Market Overview - On September 18, the gaming sector declined by 1.56%, with Xinghui Entertainment leading the drop [1] - The Shanghai Composite Index closed at 3831.66, down 1.15%, while the Shenzhen Component Index closed at 13075.66, down 1.06% [1] Individual Stock Performance - Xinghui Entertainment (300043) closed at 7.17, down 6.88%, with a trading volume of 2.0662 million shares and a turnover of 1.518 billion yuan [2] - Other notable declines include: - Shenzhou Taiyue (300002) down 4.95% to 14.20 with a turnover of 1.763 billion yuan [2] - Bingchuan Network (300533) down 4.55% to 40.52 with a turnover of 994 million yuan [2] - Conversely, Xunyou Technology (300467) saw an increase of 5.61%, closing at 27.10 with a turnover of 927 million yuan [1] Capital Flow Analysis - The gaming sector experienced a net outflow of 1.72 billion yuan from major funds, while retail investors contributed a net inflow of 1.439 billion yuan [2] - Speculative funds saw a net inflow of 281 million yuan into the gaming sector [2]

Group 1 - The gaming sector has shown strong performance recently, driven by new product release expectations and industry recovery, with the gaming ETF (159869) gaining nearly 1.5% [1] - Major stocks in the gaming ETF include Xunyou Technology (300467) leading with over 10% increase, followed by Beiwai Technology (002148) with nearly 6% rise, and others like Kaiying Network (002517), G-bits (603444), Baotong Technology (300031), and Giant Network (002558) also showing significant gains [1] - The gaming ETF has seen a net inflow of funds for two consecutive days, accumulating a total of 5.92 billion yuan [1] Group 2 - In the first half of 2025, the gaming sector achieved revenue of 54.452 billion yuan, a year-on-year increase of 22.17%, with net profit rising 74.95% to 8.052 billion yuan [2] - The profit increase is attributed to leading companies like Perfect World (002624) focusing on core product operations and self-developed IP iterations, alongside contributions from hit games and new game version updates [2] - The overall profitability of the gaming sector improved, with gross margin and net margin rising by 0.37 percentage points and 4.13 percentage points to 67.80% and 14.74%, respectively [2] Group 3 - Wanlian Securities notes that the media sector's overall performance is recovering, with significant improvement in the gaming sector's performance in Q2 2025 [3] - The long-term outlook for the industry is positive, with expectations of recovery in industry prosperity driven by gradual restoration of content supply, deepening AI technology empowerment, policy support, and consumer recovery [3] - Companies in the film and television industry, as well as those in the gaming sector showing strong performance, are recommended for attention, along with those involved in digital assets and AIGC-related technologies [3]

Group 1 - The Nasdaq China Golden Dragon Index rose by 2.85%, with notable increases in stocks such as Baidu (up over 11%) and NIO (up over 6%) [1] - The CSI Hong Kong-Shenzhen Online Consumption Theme Index (931481) increased by 0.90%, with significant gains from stocks like Ping An Good Doctor (up 3.82%) and Perfect World (up 3.79%) [1] - The Online Consumption ETF (159793) rose by 1.89%, closing at 1.18 yuan, and has seen a cumulative increase of 5.44% over the past week [1] Group 2 - As of August 29, 2025, the top ten weighted stocks in the CSI Hong Kong-Shenzhen Online Consumption Theme Index accounted for 51.84% of the index, including Tencent Holdings and Alibaba [2] - The top ten stocks by weight include Tencent Holdings (9.65%), Alibaba-W (9.25%), and Meituan-W (8.37%) [4]

Group 1 - The gaming sector experienced a significant rally on September 18, with Xunyou Technology rising over 10% [1] - Giant Network and 37 Interactive Entertainment both saw increases of over 3% [1] - Perfect World and Jiayuan Technology also followed the upward trend [1]

