the same month of the previous year [3][8] - The strict IPO review process has resulted in a tripling of terminated projects in 2024, indicating a focus on improving the quality of listed companies [7][8]. - The implementation of the "strictest delisting rules" has led to 22 companies being delisted in 2024, with a focus on financial and trading indicators [9][10]. Group 3: Corporate Quality Improvement - The combination of delisting and rescue measures has led to an overall improvement in the quality of listed companies, with 32 companies expected to withdraw delisting risk warnings by the end of May 2024 [11][12] - Companies like *ST Hengyu have successfully removed delisting risk warnings by improving their financial performance, demonstrating the effectiveness of regulatory measures [12][13]. Group 4: Investor Returns - In 2024, nearly 70% of listed companies announced cash dividend plans, totaling 1.66 trillion yuan, with the overall dividend amount reaching 2.39 trillion yuan, a 7.2% increase year-on-year [15][16] - The number of companies announcing mid-term dividends has significantly increased, with 985 companies declaring plans, marking a 4.3-fold increase in both number and amount compared to 2023 [15][16]. - State-owned enterprises continue to be the main contributors to dividends, with nearly 1,000 state-owned companies distributing a total of 1.5 trillion yuan in dividends in 2024 [16].

Core Insights - A-share gaming companies showed mixed performance in Q1 2025, with some recovering from previous downturns while others faced declines in revenue and profit [2][3] Group 1: Company Performance - ST Huatuo achieved the highest revenue and net profit among A-share gaming companies in Q1 2025, with revenue of 81.45 billion yuan, a year-on-year increase of 91.12%, and net profit of 13.5 billion yuan, up 107.2% [3][4] - Perfect World rebounded with Q1 revenue of 20.23 billion yuan, a 52.22% increase, and net profit of 3.02 billion yuan, marking an over 11-fold increase compared to the previous year [5] - 10 companies reported both revenue and net profit growth, while 9 companies, including Dazheng Culture and ST Zhongqingbao, saw declines in both metrics [2][6] Group 2: Market Trends - The gaming industry is experiencing a positive trend due to the increasing issuance of game licenses and a stronger focus on high-quality game development [2][4] - New game launches, overseas expansion, and mini-program games are key factors influencing the performance of A-share gaming companies [2][4] Group 3: Challenges Faced - Companies like 37 Interactive Entertainment and Shenzhou Taiyue reported declines in revenue and net profit, with 37 Interactive's revenue falling by 10.67% to 42.43 billion yuan [6][7] - ST Zhongqingbao has faced continuous losses for five years, with Q1 2025 revenue dropping by 34.19% to 49.27 million yuan and net loss widening to 11.73 million yuan [9]