Investment Rating - The industry investment rating is "Outperform the Market," indicating a projected increase of over 10% in the industry index relative to the market in the next six months [22]. Core Insights - The media industry (Shenwan) experienced a decline of 1.41% last week, ranking 21st in the market, while it remained flat compared to the CSI 300 index and outperformed the ChiNext index by 0.27 percentage points. Year-to-date, the media industry has seen a cumulative decline of 4.27% [11][13]. - OpenAI's announcement to shut down Sora reflects the intensifying competition in the AI industry, suggesting that projects lacking a clear commercialization path may struggle to survive. The focus is shifting towards vertical applications, cost-effectiveness, and genuine user needs, emphasizing practicality and profitability [10][20]. - The successful launch of "The Kingdom of Lock: World" is attributed to its strong nostalgic IP appeal, innovative business model, player-centric operational strategies, and high-quality content production, indicating significant market potential in the casual pet-catching game segment [10][18]. Summary by Sections Industry Dynamics - The game "The Kingdom of Lock: World" topped the iOS free game chart on its launch day and reached the top of the sales chart the following day, with 15 million new users on launch day [18]. - OpenAI's Sora, a video generation tool, will cease operations after experiencing a rapid decline in user engagement and revenue following an initial surge [20]. - In March, a total of 133 game licenses were issued, including 130 domestic and 3 imported games, indicating a stable trend in game approvals [20]. - Nearly 20 films have been scheduled for release during the Qingming holiday, showcasing a variety of genres and appealing to diverse audience preferences [21]. Industry Valuation - The Shenwan media industry PE (TTM) valuation decreased from 26.07X to 25.62X, slightly below the average level of 26.24X from 2018 to 2025, reflecting a decline of 2.36% [16].

Investment Rating - The industry investment rating is "Outperform the Market" with an expectation of over 10% relative increase in the industry index compared to the market in the next six months [5][24]. Core Insights - The recent reduction of the Apple Store commission rate in China is seen as a strategic move by Apple to balance revenue distribution between developers and the platform, which is under regulatory and competitive pressure. This adjustment is expected to significantly improve profitability for long-term operational products with high iOS channel share and strong user payment capabilities [10][11]. - The gaming industry is expected to continue its long-term growth due to a steady release of new products and normalization of licensing approvals. It is recommended to focus on leading companies with product reserves, R&D capabilities, and mature global operations. The rise of AI capabilities is anticipated to drive commercialization in various application scenarios, particularly in AI+ content creation, AI+ gaming, and AI+ marketing [2][10]. Summary by Sections Industry Dynamics - Apple announced a reduction in the standard commission rate for in-app purchases and paid apps from 30% to 25%, effective March 15, 2026. The commission rate for eligible small developers and subscription renewals will decrease from 15% to 12% [3][20]. - The global mobile game revenue rankings for February 2026 were released, with "Last War: Survival Game" at the top, followed by "Honor of Kings" in second place. "Peacekeeper Elite" rose to the top five due to updates related to the Spring Festival and Ferrari collaboration [3][22]. - Tencent's upcoming game "Kingdom of Pets: World" has nearly 50 million pre-registrations, ranking among the top five in Tencent's history. The game will feature over 400 pets available for free, with plans to add over 200 new pets annually [3][22]. - The 2026 China TV Production Industry Conference highlighted AI as a core driver for restructuring the film and television ecosystem, with a focus on deepening revenue-sharing models and parallel development of various types of series [3][23]. Industry Valuation - The SW Media industry PE (TTM) valuation decreased from 27.68X to 27.10X, but remains above the average level of 26.24X from 2018 to 2025, reflecting a 3.27% increase [4][17].

