Core Insights - The article highlights the rapid growth of Chinese mobile games entering overseas markets, driven by supportive government policies and increasing participation from various game developers [1][5] - A list of top-performing Chinese mobile games in overseas markets is presented, showcasing their estimated revenues and the factors contributing to their success [2][4] Industry Overview - The overseas market has become a primary testing and launching ground for many small to medium-sized game developers [1] - The Chinese gaming industry has entered a period of explosive growth in international markets, particularly following regulatory changes in 2018 and 2021 [1][5] - The government has implemented policies to support the internationalization of the gaming industry, creating a favorable environment for overseas expansion [1] Performance Metrics - In the third quarter, ten games made it to the "Overseas Dark Horse List," with a total estimated revenue of $445 million (approximately ¥3.176 billion) [5] - Three games exceeded $60 million in estimated overseas revenue, indicating strong market performance [5] Top Games Analysis - **Kingshot** by Century Games topped the list with an estimated revenue of $153.5 million (approximately ¥1.095 billion) since its launch in February 2025 [4][6] - **Last Z: Survival Shooter** ranked second with an estimated revenue of $87.6 million (approximately ¥625 million) [7] - **杖剑传说** (Staff Sword Legend) debuted in third place with an estimated revenue of $63.2 million (approximately ¥451 million) [7][8] New Entrants - Four new games made their debut on the list, including **Lands of Jail**, **Destiny: Rising**, and **银与绯** (Silver and Crimson), showcasing the diversity of themes and gameplay styles [9][12] - **Lands of Jail** generated an estimated revenue of $29.3 million (approximately ¥209 million) [11] - **Destiny: Rising**, leveraging the popular IP, achieved an estimated revenue of $15.8 million (approximately ¥113 million) [12] Market Trends - The SLG (Strategy Game) genre is highlighted for its high retention rates and strong user loyalty, making it suitable for long-term operations [11] - The integration of diverse gameplay styles within SLG games is seen as a strategy to broaden user demographics and enhance monetization efficiency [11][14] - The article notes the growing popularity of two-dimensional games in overseas markets, emphasizing the need for unique themes and cultural elements to stand out [12][14]

Group 1 - The gaming sector experienced a slight decline in the early trading session on October 16, with the gaming ETF (159869) showing a minor drop. However, it has attracted significant capital inflow of 2.394 billion yuan over the past 10 trading days, bringing its total scale to 10.815 billion yuan, indicating strong investor interest in A-share gaming leaders [1] - In September 2025, the National Press and Publication Administration released a total of 156 game licenses, including 145 domestic and 11 imported games. Notable titles include Tencent's "Guihuan," NetEase's "Xinghui Youqing Tian," and others [1] - From January to September 2025, the National Press and Publication Administration issued 1,195 domestic game licenses, a year-on-year increase of 24.61%, compared to 959 licenses in the same period of 2024. This reflects a supportive regulatory environment for the gaming industry [2] Group 2 - The gaming sector is undergoing multiple catalysts, including advancements in AI, content, and commercialization models. The gaming ETF (159869) tracks the CSI Animation and Gaming Index, reflecting the overall performance of A-share listed companies in the animation and gaming industry, highlighting investment opportunities [2]

