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.

Core Viewpoint - The report highlights that prominent fund managers from Ruifeng Fund have increased their holdings in leading technology companies like Alibaba, indicating a strong belief in the potential of artificial intelligence as a major technological transformation following the internet era [1]. Group 1: Fund Performance - The Ruifeng Growth Value Mixed Fund, managed by Fu Pengbo and Zhu Lin, saw a net value increase of over 50% in Q3, with A-class shares rising by 51.09%, outperforming the benchmark by 14.82%, marking the highest quarterly record since its inception in 2019 [1]. - The top ten holdings of the fund included three stocks that doubled in price during Q3: Xinyi Technology (300502.SZ), Shenghong Technology (300476.SZ), and Cambricon Technologies (688256.SH), although these stocks were reduced in holdings [1][2]. - The fund maintained a high stock asset allocation, with over 90% in equities, and the top ten holdings accounted for 66% of the net value, showing a significant increase from Q2 [2][3]. Group 2: Stock Holdings and Adjustments - The fund reduced its positions in long-held stocks that experienced rapid price increases due to misleading news, indicating a cautious approach to valuation adjustments [3]. - The Ruifeng Balanced Value Three-Year Holding Mixed A Fund, managed by Zhao Feng, achieved a net value growth rate of 19.29% in the reporting period, outperforming the benchmark by 5.59% [3][4]. - Zhao Feng's fund maintained a stable portfolio with slight increases in leading internet companies focused on AI and undervalued home appliance companies with stable profit growth prospects [3][4]. Group 3: Sector Focus and Future Outlook - The fund managers expressed optimism about AI, emphasizing its rapid integration across various industries and daily life, with significant growth in AI-related investments [5][6]. - Despite the unclear future returns from substantial investments in foundational models and data centers, leading internet companies are well-positioned to support their capital expenditures due to strong cash flows [6]. - The report notes that traditional industries with low historical valuations and stable free cash flows are becoming increasingly attractive, suggesting a lower risk of decline and potential for recovery in demand [6].

Core Viewpoint - The report highlights that prominent fund managers from Ruifeng Fund have increased their holdings in leading technology companies like Alibaba, indicating a strong belief in the potential of artificial intelligence as a major technological transformation following the internet era [1]. Fund Performance - The Ruifeng Growth Value Mixed Fund, managed by Fu Pengbo and Zhu Lin, saw a net value increase of over 50% in Q3, with A-class shares rising by 51.09%, outperforming the benchmark by 14.82%, marking the highest quarterly record since its inception in 2019 [1]. - The Ruifeng Balanced Value Three-Year Holding Mixed A Fund, managed by Zhao Feng, reported a net value growth rate of 19.29%, exceeding the benchmark return of 13.70% during the same period [3][4]. Portfolio Adjustments - The top ten holdings of the Ruifeng Growth Value Mixed Fund included stocks that doubled in price during Q3, such as Xinyi Technology, Shenghong Technology, and Cambricon, although these were reduced in the portfolio [1]. - The fund maintained a high stock asset allocation with over 90% in equities, and the top ten holdings accounted for 66% of the net value, showing a significant increase from the previous quarter [2][3]. Sector Focus - The fund managers expressed a continued positive outlook on artificial intelligence, focusing on sectors such as internet technology, optical modules, PCB, chips, and innovative pharmaceuticals [2][3]. - The report indicates that the concentration of holdings increased due to significant price rises in key stocks, particularly in the new energy and Apple supply chain sectors [3]. Investment Strategy - Zhao Feng emphasized that AI is becoming the largest technological transformation after the internet, with rapid adoption across various industries [5]. - The report notes that while there are uncertainties regarding the future returns from substantial investments in foundational models and data centers, leading internet companies are well-positioned financially to support these capital expenditures [6].

