Core Viewpoint - Despite a more than 50% increase year-to-date, the Chinese internet sector remains a "must-hold" asset, presenting unique investment opportunities in AI and gaming [1][2]. Group 1: AI and Gaming Opportunities - Chinese internet giants are in a "best position" for AI applications and commercialization, benefiting from a closed-loop ecosystem, proven commercialization expertise, vast user data, and lower token costs [2][6]. - Tencent is highlighted as the top pick in the sector, combining AI-driven growth, a stable competitive landscape, strong shareholder returns, and attractive valuation [2]. - Alibaba is favored in the AI and cloud business due to its leading market share and comprehensive AI/cloud products, with accelerating cloud revenue expected to support market sentiment [5][6]. Group 2: E-commerce Challenges - The report expresses a cautious stance on trading platforms (e-commerce and local services), describing competition in the "instant retail" sector as a "protracted battle" expected to last until 2026, which will lower industry profit margins [8][10]. - E-commerce sector's total operating profit growth has sharply declined from a 2% year-on-year increase in Q1 2025 to a 23% year-on-year decrease in Q2 2025, with most trading platforms seeing downward revisions in their 12-month rolling EPS forecasts [10]. - Meituan's rating has been downgraded from "buy" to "neutral" due to low visibility on 2026 earnings and high uncertainty [10]. Group 3: Valuation Insights - Despite challenges, the overall valuation discount of the Chinese internet sector remains significant [13]. - Historically, the Nasdaq Golden Dragon China Index traded at similar valuations to the Nasdaq 100 Index before early 2023, with the current valuation premium over the MSCI China Index at only 20%, compared to 40-80% over the past decade [16]. - This deep discount provides unique entry opportunities for long-term investors, particularly in high-certainty growth areas like AI applications and gaming [18].

Group 1 - The media industry is showing signs of bottom improvement, with the gaming sector benefiting from a new product cycle driving performance growth [1] - The acceleration of AI applications and the introduction of guidelines for large model deployment in the government sector are promoting the development of "AI + government," with gaming, advertising, and education as key focus areas [1] - The gaming market is highlighted by the strong performance of products like "Whiteout Survival" from Diandian Interactive, indicating significant overseas potential [1] Group 2 - The Gaming ETF (516010) tracks the Animation and Gaming Index (930901), which selects listed companies involved in animation production, game development, and related industries to reflect the overall performance of the digital entertainment sector [1] - The Animation and Gaming Index focuses on the integration of cultural creativity and technology, covering the entire industry chain from content creation to technology research and platform operation, effectively reflecting market trends and developments in the digital entertainment industry [1]

Core Insights - The Chinese gaming industry is a significant part of the modern cultural industry and digital economy, with numerous listed companies across various segments of the gaming value chain [2][12]. Group 1: Company Overview - Major listed companies in the Chinese gaming industry include Tencent (00700.HK), NetEase (09999.HK), and Bilibili (09626.HK), among others [1][2]. - Tencent is recognized as the largest gaming company in China, contributing over 60% of its revenue from games, with a projected revenue of 197.7 billion yuan in 2024 [13]. - NetEase ranks 19th in the 2024 Hurun China 500 list, with a gaming revenue of 83.6 billion yuan, driven by both PC and mobile games [13]. Group 2: Revenue and Financial Performance - In 2024, Tencent's gaming revenue is expected to reach 1187 billion yuan, while NetEase's is projected at 465.1 billion yuan [16]. - The highest gaming revenue among listed companies is from Tencent, followed by NetEase and Century Huatong, which has a revenue of 164.33 billion yuan [16]. - Three Seven Interactive leads in gaming business gross margin at 77.25%, with its gaming business accounting for 100% of its revenue [16]. Group 3: Business Layout and Market Strategy - Tencent and NetEase have the broadest gaming business layouts, focusing on both domestic and international markets, including North America, Europe, Japan, and Southeast Asia [14]. - Century Huatong has a strong focus on the overseas market, with over 60% of its revenue coming from international operations [15]. - Three Seven Interactive is fully focused on the overseas market, particularly in the SLG segment, with 70% of its revenue from this category [15]. Group 4: New Game Development and Technology Utilization - Tencent and NetEase have the highest new game reserves, with 35 and 28 titles respectively, indicating a trend towards diversification and IP development in their game offerings [17][18]. - Companies are increasingly integrating advanced technologies such as AI and NVIDIA's DLSS to enhance game development and visual quality [16][18]. - The gaming industry is expected to continue evolving with a focus on innovative technologies and diverse game genres, aligning with national cultural industry goals [16][18].