Core Insights - The Chinese gaming industry is structured into three main segments: game development, publishing and operation, and distribution channels [2][3][7] - Guangdong province is the primary hub for gaming companies, followed by Beijing, Shanghai, Sichuan, Zhejiang, and Jiangsu [7][10] - Tencent and NetEase lead the gaming revenue among listed companies, with Tencent's revenue reaching 197.7 billion yuan and NetEase's at 105.3 billion yuan in 2024 [16][18] Industry Structure - The gaming lifecycle includes market research, game development, quality testing, publishing, user operation, and distribution [2] - Game development is divided into copyright holders and developers, with notable companies like Unity and Unreal Engine [3] - Major publishers include Tencent and other companies like Block Game and Thunder Game [3] Regional Distribution - The majority of gaming companies are concentrated in Guangdong, with 142 game licenses issued in the first half of 2025, followed by Shanghai (127), Beijing (98), and Zhejiang (67) [12][13] - Representative companies in Guangdong include Tencent, NetEase, and 37 Interactive Entertainment [10] Revenue Insights - Listed companies in the gaming sector show varied revenue, with Perfect World at 55.7 billion yuan and Kingsoft at 103.2 billion yuan [17][18] - 37 Interactive Entertainment reported a revenue of 174.41 billion yuan, while other companies like Giant Network and Yaoji Technology reported revenues of 29.23 billion yuan and 45.8 billion yuan respectively [18][19] Investment Trends - In 2023, Tencent acquired the casual game developer EasyBrain and invested in Ubisoft's IP subsidiaries [21] - NetEase established a Vancouver studio for cross-media IP projects, while 37 Interactive Entertainment invested in various tech companies to enhance its gaming capabilities [21] - Perfect World is exploring virtual reality through investments in VR game developers [21]

Core Insights - The mini-game sector has emerged as one of the largest growth points in the gaming industry in recent years, with DataEye providing exclusive monthly observations on WeChat mini-games [1]. Consumption Patterns - In September, the consumption share of major categories such as war strategy, idle, and simulation management declined, with war strategy dropping by 1.2 percentage points and simulation management by approximately 1.3 percentage points [4]. - The mini-game market returned to normalcy post-summer, leading to a shift in marketing strategies for certain products, which may pressure leading categories [4]. - The second tier of consumption saw an increase in tower defense and legendary RPG categories, with tower defense reaching approximately 12.64% of consumption share, showing growth from August [4]. - The consumption share of character card categories further declined to below 5%, while card and fishing games slightly improved their consumption share [4]. Monthly Consumption Rankings - The top consumption list for September saw "Three Kingdoms: Ice Age" at the top, with "Zombie Defense" moving up one position to second, and "Endless Winter" dropping to third [8]. - "Forever Blue Planet" maintained strong consumption momentum, rising seven ranks to seventh place in the monthly consumption list [8]. - "Source Star Domain," a new sci-fi idle card game, debuted in the top ten, benefiting from a collaboration with "The Wandering Earth" and featuring a celebrity endorsement [10]. Growth Rankings - The consumption growth ranking for September was led by "Source Star Domain," followed by "Bouncing Kingdom" and "Flame Awakening" [19]. - "My Garden World," which launched on the last day of September, quickly rose to the popularity list and ranked 21st in the sales chart, performing exceptionally well during the National Day holiday [19]. - The overall trend indicates a recovery in the legendary RPG sector, with four products entering the consumption growth ranking [21]. Advertising Trends - In September, the total advertising material for WeChat mini-games was approximately 2.13 million, reflecting a 4.8% increase from August [25]. - The number of games participating in advertising reached about 12,200, marking an increase of 50 games from August [27]. - The top three themes for participating games were modern, other, and fantasy, with legendary themes seeing nearly a 10% increase in game participation [30].