Core Viewpoint - The media sector has shown a notable performance this week, ranking 7th among all sectors in terms of price changes, with a 4.20% increase, outperforming the CSI 300 but underperforming the ChiNext Index [3]. Group 1: Industry Performance - The media industry increased by 4.20% during the week of October 20-24, 2023, outperforming the CSI 300's 3.24% but underperforming the ChiNext Index's 8.05% [3]. - The top gainers in the media sector included Rongxin Culture, Youzu Interactive, Haikan Co., and Jiayun Technology, while the biggest losers were Vision China, Tianxiaxiu, Xinghui Entertainment, and Gehua Cable [3]. Group 2: Key Events and Innovations - Significant events include the launch of OpenAI and Oracle's $15 billion Lighthouse Park, expected to be completed by 2028 [3]. - The introduction of the MoGA long video generation model by the University of Science and Technology of China and ByteDance, capable of producing high-quality videos with a resolution of 480p at 24 frames per second [3]. - ByteDance's Seed team has launched the 3D generation model Seed3D1.0, which can create high-quality simulation-level 3D models from a single image [3]. - Bilibili's "Escape from Duckkov" achieved over one million sales in its first week [3]. Group 3: Investment Recommendations - The company maintains a positive outlook on the gaming sector, IP toys, and the potential for policy shifts in the film industry, recommending stocks such as Giant Network, Kaiying Network, and Gigabit [5]. - For IP toys, Pop Mart is highlighted as a key recommendation [5]. - The media sector is advised to monitor potential economic recovery, with a focus on companies like Focus Media [5]. - The shift in content policies and AI application opportunities are emphasized, recommending platforms like Mango TV and Bilibili, as well as content providers such as Light Media and Huace Film [5].

Core Insights - Zhang Kun's four funds reported a slight increase in total management scale, reaching 56.544 billion yuan, despite a decline in individual fund shares [2] - The total share reduction across the four funds amounted to 3.93 billion shares, with the largest decline seen in the E Fund Blue Chip Select, which lost 2.077 billion shares [2] - Three out of the four funds underperformed their benchmarks, with E Fund Blue Chip Select yielding only 14.75% year-to-date compared to the benchmark's 34.33% [2] Fund Performance - E Fund Blue Chip Select ranked 3800 out of 4503 similar funds, indicating significant underperformance [2] - E Fund Asia Select was the only fund to outperform its peers, achieving a year-to-date return of 39.29% [2] Holdings Adjustment - Significant reductions were made in holdings of Tencent Holdings and Alibaba-W, with reductions exceeding 30% for Alibaba-W [3][4] - Despite the reductions, Tencent Holdings and Alibaba-W remained the top two holdings, each accounting for nearly 10% of the total net value [5] Top Holdings Overview - The top ten holdings primarily saw a trend of reduction, with only minor increases in positions for E Fund Blue Chip Select and E Fund Quality Select in Kweichow Moutai [4] - Kweichow Moutai, Luzhou Laojiao, Shanxi Fenjiu, and Wuliangye each held around 9% of the net value [5] Performance of Key Stocks - Tencent Holdings and Alibaba-W showed respective gains of 18.09% and 43.95% over the quarter, despite the reduction in holdings [6] - Other notable stocks included JD Health and Kweichow Moutai, with JD Health showing a 29.26% increase [6]

Core Viewpoint - Zhang Kun's latest quarterly report presents a contrarian view on China's domestic demand and consumption growth, arguing that the market has overemphasized short-term negative factors while neglecting long-term structural advantages [4][20]. Group 1: Market Predictions - Zhang Kun believes that the most likely scenario is that "China's consumption growth > China's GDP growth > global GDP growth" [23]. - He emphasizes the significant scale effects from a unified market of 1.4 billion people, which can amplify the advantages of excellent companies [4][25]. - The report suggests that the market has underestimated the potential of domestic demand and consumption in China [20]. Group 2: Fund Performance - Zhang Kun's representative fund, "E Fund Quality Enterprises," surged by 15.81% in Q3, outperforming its benchmark by 2.56 percentage points [6][8]. - This performance marks a turnaround from previous quarters where several funds managed by Zhang Kun underperformed their benchmarks [7]. Group 3: Key Holdings - Key stocks such as Tencent, Alibaba, and JD Health saw significant gains of 32% to 61% in the last quarter, contributing positively to the fund's performance [10][11]. - Zhang Kun has also shown a positive outlook on liquor stocks, with some experiencing over 10% growth in Q3 [12]. Group 4: Investment Philosophy - Zhang Kun maintains a long-term investment strategy, focusing on companies with excellent business models, significant competitive advantages, and sustainable growth potential [14][16]. - He warns investors to resist the influence of "Mr. Market," who may overreact to short-term fluctuations [18][24]. Group 5: Portfolio Adjustments - The fund's stock positions remain stable, with adjustments made in sectors like pharmaceuticals, consumer goods, and technology [28]. - Notably, the media company Focus Media has entered the top holdings for the first time, indicating a shift in focus towards domestic consumption [30][32]. Group 6: Technology Sector Shift - The E Fund Asia Select has seen a shift in its top holdings, moving away from semiconductor companies to more stable AI software and service firms like Google [34][36].

