Core Viewpoint - The gaming sector is experiencing a notable recovery, with significant capital inflow and a supportive regulatory environment for both domestic and imported games [1] Group 1: Market Performance - The gaming ETF (159869) has seen a near 1% increase after a slight fluctuation in early trading on September 29, with a total net capital inflow of 1.672 billion yuan over the past 10 trading days [1] - The product scale of the gaming ETF has surpassed 10 billion yuan, reaching a new high since its inception, indicating strong investor interest [1] Group 2: Regulatory Environment - From January to September 2025, the National Press and Publication Administration has issued a total of 1,275 game licenses, maintaining a high volume of domestic licenses and a consistent approval rhythm for imported licenses [1] - In August alone, 166 game licenses were issued, marking the highest monthly issuance since the resumption of licenses in April 2022 [1] - The government has explicitly stated its support for the overseas expansion of the gaming industry, aiming to build a complete industrial chain from IP creation to production, distribution, and overseas operations [1] Group 3: Industry Outlook - According to Kaiyuan Securities, the gaming industry is still in a high prosperity cycle driven by supply-demand resonance, with the upcoming quarterly reports likely to further validate this high prosperity [1] - The current valuation of the gaming sector remains attractive, and it is recommended to increase allocations in gaming after recent adjustments [1] - The gaming sector is catalyzed by multiple factors including AI, content, and changes in commercialization models, with the gaming ETF (159869) tracking the performance of A-share listed companies in the animation and gaming industry [1]

Core Insights - The company reported strong financial performance for the first half of 2025, with a revenue of 1.01 billion yuan, a year-on-year increase of 25.09%, and a net profit attributable to shareholders of 162 million yuan, up 69.22% [1] - The growth in revenue and profit is primarily driven by the recovery in the gaming industry and increased advertising spending in the online gaming sector [2] Financial Performance - In Q2 2025, the company achieved a revenue of 432 million yuan, reflecting a year-on-year growth of 9.3%, with net profit reaching 88.05 million yuan, a significant increase of 109.61% [1] - The gross margin for Q2 2025 was 46.16%, up 6.47 percentage points year-on-year, while the net profit margin reached 20.37%, an increase of 9.75 percentage points year-on-year [1] Business Segments - The company's online advertising and value-added services generated 800 million yuan in revenue for H1 2025, a year-on-year increase of 30.99%, outpacing overall revenue growth [2] - The gaming segment reported a revenue of 208 million yuan for H1 2025, with a gross margin of 87.88%, indicating strong profitability [2] Market Trends - The domestic gaming market saw actual sales revenue of 168 billion yuan in H1 2025, growing by 14.08% year-on-year, with the client game market revenue at 35.4 billion yuan, up 4.86% [2] - The number of online service venues and esports hotels reached 107,300 by the end of Q2 2025, with a revenue scale of 48.95 billion yuan in the first half of the year [2] Product Development - The company launched the "Wangwei Master 9300" version, enhancing user experience through AI optimization and supporting diverse computing needs [3] - The company is actively advancing the launch of new games, with two titles from its subsidiary, Fuyun Technology, having received publication approval [2] Future Outlook - The company is expected to benefit from increased advertising budgets due to the upward trend in the end-game product cycle, with projected net profits of 325 million, 405 million, and 627 million yuan for 2025-2027 [4] - The anticipated PE ratios for 2025, 2026, and 2027 are 58x, 47x, and 30x, respectively, indicating strong growth expectations [4]

Core Viewpoint - The company, Friendship Time (6820.HK), has issued a positive profit forecast for the first half of 2025, reflecting a strong recovery in the gaming industry and confidence from both the company and its major shareholders [1][2]. Industry Summary - The gaming industry in China experienced a growth rate of nearly 15% in the first half of 2025, with actual sales revenue reaching 168 billion yuan, a year-on-year increase of 14.08% [2]. - The number of gaming users in China reached approximately 679 million, marking a historical high with a growth of 0.72% [2]. - Self-developed games generated overseas sales revenue of $9.501 billion, reflecting a year-on-year increase of 11.07%, indicating ongoing global competitiveness of Chinese gaming companies [2]. Company Performance Summary - Friendship Time expects revenue for the first half of 2025 to be between 600 million to 650 million yuan, representing a year-on-year growth of 14.1% to 23.6% [2]. - The company anticipates a profit of approximately 38 million to 44 million yuan, marking a turnaround from losses with a year-on-year increase of 152.5% to 160.8% [2]. - The growth is primarily driven by the strong performance of mini-games such as "Dulala's Promotion" and "Lingyun Nuo," along with an increase in high-margin channel revenue contributing to a gross margin increase of about 5 percentage points [2]. Game Highlights - The new game "Chaotic Chef Party" launched on May 28, 2025, quickly topped various app store charts and features collaborations with over 30 well-known food brands [3]. - The game has also initiated a second phase of the "Chef Creator" incentive program to support content creators [3]. - "Dulala's Promotion," another key product, has received positive feedback in both domestic and international markets, particularly in South Korea, where it reached the iOS game sales chart's Top 30 [4]. Shareholder Returns - The company has a strong commitment to shareholder returns, having distributed over 750 million yuan in cash dividends since its IPO, exceeding the net proceeds from its initial public offering [5]. - The company has repurchased approximately 3.7% of its total issued share capital as part of its share incentive plan [5]. - The chairman and major shareholder has committed not to sell any shares in the open market for 12 months starting from July 17, 2025, to reinforce confidence in the company's long-term prospects [5].

Core Insights - The gaming companies in Shanghai appear to be recovering, signaling a potential new phase for the industry [1][26] Group 1: Company Performance - Eagle's new game "Pom Pom" has achieved significant success, ranking Top 3 in China and Top 10 globally on Steam with an 88% approval rating [1][2][3] - Paper Games has seen a remarkable turnaround, with its flagship store topping the sales chart on Tmall during the "618" shopping festival [5][6] - The game "Love and Deep Space" has shown strong performance, with projected revenue exceeding 6 billion yuan across all platforms in 2024 [6][7] - Heartbeat Games has reported a nearly 70% year-on-year revenue increase, reaching 3.3 billion yuan in 2024, driven by successful titles [10][12] Group 2: Industry Trends - The gaming industry in Shanghai is experiencing a collective improvement, which may indicate the beginning of a recovery cycle [26] - Despite the positive trends, many companies remain cautious regarding project launches and hiring, with a significant oversupply of talent in the job market [24][25] - The past two years saw a wave of layoffs and project cancellations across the industry, but the current signs of recovery suggest a potential shift in the market dynamics [23][26]