Group 1: Industry Performance - The gaming industry index closed up 2.13% on September 17, with key stocks like Kaiying Network rising by 9.01% and others like Giant Network and Xunyou Technology increasing by over 4% [1] - Year-to-date, the gaming industry index has increased by 82.61%, ranking third among all Shenwan secondary industries, making it one of the best-performing sectors this year [1] - Six gaming stocks have doubled in price compared to the end of last year, with ST Huatuo, Giant Network, and 37 Interactive Entertainment showing significant cumulative increases of 286.19%, 261.23%, and 157.39% respectively [1] Group 2: Market Growth - The gaming market revenue reached 1970.84 billion yuan from January to July 2025, marking a year-on-year growth of 12.58% [2] - Projected revenues for the gaming market from 2022 to 2024 are 2658.84 billion yuan, 3029.64 billion yuan, and 3257.83 billion yuan respectively, indicating robust growth potential [2] Group 3: Esports Development - The esports industry in China generated 127.61 billion yuan in revenue from January to June 2025, reflecting a year-on-year increase of 6.1% [4] - The Chinese esports industry is expanding its influence overseas, particularly in regions like Latin America, alongside traditional markets in East and Southeast Asia [4] Group 4: Supply and User Growth - The steady growth in industry revenue is attributed to the continuous release of new games, with a noticeable reduction in the approval cycle for game licenses [5] - As of June 2025, the number of online game users in China reached 584 million, an increase of 26.92 million from December 2024, representing 52% of the total internet users [7] - The proportion of female gamers has risen to 48%, up by 3.1 percentage points from the end of 2024, contributing to market expansion and innovation [7] Group 5: International Expansion - The overseas business revenue of 20 A-share gaming companies reached 21.823 billion yuan in the first half of 2025, a year-on-year increase of 30.43% [9] - Notably, ST Huatuo, Kunlun Wanwei, and 37 Interactive Entertainment reported overseas revenues exceeding 1 billion yuan, with ST Huatuo achieving 89.58 billion yuan, accounting for 52.06% of its total revenue [10]

Market Overview - On September 17, the gaming sector rose by 2.02%, with Kaiying Network leading the gains [1] - The Shanghai Composite Index closed at 3876.34, up 0.37%, while the Shenzhen Component Index closed at 13215.46, up 1.16% [1] Individual Stock Performance - Notable gainers included: - Xinying Network (002517) with a closing price of 28.06, up 9.01% and a trading volume of 563,800 shares, totaling 1.514 billion yuan [1] - Giant Network (002558) closed at 45.38, up 4.49% with a trading volume of 459,700 shares, totaling 2.076 billion yuan [1] - Xunyou Technology (300467) closed at 25.66, up 4.44% with a trading volume of 180,400 shares, totaling 453 million yuan [1] Fund Flow Analysis - The gaming sector experienced a net outflow of 637 million yuan from institutional investors, while retail investors saw a net inflow of 330 million yuan [2][3] - Key stocks with significant fund flows included: - Shenzhou Taiyue (300002) with a net inflow of 141 million yuan from institutional investors [3] - Perfect World (002624) saw a net inflow of 95.9 million yuan from institutional investors [3] ETF Performance - The Gaming ETF (159869) tracking the China Animation and Gaming Index saw a 4.78% increase over the past five days, with a net outflow of 44.875 million yuan [5] - The Food and Beverage ETF (515170) experienced a decline of 1.63% over the past five days, with a net outflow of 17.845 million yuan [5]

Group 1 - The A-share market's online gaming sector experienced a significant upward trend, with notable stocks such as Beiwai Technology hitting the daily limit, and Kaiying Network approaching the daily limit while reaching a new high [1] - Giant Network saw an increase of over 4%, indicating strong performance within the sector [1] - Other companies including Xunyou Technology, Shenzhou Taiyue, Iceberg Network, Perfect World, and 37 Interactive Entertainment also showed positive movement, contributing to the overall growth of the online gaming sector [1]

Investment Rating - The investment rating for the media industry is "Outperform the Market" (maintained) [1] Core Viewpoints - The media industry is experiencing a recovery in net profits, driven by a low base effect from the previous year and a significant decrease in expenses [2][18] - The gaming sector is showing strong growth due to a new product cycle, while the film and television sector is expected to see a bottom reversal supported by policy changes [5][60] Summary by Sections 1. Performance Review: Significant Recovery in Net Profit - In the first half of 2025, the A-share media sector achieved a total revenue of 254.9 billion yuan and a net profit of 21.8 billion yuan, representing year-on-year growth of 4.06% and 28.70% respectively [2][18] - The gross margin increased by 0.9 percentage points to 32.90%, and the net margin improved by 1.7 percentage points to 8.65% [19][29] 2. Q2 Performance Continues Upward Trend - In Q2 2025, the media sector reported revenues of 129.1 billion yuan and a net profit of 10.7 billion yuan, with year-on-year growth of 2.59% and 19.53% respectively [3][49] - The gaming sector's net profit saw a significant improvement, driven by new game launches [3][74] 3. Subsector Performance: Gaming Sector Achieves High Growth - The gaming sector generated revenues of 27.7 billion yuan and a net profit of 4.6 billion yuan in Q2 2025, with year-on-year growth of 22.40% and 104.47% respectively [4][74] - The film and television sector faced challenges, with revenues declining by 21.7% and net profit turning negative [4][60] 4. Investment Recommendations: Focus on Gaming and Film Sectors - The report recommends focusing on gaming companies benefiting from a strong new product cycle and film companies poised for recovery due to favorable policies [5][60] - Specific stock recommendations include Giant Network, Bilibili, Mango Excellent Media, and Light Media [5][60]