Investment Rating - The investment rating for the media industry is "Positive" (maintained) [1] Core Insights - The report highlights the increasing integration of AI technologies in the media and gaming sectors, particularly through the OpenClaw platform, which is driving significant growth in model usage and cloud computing demand [3][31] - Apple's recent decision to lower the commission rate for in-app purchases from 30% to 25% is expected to enhance the profitability of mobile game companies, thereby creating a more favorable environment for growth in the gaming sector [4][31] Industry Data Overview - As of March 14, 2026, "Delta Operation" ranked first in the iOS free game chart in mainland China, while "Honor of Kings" topped the iOS revenue chart [12][16] - The upcoming game "Three Kingdoms: The World Returns" is set to launch on April 16, 2026, with over 3 million pre-registrations, indicating strong market interest [4][31] Industry News Summary - The OpenClaw platform is significantly increasing the usage of domestic AI models, with Kimi's valuation reportedly rising over three times within three months [31] - The gaming sector is benefiting from Apple's reduced commission rates, with the overseas version of "Heart Town" achieving a peak revenue of over $2.5 million in February 2026, reflecting a 221% month-over-month increase [31][34] Company Recommendations - Key recommendations include Tencent Holdings and Kuaishou for large models, with other beneficiaries including Alibaba, Baidu, and Minimax [3][6] - In the AI advertising space, the report recommends focusing on HuiLiang Technology, while for AI music and social applications, it suggests investing in Yuedu Group [3][6]

Investment Rating - The report maintains a "Buy" rating for the company, indicating a potential upside of over 15% compared to the local market index [8]. Core Insights - The company is expected to achieve significant net profit growth in 2025, with a forecasted net profit of no less than 1.5 billion RMB, a substantial increase from 44 million RMB in 2024. This growth is attributed to increased fair value gains from financial assets, improved revenue from overseas game publishing, and reduced marketing costs due to AI technology applications [2][10]. - The successful issuance of 468 million HKD in convertible bonds will accelerate the company's AI+ gaming strategy, enhancing operational efficiency and revenue generation [10]. - The company has a rich pipeline of new games for 2026, including titles like "King's Legend 2" and "New Moon Continent," which are expected to drive revenue growth [10][12]. Financial Summary - The company's total revenue is projected to decline from 6,514.59 million RMB in 2023 to 4,607.70 million RMB in 2025, before rebounding to 5,621.05 million RMB in 2026 and 6,432.11 million RMB in 2027, reflecting a growth rate of 22.0% in 2026 [4]. - The net profit is forecasted to recover dramatically from a loss of 3.62 million RMB in 2024 to 1,571.99 million RMB in 2025, followed by 1,208.54 million RMB in 2026 and 1,495.21 million RMB in 2027 [4]. - The company’s PE ratio is expected to improve significantly from 98.94 in 2023 to 5.80 in 2025, indicating a more favorable valuation as profits recover [4]. Game Product Pipeline - The company has developed a diverse product matrix covering various IPs, with key upcoming titles including "King's Legend 2," "New Moon Continent," and "Douluo Dalu: The Legend of the Evil," which are anticipated to contribute to future revenue growth [12].

Investment Rating - The report maintains a "Buy" rating for the company, indicating a strong performance relative to the local market index [8]. Core Insights - The company is expected to achieve significant net profit growth in 2025, with a forecasted net profit of no less than 1.5 billion RMB, a substantial increase from 44 million RMB in 2024 [10]. - The successful issuance of 468 million HKD in convertible bonds will accelerate the company's AI+ gaming strategy, enhancing operational efficiency and growth potential [10]. - The company has a rich pipeline of new games for 2026, which is anticipated to drive revenue growth, including titles like "King's Legend 2" and "New Moon Continent" [10]. Financial Summary - Total revenue is projected to decline from 6,514.59 million RMB in 2023 to 4,607.70 million RMB in 2025, before rebounding to 5,621.05 million RMB in 2026 and 6,432.11 million RMB in 2027, reflecting a growth rate of 22.0% in 2026 [4]. - Net profit is expected to recover dramatically from a loss of 3.62 million RMB in 2024 to 1,571.99 million RMB in 2025, with a projected profit of 1,208.54 million RMB in 2026 and 1,495.21 million RMB in 2027 [4]. - The company’s PE ratio is forecasted to improve significantly from 98.94 in 2023 to 5.80 in 2025, indicating a more favorable valuation as earnings recover [4]. Game Product Pipeline - The company has developed a diverse product matrix, including popular IPs such as "Legend," "Miracle," and "Blood of the River," with several new titles set for release in 2026 [12]. - Key upcoming games include "King's Legend 2," "New Moon Continent," and "Douluo Dalu: The Legend of the Evil," which are expected to contribute to future revenue growth [12].