Core Insights - Qualcomm's Snapdragon won the "Brand Power · Annual Aha Moment" award at the 2025 Brand Power Awards by First Financial, showcasing its leadership in AI, high-performance low-power computing, and connectivity technologies [1] - The Snapdragon theme pavilion at the 2025 ChinaJoy exhibition highlighted the integration of technology with youth culture, demonstrating the potential of future business through immersive interactive experiences [1][4] Group 1 - The award recognizes brands with breakthrough performances in product, design, advertising, technology, and creativity, with Qualcomm collaborating with 75 industry partners to present an innovative summer event [4] - This marks the sixth Snapdragon theme pavilion created by Qualcomm, which has been rooted in China for 30 years and has established itself as a pioneer in digital entertainment equipment [4] - The Snapdragon platform supports various devices, including smartphones, tablets, PCs, handheld gaming devices, XR, and automotive applications, enhancing digital entertainment experiences and ecosystem prosperity [4] Group 2 - The "Snapdragon XR Fantasy Journey" experience was significantly upgraded, utilizing the Snapdragon XR platform to deliver high-quality visual effects and seamless performance in crowded environments [6] - New AR interactive experiences were introduced at the 2025 ChinaJoy, showcasing applications in mobile, entertainment, and shopping, allowing users to overlay virtual content onto the real world [6] - Qualcomm is collaborating with major gaming companies and telecom operators to enhance the gaming and esports industry, focusing on the application of 5G and AI innovations in digital entertainment [6]

Investment Rating - The report maintains an "Outperform" rating for the company [5][26]. Core Insights - The company's revenue for Q2 2025 reached $5.3 billion, representing a year-over-year growth of 38%, driven primarily by strong performance in e-commerce and digital financial services [9][26]. - The adjusted EBITDA for the quarter was $828 million, with a corresponding profit margin of 16% [9]. - The e-commerce segment saw revenue of $3.8 billion, up 34% year-over-year, with GMV growth of 28% [12][26]. - Digital financial services generated $883 million in revenue, a 70% increase year-over-year, with a stable non-performing loan rate of 1.0% [16][26]. - The digital entertainment segment reported revenue of $559 million, a 28% increase year-over-year, with an expected annual revenue growth of over 30% [19][26]. Summary by Sections Overall Performance - The company reported a total revenue of $5.3 billion for Q2 2025, with a net profit of $410 million and a net profit margin of 8% [9][26]. E-commerce Business - E-commerce revenue was $3.8 billion, with a GMV growth of 28% year-over-year. The platform's monetization rate improved from 10.3% to 11.1% [12][26]. - The adjusted EBITDA for the e-commerce segment was $228 million, with a profit margin of 6.0% [12][26]. Digital Financial Services - Digital financial services achieved revenue of $883 million, a 70% increase year-over-year, with an adjusted EBITDA of $255 million and a profit margin of 29% [16][26]. - The total receivables reached $6.9 billion, a 90% increase year-over-year, with over 4 million new first-time borrowers added in the quarter [16][26]. Digital Entertainment - The digital entertainment segment generated $559 million in revenue, with a 23% increase in revenue streams. The number of paying users reached 61.8 million, an 18% year-over-year increase [19][26]. - The company expects the annual revenue growth for digital entertainment to exceed 30% [19][26]. Financial Forecasts - Revenue forecasts for 2025-2027 have been adjusted to $21.6 billion, $26.4 billion, and $30.4 billion, respectively, with corresponding net profit forecasts of $1.8 billion, $2.9 billion, and $3.8 billion [26].

Group 1 - The gaming ETF (516010) has risen over 2% during trading, driven by improvements in the industry fundamentals and technological innovations [1] - Guosen Securities indicates that the media and gaming industries are showing signs of bottoming out, with the gaming sector needing to focus on product cycles and performance [1] - The media sector is benefiting from increased advertising spending due to economic recovery, while the film and television content sector is expected to see improvements on the supply side [1] Group 2 - The ChinaJoy exhibition has seen high attendance, with 743 participating companies and a foreign investment ratio of 31.8%, reflecting the industry's enthusiasm [1] - The mobile game "Whiteout Survival" has maintained its position at the top of the revenue charts, indicating sustained high industry sentiment [1] - Overall, the media and gaming industries are showing positive signals in terms of performance recovery, technological innovation, and market enthusiasm [1] Group 3 - The gaming ETF (516010) tracks the animation and gaming index (930901), which selects listed companies involved in game development and operation, animation production, and related businesses [1] - This index reflects the overall performance of listed companies in the digital entertainment industry, highlighting the growth potential and innovative vitality of the animation and gaming sector [1] - Investors without stock accounts can consider the Guotai Zhongzheng Animation and Gaming ETF Connect C (012729) and A (012728) [1]