Core Insights - The advertising and marketing sector saw a rise of 0.89% on October 28, with Tianxiexiu leading the gains [1] - The Shanghai Composite Index closed at 3988.22, down 0.22%, while the Shenzhen Component Index closed at 13430.1, down 0.44% [1] Stock Performance - Tianxiexiu (600556) closed at 6.11, up 10.09%, with a trading volume of 1.9024 million shares and a transaction value of 1.142 billion [1] - Jiayun Technology (300242) closed at 4.76, up 4.16%, with a trading volume of 405,900 shares and a transaction value of 193 million [1] - Xinhua Du (002264) closed at 7.06, up 3.22%, with a trading volume of 331,900 shares and a transaction value of 232 million [1] - Other notable performers include Yaowang Technology (002291) up 3.12% and Qida Technology (300061) up 2.77% [1] Capital Flow - The advertising and marketing sector experienced a net inflow of 493 million from institutional investors, while retail investors saw a net outflow of 301 million [2] - The main stocks with significant capital inflow include Tianxiexiu with a net inflow of 337 million, accounting for 29.56% of its trading volume [3] - Conversely, retail investors showed a net outflow from stocks like Yidian Tianxia, which had a net outflow of 81.31 million, representing 8.98% of its trading volume [3]

Core Viewpoint - Zhang Kun's fund management has shifted focus towards domestic consumption and technology sectors, increasing positions in companies like Focus Media, Yum China, and Google, while also adding to holdings in Kweichow Moutai and Wuliangye [1][2][3]. Fund Performance - The E Fund Quality Select Mixed Fund (QDII) reported a net asset value of 5.7973 yuan with a growth rate of 17.58%, outperforming its benchmark by 4.01% [1]. - The E Fund Blue Chip Select Fund showed a net asset value of 2.0449 yuan and a growth rate of 16.37%, exceeding its benchmark by 3.12% [3]. - The E Fund Quality Enterprise Three-Year Holding Fund had a net asset value of 1.0393 yuan with a growth rate of 15.81%, also surpassing its benchmark by 2.56% [5]. - The E Fund Asia Select Fund reported a net asset value of 1.368 yuan and a growth rate of 17.63%, outperforming its benchmark by 8.05% [7]. Portfolio Adjustments - The top holdings in the E Fund Blue Chip Select Fund included Tencent, Alibaba, and Kweichow Moutai, with significant reductions in Tencent and Alibaba, while increasing positions in Kweichow Moutai and Yum China [4]. - The E Fund Quality Enterprise Three-Year Holding Fund saw a notable decrease in holdings for most stocks, except for Yum China, which had an increase [6]. - The E Fund Asia Select Fund replaced ASML and SK Hynix in its top ten holdings with Google and Prada, while reducing positions in Trip.com and TSMC [8]. Investment Philosophy - Zhang Kun emphasizes a bottom-up research approach to identify companies with strong business models, competitive advantages, and sustainable growth potential [9]. - The long-term view suggests that despite short-term market fluctuations, structural factors will drive growth in China's economy, particularly in domestic consumption [10][11].

