Investment Rating - The industry investment rating is "Positive" (maintained) [2] Core Viewpoints - The gaming sector is expected to benefit from emotional consumption needs among young users, with an average of 118 and 135 game licenses issued monthly in 2024 and the first half of 2025, respectively, indicating a potential acceleration into a prosperous phase [3] - The report emphasizes the importance of innovative gameplay and new content releases in driving growth across gaming, film, and entertainment sectors, with specific recommendations for companies like Xindong Company, Giant Network, and Shanghai Film [3][4] Industry Data Overview - The game "Paper Wedding 8: Qianzi Tree" ranked first on the iOS free chart, while "Honor of Kings" topped the iOS revenue chart as of July 5, 2025 [10] - The film "Jurassic World: Rebirth" achieved a weekly box office of 236 million yuan, leading the box office rankings [25] - The report highlights significant advancements in AI and IP integration, with ongoing product launches in gaming and film sectors [34] Sector Performance Summary - The A-share media sector outperformed major indices in the 27th week of 2025, with the gaming sector showing particularly strong performance [3] - The report notes that the summer entertainment IP consumption is expected to continue to rise, driven by new game releases and film launches [3][4] Company Recommendations - For the gaming sector, companies such as Xindong Company, Giant Network, and Perfect World are recommended based on their innovative gameplay and new product cycles [3] - In the film sector, Shanghai Film is highlighted as a key player, with potential beneficiaries including Chinese Online [3] - The concert segment recommends Fengshang Culture, with beneficiaries including Damai Entertainment and Borui Communication [3]

Core Viewpoint - The company has successfully reversed its previous losses and achieved significant revenue and profit growth, establishing itself as a key player in the gaming industry, particularly in the retro gaming segment [1][3][5]. Financial Performance - The company's revenue has resumed growth since 2020, reaching 5 billion yuan last year, with net profit exceeding 1 billion yuan for three consecutive years [1]. - Last year's revenue grew by 19% year-on-year, totaling 5.1 billion yuan, with self-operated and joint-operated revenues accounting for 63% of total revenue [5]. Business Developments - The company has undergone significant changes, including the resolution of past legal issues and a restructuring of its business model, allowing for increased product releases and investment activities [4][8]. - The company has expanded its product offerings beyond traditional titles like "Legend" and "Miracle," venturing into various game genres [4]. Product Portfolio - The core revenue still relies on retro-themed games, which include titles like "Original Legend," "Blood of the Battle," and "Angel War," contributing significantly to the revenue base [5]. - The company has introduced a new information service that has grown rapidly, accounting for 18% of total revenue, primarily from the 996 game box and Cangyue Island platform [7]. Strategic Partnerships - The company has established a strong partnership with Zhejiang Shenghe, a game developer, which has been a significant contributor to its success, particularly with the "Legend" series [8]. - The company has strengthened its ties with Century Huatong and Zhongxu Future through cross-shareholding and strategic cooperation agreements, enhancing its position in the "Legend" IP ecosystem [10][12]. Legal and Regulatory Developments - The company has been involved in long-standing copyright disputes over the "Legend" IP, which have recently seen resolution, allowing for a more stable business environment [9]. - A recent arbitration ruling ordered a compensation of 224.5 million yuan from a Korean company, further solidifying the company's legal standing [12]. Market Expansion - The company has made strides in international markets, with overseas revenue reaching 375 million yuan, a year-on-year increase of over 220% [22]. - The company has diversified its product line, including various genres and IP adaptations, to enhance its market presence and appeal [13][19].