Core Viewpoint - The gaming industry is undergoing significant scrutiny and internal investigations, highlighted by the corruption case involving a senior manager at Zhongyou Mobile, which has led to a sharp decline in the company's stock price and raised concerns about the performance of its flagship game, "Xianjian World" [1][4]. Group 1: Company Developments - Zhongyou Mobile's internal corruption report revealed that Jiang Haitao, the former general manager of the Man Tian Xing studio, was detained for serious job-related crimes [1]. - "Xianjian World," which had over 300 million yuan invested in its development, initially topped the iOS free chart but quickly fell to 36th place within a weekend, indicating poor market performance [1][2]. - The game received negative feedback from players, citing issues such as severe frame drops and lackluster content design, which did not meet expectations for the "Xianjian" IP [2][3]. - Following the corruption report, Zhongyou Mobile's stock price dropped by 5.56%, with a total market value of 1.528 billion HKD, reflecting a decline of over 30% year-to-date [4]. Group 2: Industry Context - The gaming industry is experiencing a wave of internal purges, with companies like Perfect World and Bilibili also taking action against executives involved in misconduct [6][7]. - The reliance on outsourcing in the gaming sector, where art and special effects outsourcing can account for 30%-50% of total development costs, creates opportunities for management to exploit their authority for personal gain [7][8]. - Zhongyou Mobile is facing its largest loss since its listing, with a net loss of 2.08 billion yuan projected for 2024, prompting the company to accelerate plans for the "Xianjian Qixia Chuan" IP to unlock new commercial potential [5].

Core Viewpoint - The gaming industry is undergoing significant scrutiny and internal investigations, highlighted by the corruption case involving a senior executive at Zhongyou Mobile, which has led to a sharp decline in the company's stock price and financial performance [1][4][5]. Group 1: Company Developments - Zhongyou Mobile's internal corruption report revealed that Jiang Haitao, the former general manager of the Man Tian Xing studio, was detained for serious job-related crimes [1]. - The game "Xian Jian World," developed under Jiang's leadership, initially showed promise but quickly fell in rankings and received poor player reviews, leading to disappointing revenue of only 1.25 million yuan in its first week despite over 300 million yuan invested in development [2][3]. - Following the corruption allegations, Zhongyou Mobile's stock price dropped by 5.56%, with a total market value of 1.528 billion HKD, reflecting a decline of over 30% year-to-date [4]. Group 2: Industry Context - The gaming industry is experiencing a wave of internal purges, with companies like Perfect World and Bilibili also taking action against executives involved in misconduct [6][7]. - The reliance on outsourcing in the gaming sector, where art and special effects outsourcing can account for 30%-50% of total development costs, raises concerns about management's ability to control costs and prevent misuse of power [7].

Group 1: Company Developments - Zhong Shouyou (中手游) reported an internal investigation leading to the criminal detention of former studio manager Jiang, who was involved in serious misconduct [1] - The studio, known as "Mantiansxing," was established in early 2021 and was responsible for the development of the game "Xianjian World," which has underperformed since its launch [1][2] - The company faced significant financial challenges, with a reported revenue of 1.93 billion RMB and an adjusted net loss of 2.08 billion RMB for the 2024 fiscal year, primarily due to delays in the launch of its core game [2] Group 2: Industry Trends - The gaming industry has seen a surge in anti-corruption actions, with multiple companies, including Perfect World and Bilibili, reporting serious violations and criminal activities among employees [4][5] - Analysts suggest that the current wave of anti-corruption efforts is crucial for the healthy development of companies, as many issues have surfaced due to the lack of robust regulations in the rapidly growing industry [5] - The gaming sector's unique characteristics necessitate ongoing adjustments to corporate governance and anti-corruption measures to address emerging challenges [5]

Core Viewpoint - The gaming industry is currently undergoing a significant anti-corruption campaign, with multiple companies reporting serious misconduct among their employees, which has led to criminal investigations and arrests [5][6]. Company Summary - On July 30, Zhong Mobile (00302.HK) reported that its former studio manager, Jiang, was involved in serious job-related crimes and has been detained by law enforcement [1]. - Jiang was responsible for the "Xianjian World" project, which launched earlier this year but failed to meet performance expectations, leading to significant layoffs within the project team [2]. - Zhong Mobile's financial performance has been under pressure, reporting a revenue of 1.93 billion RMB and an adjusted net loss of 2.08 billion RMB for the 2024 fiscal year, primarily due to delays in the launch of its core game [3]. Industry Summary - The anti-corruption efforts in the gaming industry have intensified, with Perfect World and Bilibili also reporting serious violations among their employees, leading to criminal charges [5]. - Analysts suggest that these anti-corruption measures are crucial for the healthy development of companies in the gaming sector, as many firms are now addressing internal misconduct that has been exposed due to improved regulations [6]. - The gaming industry faces unique challenges in establishing modern corporate governance, which necessitates ongoing adaptation to effectively combat corruption [6].

Core Viewpoint - Perfect World has returned to profitability in the first half of the year, with expected net profit of 480 to 520 million yuan, primarily driven by its game business and the success of key products like "Zhu Xian World" and the anticipated "Yihuan" [2][3]. Financial Performance - The company expects to achieve a net profit attributable to shareholders of 480 to 520 million yuan in the first half of the year, with a non-recurring profit of approximately 290 to 330 million yuan [2][3]. - The gaming segment is projected to contribute the entire net profit, with a similar range of 480 to 520 million yuan, and a non-recurring profit of 320 to 360 million yuan, marking a turnaround from losses in the previous year [2][3]. Game Development and Expectations - The success of "Zhu Xian World," launched in December 2024, has significantly contributed to the company's performance, generating over 400 million yuan in revenue within the first 30 days of its public release [3]. - The upcoming game "Yihuan" is expected to be a major hit, with analysts predicting it could become a flagship IP for Perfect World, potentially generating over 5 billion yuan in its first year [5]. E-sports and Other Business Segments - The e-sports business has shown steady growth, supported by high-quality and frequent events, contributing to stable revenue [3]. - The film and television segment is also expected to achieve a net profit of around 40 million yuan, with recent productions like "Qian Duo Tao Hua Yi Shi Kai" and "Zhi Ci Jiang Hu Meng" performing well [4]. Internal Adjustments and Anti-corruption Measures - The company has initiated a series of internal adjustments aimed at optimizing operations and reducing costs, which have begun to show results [3]. - Perfect World has also intensified its anti-corruption efforts, reporting multiple violations of company policies and contracts, leading to legal actions against involved employees and suppliers [6][7].