Investment Rating - The report maintains a "Buy" rating for several companies in the media sector, including Giant Network, Kaiying Network, and others [4][9][6]. Core Insights - The media industry has shown strong performance with a weekly increase of 4.27%, ranking 4th among industries, while the Shanghai Composite Index rose by 1.52% [12][20]. - The gaming market remains robust, with significant revenue growth from major players like Tencent and Point Interactive, and the upcoming National Day film releases are anticipated to boost box office performance [3][4][41]. Market Performance - The media industry (Shenwan) increased by 4.27% from September 6 to September 12, 2025, outperforming the Shanghai Composite Index, which rose by 1.52% [12]. - The gaming II sector saw a rise of 6.61%, while the film industry also experienced a notable increase of 6.58% during the same period [15][12]. Key Data and Dynamics AI Applications - In August, the top five AI products by web traffic included ChatGPT and New Bing, with Deepseek leading domestic traffic at 316 million visits, despite a month-over-month decline of 8.52% [24][25]. - The domestic AI search engine Nano AI ranked second with 307 million visits, also showing a decline of 7.52% [24][25]. Gaming Data - In August, Tencent, Point Interactive, and NetEase were the top three mobile game publishers globally, with total revenues of $2.04 billion, accounting for 35.1% of the top 100 publishers' income [29][30]. - Giant Network's revenue surged by 72% due to the success of "Supernatural Action Group," which entered the top ten for global mobile game revenue [29][30]. Film Data - The total box office for the week of September 6-12 was 358 million yuan, with "Chasing the Wind" leading at 120 million yuan [41]. - Nine films have been scheduled for release during the National Day holiday, indicating a strong upcoming box office potential [41][42]. Investment Recommendations - The report highlights a positive outlook on themes such as AI applications and cultural exports, with a focus on sub-sectors like gaming, IP, short dramas, and publishing [4]. - Specific companies recommended for investment include Giant Network, Kaiying Network, and Perfect World, among others [4][9].

Investment Rating - The report maintains an "Overweight" rating for the industry [1]. Core Insights - The performance of A-share game companies in H1 2025 is strong, driven by two innovative game categories: "Micro Horror Search and Fight" and "Overseas SLG" [2]. - "Micro Horror Search and Fight" is expected to become a long-lasting game with a high profit margin, enhancing the performance of companies like Giant Network [2]. - The overseas SLG market is entering a new expansion cycle, with leading companies showing significant advantages [2]. Summary by Sections 1. Micro Horror Search and Fight: Long-lasting Games with High DAU - The "Search and Fight" category creates a loop of investment, risk, and return, making players addicted through high failure penalties and strong victory rewards [10]. - The game "Supernatural Action Group" targets the casual social and female-oriented segment, with no current competitors in the market, indicating potential for sustained growth [2][20]. - The female gaming market is projected to reach 8 billion yuan in 2024, growing by 124.1% year-on-year, highlighting the increasing importance of female players [11]. 2. Overseas SLG: New Expansion Cycle in the Industry - The overseas SLG mobile game market is expected to reach $124.64 billion in 2024 and $73.08 billion in H1 2025, with year-on-year growth of 17% and 25% respectively [43]. - Chinese companies are projected to generate $185.57 billion in overseas revenue in 2024, with strategy games accounting for 41.38% of the top 100 games [43]. - SLG games have high user value, with the average revenue per download (RPD) for 4X SLG being 8-9 times higher than the overall mobile game level [44]. 3. Major Companies - Giant Network is expected to benefit significantly from "Supernatural Action Group," which could lead to a "Davis Double" effect, enhancing both revenue and valuation [71].