Investment Rating - The industry is rated as "Outperform" with an expectation of a relative increase of over 10% compared to the market index in the next six months [22]. Core Insights - The media industry (Shenwan) experienced a decline of 6.97% last week, underperforming the CSI 300 index by 5.90 percentage points and the ChiNext index by 4.52 percentage points. Year-to-date, the media industry has a cumulative increase of 4.28% [11][15]. - Google announced a series of updates to Google Play, including a reduction in the in-app purchase (IAP) service fee to 20% from a maximum of 30%. This adjustment is seen as a move towards ecological openness under regulatory and competitive pressures, which will significantly lower developer costs and enhance profitability [9][20]. - Unity has updated its regional licensing and distribution policies, stating that from March 31, 2026, users in mainland China and Hong Kong/Macau will no longer have access to overseas Unity resource stores. This is part of Unity's localization strategy, which may impact small teams and independent developers more significantly in the short term [9][20]. Industry Dynamics - The gaming sector is witnessing continuous new product releases, and the normalization of licensing trends is solidifying. The long-term growth potential of the industry remains robust, with a recommendation to focus on leading companies with product reserves, R&D capabilities, and mature global operations [10]. - The enhancement of AI capabilities is expected to drive commercialization in downstream application scenarios, with a focus on tracking developments in AI+ content creation, AI+ gaming, and AI+ marketing advertising [10].

Investment Rating - The industry investment rating is "Outperform the Market," indicating an expected relative increase of over 10% in the industry index compared to the broader market within the next six months [23]. Core Insights - The media industry (Shenwan) experienced a decline of 5.10% last week, ranking 31st in the market and underperforming the CSI 300 index by 6.18 percentage points. However, the industry has seen a cumulative increase of 7.63% year-to-date [12][16]. - The upcoming launch of the RPG "Yihuan" by Perfect World on April 23 is anticipated to face intense competition in the saturated domestic two-dimensional open-world market, particularly from established titles like "Genshin Impact" and "Ming Chao." The product's actual performance remains to be evaluated [10][11]. - Google's release of the Nano Banana 2 image generation model marks a significant advancement in speed, cost, and consistency, reinforcing its leadership in the multi-modal AI sector and indicating a shift towards industrial-scale, low-cost applications in AI image generation [10][11]. Summary by Sections Industry Weekly Perspective - The media industry is currently in a highly competitive phase, with user engagement and budgets increasingly concentrated among leading products. The launch of "Yihuan" will be closely monitored for its market acceptance and performance [10][11]. Market Performance Review - The media industry underperformed last week, with a 5.10% decline, while the CSI 300 index rose by 1.08%. Year-to-date, the media sector has outperformed the CSI 300 by 5.50 percentage points [12][16]. Industry Dynamics - The gaming sector is seeing new releases, including "Yihuan," which will be available on multiple platforms. Additionally, the National Press and Publication Administration approved 146 domestic and 6 imported games in February, indicating a stable trend in game approvals [21]. - The launch of Google's Nano Banana 2 model is expected to enhance the quality and efficiency of AI-generated images, marking a new phase in the competition for AI image generation technologies [21]. Industry Valuation - The current PE (TTM) valuation for the Shenwan media industry is 29.51X, slightly down from earlier this year but still above the 7-year average of 26.24X, reflecting a 12.44% increase [19].