Core Viewpoint - Derlin Holdings has entered into a subscription agreement with Pangu Software Pte Ltd, agreeing to invest a total of $1 million for 1,041 ordinary shares, with an option for an additional $1 million for the same number of shares, aiming to strengthen its strategic position in the digital entertainment and Web3 sectors [1] Group 1: Investment Details - The investment will result in Derlin Holdings acquiring approximately 2.0% equity in Pangu, assuming no further issuance or repurchase of shares [1] - The fund managed by Derlin Holdings holds about 11.7% interest in the Cayman Islands private equity fund [1] Group 2: Pangu Overview - Pangu is a Singapore-registered tech company focused on developing decentralized Web3 gaming platforms, utilizing blockchain and AI technologies to enhance user engagement and digital asset ownership [2] - Pangu operates the MetaCene Universe, which has launched four Web3 titles, including the flagship MMORPG Metacene, recognized for its innovative Web3 gaming features [2] Group 3: Strategic Alignment - The investment aligns with Derlin Holdings' long-term vision and recent business plans in digital finance, virtual assets, and real-world asset tokenization [2] - The company is executing a three-phase plan to develop a comprehensive digital finance ecosystem, with the investment expected to capture new business development and collaboration opportunities in the merging fields of virtual assets and decentralized finance [3] Group 4: Synergy with RWA Tokenization - Derlin Holdings plans to tokenize real-world assets (RWA) and distribute digital rights to qualified shareholders, with the investment expected to leverage Pangu's platform for potential integration with RWA and digital asset management [3] - The investment is anticipated to enhance the company's competitive advantage in virtual assets, expanding its regulatory license scope to cover various virtual asset activities [3] Group 5: Strategic Value and Market Leadership - The investment is expected to position Derlin Holdings to participate in the rapid development of Web3 technologies and business models, which are strategically significant for its digital finance development plan [4] - By establishing a partnership with Pangu, the company aims to seize opportunities in digital entertainment and drive the integration of traditional finance with blockchain-driven asset models, creating long-term value for shareholders and clients [4]

Group 1 - The company, Derin Holdings (01709.HK), announced a subscription agreement with Pangu Software Pte Ltd, involving a conditional investment of USD 1 million for 1,041 ordinary shares, with an additional option to subscribe for another 1,041 shares for the same amount [1] - The investment aims to strengthen the company's strategic position in the digital entertainment and Web3 sectors [1] - Upon completion of the investment, the fund will hold approximately 2.0% equity in Pangu, assuming no further issuance or repurchase of shares by Pangu [1]

Core Viewpoint - The 2025 ChinaJoy and the China International Digital Entertainment Industry Conference (CDEC) highlight the advancements in the digital entertainment industry, with Qualcomm showcasing its technological innovations and ecosystem development in mobile gaming and AI integration [1][3]. Group 1: Technological Innovations - Qualcomm's Snapdragon 8 Gen 2 mobile platform features over 40% improvements in CPU, GPU, and NPU performance, enhancing mobile gaming and multitasking capabilities [3]. - The platform supports over 180 terminal designs from brands like Honor, OPPO, vivo, and Xiaomi, providing top-tier experiences in mobile gaming, social media, and multimedia [3]. - The integration of the seventh-generation Snapdragon Elite Gaming suite brings PC-level gaming experiences to mobile devices, improving graphics and frame rates [3]. Group 2: AI and 5G Integration - Qualcomm is actively promoting the deployment of generative AI on the device side, exemplified by the Xiaomi AI glasses that utilize Qualcomm chips for real-time AI interactions [5]. - The Snapdragon AR1+ platform has been reduced in size by 26% and offers lower power consumption, supporting small language models for AI smart glasses [5]. - The acceleration of 5G-A network commercialization, combined with AI and spatial computing, opens new possibilities for digital entertainment [5]. Group 3: Ecosystem Development - Qualcomm has built a comprehensive digital entertainment ecosystem across multiple devices, including smartphones, PCs, XR, and automotive applications [6]. - Over 30 flagship Android smartphones based on the Snapdragon 8 Gen 2 and fourth-generation Snapdragon 8s platforms were showcased, enhancing user experiences [6]. - The collaboration with 75 partners resulted in over 100 terminal demonstrations and more than 50 multi-terminal game titles, showcasing the strength of Qualcomm's ecosystem [6]. Group 4: Interactive Experiences - The Snapdragon theme pavilion at ChinaJoy features multi-dimensional interactive scenarios, including the upgraded "Snapdragon XR Fantasy Journey" that offers ultra-8K resolution and low-latency immersive experiences [7]. - Online and offline engagement strategies, such as social media campaigns and promotional events, have attracted significant user participation [7]. - Qualcomm aims to innovate and collaborate with partners to create a new chapter in digital entertainment and consumption [7].

Core Insights - The 2025 ChinaJoy event in Shanghai features Qualcomm's sixth "Snapdragon Theme Pavilion," showcasing cutting-edge technology and digital entertainment experiences with 75 industry partners [1][3] - Qualcomm aims to provide a comprehensive digital entertainment experience, presenting over 100 devices across 10 categories and more than 50 multi-device game titles [3][4] - The Snapdragon 8 Gen 2 processor enhances gaming performance and efficiency, supporting advanced technologies like AI image motion engine and super-resolution [4] Group 1 - Qualcomm's Snapdragon Theme Pavilion is designed to deliver an immersive digital entertainment experience, featuring a variety of mobile games and cross-device applications [3][5] - The pavilion includes 15 XR devices covering AR, VR, and MR, providing multi-dimensional interactive experiences [4] - The "Snapdragon Gear Library" showcases a robust digital entertainment ecosystem with over 30 flagship Android smartphones and AI PCs [4] Group 2 - Qualcomm emphasizes its leadership in connectivity, AI on-device capabilities, and high-performance low-power computing to enhance cross-device experiences [4] - The event includes interactive gaming sessions and opportunities for fans to engage with professional esports players [4] - Qualcomm reaffirms its commitment to technological innovation and industry collaboration to shape the future of digital entertainment [5]