Core Insights - The fund managed by renowned fund manager Xie Zhiyu has made significant adjustments in its third-quarter report, indicating a strong focus on AI computing power sectors [1][3] - The fund has increased its positions in leading companies such as Zhongji Xuchuang, Lanke Technology, Beifang Huachuang, and Dongshan Precision, which are key players in optical modules, high-speed interconnect chips, semiconductor equipment, and PCBs [1][3] - Conversely, companies like Haida Group, Perfect World, and Pengding Holdings have been removed from the top ten holdings, suggesting a strategic shift in investment focus [1] Fund Performance - The XQ He Run Mixed A fund rose by 36.16% in Q3, significantly outperforming the benchmark return of 13.84% [2] - Year-to-date, the fund has increased by 39.63%, ranking in the top 35% among 4,503 similar products [2] - The fund's total assets increased by 3.127 billion yuan, reaching 24.982 billion yuan, with a stock position ratio of 90.28% as of the end of Q3 [3] Investment Strategy - The XQ He Yi fund also saw a rise of 30.89% in A shares and 30.69% in C shares during Q3, with a total asset growth of 2.7 billion yuan, reaching 18.679 billion yuan [5] - The fund's stock position ratio stood at 91.21% at the end of Q3, indicating a strong commitment to equity investments [5] - Xie Zhiyu noted that the rapid growth in AI sectors has led to market volatility, with concerns about the sustainability of demand growth amid changing macroeconomic conditions [5][6] Market Trends - The overseas computing power sector, particularly in optical modules and PCBs, remains a key driver of market growth, despite investor concerns about the long-term sustainability of demand [5] - The Chinese market has shown resilience due to strong fundamentals in technology and high-end manufacturing, with breakthroughs in domestic computing power boosting semiconductor equipment shipments [6] - The Hong Kong market has underperformed in Q3, influenced by fluctuations in the Hong Kong dollar and increased competition in sectors like e-commerce and new energy vehicles [6]

Core Viewpoint - Zhang Kun, a prominent fund manager at E Fund, has disclosed the top ten holdings of four funds as of Q3 2025, indicating a strategic shift in investment focus towards consumer and technology sectors, while also reflecting on the long-term growth potential of China's consumption market [1][9]. Fund Holdings Summary - The combined top ten holdings of Zhang Kun's four funds include Tencent Holdings, Alibaba-W, Kweichow Moutai, Luzhou Laojiao, Shanxi Fenjiu, Wuliangye, JD Health, Yum China, CNOOC, and Focus Media [1]. - The total market value of the top holdings is as follows: - Tencent Holdings: 56.18 billion - Alibaba-W: 56.16 billion - Kweichow Moutai: 51.36 billion - Luzhou Laojiao: 51.13 billion - Shanxi Fenjiu: 50.69 billion - Wuliangye: 50.64 billion - JD Health: 45.02 billion - Yum China: 28.69 billion - CNOOC: 27.60 billion - Focus Media: 26.44 billion [2]. Changes in Holdings - Compared to Q2 2025, the only change in the top ten holdings was the exit of SF Express, replaced by Focus Media [2]. - In Q3, Zhang Kun reduced his holdings in Tencent and Alibaba by 2.465 million shares and 17.392 million shares, respectively, likely due to price increases of 31% and 61% during the quarter [5]. - In the liquor sector, there was an increase in Kweichow Moutai by 48,100 shares, while reductions were made in Luzhou Laojiao, Shanxi Fenjiu, and Wuliangye [6]. Sector Analysis - In the consumer sector, there were reductions in Luzhou Laojiao and Shanxi Fenjiu, but increases in Kweichow Moutai and Wuliangye, indicating a positive outlook on premium liquor [7]. - The new investments in Yum China and Focus Media reflect expectations of recovery in the restaurant and advertising sectors [7]. - In the technology sector, there were reductions in Tencent and Alibaba across all funds, while new positions were taken in Google-A and reductions in ASML and TSMC, indicating a shift towards more globally competitive tech giants [8]. Long-term Outlook - The team believes that China's consumption growth is likely to outpace GDP growth, supported by a low consumer spending ratio relative to GDP compared to other major economies [9]. - The potential for a unified market of 1.4 billion people offers significant scale advantages for product development and sales [9]. - The current low valuation levels provide a safety margin for investments in the domestic consumption market, which is expected to remain fertile ground for long-term investment [9].