Core Viewpoint - The performance of A-share game companies in H1 2025 is expected to be strong, driven by industry dynamics and the emergence of "micro-horror search and destroy" and "overseas SLG" games, leading to performance and valuation upgrades for relevant companies [1][2] Group 1: Micro-Horror Search and Destroy - The "search and destroy" model creates a closed loop of "investment-risk-return," incentivizing players through high failure penalties and strong victory rewards, potentially leading to long-lasting game hits [2] - Games like "Delta Action," "Dark Zone Breakthrough," and "Fog Shadow Hunter" focus on combat, while "Supernatural Action Group" targets casual social gameplay, appealing to female audiences [2] - The game "Supernatural Action Group" is expected to become another evergreen title for Giant Network (002558.SZ), significantly enhancing the company's performance and stabilizing revenue streams [2] Group 2: Overseas SLG Market - The overseas SLG mobile game market is projected to reach $124.64 billion in 2024 and $73.08 billion in H1 2025, with year-on-year growth rates of 17% and 25%, respectively [3] - Chinese companies are expected to generate $185.57 billion in overseas revenue in 2024, with strategy games accounting for 41.38% of the top 100 overseas games, indicating a strong competitive advantage [3] - The success of overseas SLG games relies on user acquisition through advertising and brand promotion, with a focus on improving user lifetime value (LTV), click-through rates (CTR), and conversion rates (CVR) while reducing customer acquisition costs (CPM) [3] Group 3: Innovation and Market Expansion - Companies like Yuanqu with "Last War" and Diandian Interactive with "Whiteout Survival" have achieved breakthroughs in integrating secondary gameplay and casual gameplay, reducing acquisition costs and improving long-term retention [4] - The industry is entering a new expansion phase, with leading companies expected to continue product iterations, resulting in steady performance growth [4]

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].