Investment Rating - The industry investment rating is "Outperform the Market," indicating an expected relative increase of over 10% in the industry index compared to the broader market within the next six months [23]. Core Insights - The media industry (Shenwan) experienced a decline of 5.10% last week, ranking 31st in the market and underperforming the CSI 300 index by 6.18 percentage points [12]. However, year-to-date, the media industry has shown a cumulative increase of 7.63%, outperforming the CSI 300 index by 5.50 percentage points [16]. - The upcoming launch of the RPG "Yihuan" by Perfect World on April 23 is anticipated to face intense competition in the saturated domestic two-dimensional open-world market, particularly from established titles like "Genshin Impact" and "Ming Chao" [10][11]. Despite this, "Yihuan" possesses unique differentiation advantages that may disrupt the current competitive landscape [10]. - Google's release of the Nano Banana 2 image generation model marks a significant advancement in speed, cost, and consistency, reinforcing its leadership in the multi-modal AI sector and pushing AI image generation towards industrialization and commercialization [10][11]. Summary by Sections Industry Dynamics - The game "Yihuan" is set for full platform release on April 23, developed using Unreal Engine 5 and will be available on multiple platforms including PC and PS5 [21]. - The National Press and Publication Administration approved a new batch of game licenses on February 27, including 146 domestic and 6 imported games, with notable titles from Tencent and other developers [21]. - Google's Nano Banana 2 model, launched on February 27, combines high-quality image generation with rapid processing speeds and lower costs, achieving a top score in blind tests [21]. Industry Valuation - The Shenwan media industry PE (TTM) valuation slightly decreased to 29.51X as of February 13, but remains above the 7-year average of 26.24X, reflecting a 12.44% increase [19].

Core Viewpoint - The inclusion of the gaming publisher, 贪玩 (9890.HK), in the MSCI China Small Cap Index reflects strong recognition of its comprehensive strength, innovation capability, and long-term development potential in the capital market [1][2]. Group 1: MSCI Inclusion - 贪玩 has been added to the MSCI China Small Cap Index, effective after the market close on February 27, 2026 [1]. - Inclusion in the MSCI index indicates that the company meets international standards in governance, operational quality, and market performance, enhancing its representativeness [1]. - This adjustment may lead international investors to optimize their portfolios, increasing market attention on the stock [1]. Group 2: Company Strategy and Operations - 贪玩 focuses on globalizing its IP development strategy and diversifying its business layout, including premium game long-cycle operations and trendy derivative products [1]. - The company is proactively integrating artificial intelligence technology into its game distribution process, enhancing its core advantages in precise marketing and long-term operations [1]. - Key games published by 贪玩, such as 《龙迹之城》, 《原始传奇》, and 《热血江湖：归来》, have established a broad user base and positive reputation in the market [1]. Group 3: Future Outlook - The recognition from MSCI is expected to help 贪玩 expand its international investor base and enhance its brand visibility in the global capital market [2]. - The ongoing optimization of the investor structure is likely to improve the liquidity and valuation of the company's stock, thereby increasing its overall investment value [2]. - 贪玩 aims to continue its global distribution strategy and IP ecosystem strategy, driven by technological innovation, to maintain its leading position in the gaming distribution sector [2].

Core Viewpoint - The gaming sector is experiencing a positive trend, driven by regulatory support and solid industry fundamentals, as evidenced by the issuance of game licenses and projected revenue growth in the coming years [1][2]. Group 1: Industry Performance - In January 2026, a total of 182 game licenses were issued, including 177 domestic games and 5 imported games, indicating a continued normalization in regulatory approvals since 2025 [1]. - The "2025 China Game Industry Report" forecasts that the actual sales revenue of China's gaming market will reach 350.79 billion yuan, marking a year-on-year growth of 7.68% and surpassing the 350 billion yuan threshold for the first time [1]. - The number of gaming users is expected to grow steadily to 683 million [1]. Group 2: Investment Logic - The current investment logic in the gaming sector focuses on "performance realization" and "AI technology transformation" [2]. - The 7.68% revenue growth effectively counters the narrative of industry contraction, with anticipated steady growth driven by successful products and upcoming major releases [2]. - The application of AI technology in game development and player interaction is reshaping valuation logic, reducing development costs and enhancing user willingness to pay through innovative gameplay [2]. Group 3: Market Outlook - With the normalization of license issuance and accelerated AI technology integration, the valuation center of the gaming sector is expected to further recover [3]. - Despite potential short-term market fluctuations due to macroeconomic sentiment, the long-term competitiveness of Chinese gaming companies is strengthening, supported by dual revenue streams from domestic and international markets [3]. - Investors are encouraged to consider the gaming ETF (516010) for long-term growth opportunities, utilizing strategies such as phased investments or dollar-cost averaging [3].