Summary of Tencent Holdings (0700.HK) 3Q25E Preview Company Overview - **Company**: Tencent Holdings (0700.HK) - **Reporting Date**: 3Q25 results to be reported on November 13, 2025 Key Industry Insights - **Gaming Sector**: - Anticipated strong performance driven by titles such as Delta Force and Peacekeeper Elite - Delta Force's daily active users (DAU) surpassed 30 million in September 2025, supported by promotional activities [3][12] - Tencent maintained a dominant position in mobile gaming, capturing 8 out of the top 10 grossing mobile games in China by the end of September 2025 [3][11] - **Advertising Sector**: - Marketing services revenue expected to sustain growth at approximately 20% year-over-year, aided by AI-powered ad technology and the growth of video accounts and mini shops [1][2] Financial Projections - **3Q25 Revenue Forecast**: - Total revenues projected to increase by 13.5% year-over-year to RMB 189.7 billion, with non-GAAP net profit expected to rise by 11% year-over-year to RMB 66.4 billion [2][10] - Online gaming revenues anticipated to grow by 17% year-over-year to RMB 60.6 billion, with domestic and international games expected to grow by 15% and 22% respectively [2][55] - **4Q25 Outlook**: - Potential offset of soft gaming seasonality by deferred revenues from previous quarters and marketing services revenue benefiting from e-commerce festivals [1][2] Core Financial Metrics - **Earnings Summary**: - 2025E Net Profit: RMB 255.3 billion, with a diluted EPS of RMB 27.596 [5][10] - Projected growth rates for sales revenue and core NPAT are 13.0% and 14.6% respectively for 2025 [10][55] Notable Game Titles and Performance - **Top Mobile Games**: - Honour of Kings (HoK) remains the top-grossing mobile game, followed by Delta Force, which has recently surpassed Peacekeeper Elite in grossing [12][17] - Delta Force's MAU reached 49.4 million in August 2025, indicating strong user engagement [20][21] - **New Game Releases**: - Tencent released four new titles in 3Q25, including Valorant Mobile, which performed well in downloads and grossing [48][51] - A solid pipeline of 96 mobile games is expected to support future revenue growth [52][55] AI and Technology Developments - **AI Integration**: - Tencent's Hunyuan 3D model has improved modeling accuracy by three times, with over 40% of new code generated by AI [4][1] - Continued growth in Tencent Cloud's international business, maintaining high double-digit growth over the past three years [4] Investment Recommendation - **Rating**: Maintain Buy - **Target Price**: HK$735, representing a potential upside of 12.8% from the current price of HK$651.50 [6][10] Conclusion - Tencent is positioned for a solid performance in 3Q25, driven by strong gaming revenues and advertising growth, with a robust pipeline of new games and advancements in AI technology. The company is expected to continue its leadership in the gaming sector while capitalizing on advertising opportunities.

Core Insights - Chinese gaming companies have established a significant presence in the global mobile gaming market, with 32 companies generating $2.04 billion, accounting for 35.1% of the total revenue of the top 100 mobile game publishers worldwide [1] - The overseas sales revenue of self-developed Chinese games has surged from $3.1 billion to $18.6 billion over the past decade, with overseas revenue now constituting over 30% of total income [1] - Appier, an AI-driven SaaS company, provides advertising and marketing automation solutions to assist Chinese gaming companies in expanding into international markets [2][4] Industry Trends - The trend of Chinese gaming companies going overseas is seen as an opportunity for both established giants and innovative studios, despite the challenges of cultural and market differences [1] - Appier's services include user acquisition, user re-engagement, and personalized marketing automation across various channels, significantly enhancing the marketing capabilities of Chinese gaming companies [8][12] - The focus on testing smaller markets before entering larger ones has become a common strategy, allowing companies to optimize their marketing strategies based on user behavior and retention rates [14][15] Market Dynamics - The U.S. remains the top market for game applications, followed by China and Japan, with many Chinese companies now directly targeting the U.S. market due to successful case studies [12] - Different regions exhibit distinct gaming preferences and advertising material aesthetics, necessitating tailored marketing strategies for each market [13] - The average user acquisition cost has been increasing by 3% to 5% annually, prompting companies to be more cautious with their marketing budgets and strategies [16] Appier's Role - Appier's AI technology enhances advertising effectiveness by identifying high-value users, optimal advertising contexts, and timing for ad exposure [20] - The company assists in localizing marketing efforts, particularly for Japanese and Korean gaming companies, while Chinese companies often establish local teams for direct market insights [18] - Appier's AI solutions have been successfully implemented globally, optimizing ad spend and improving return on ad spend (ROAS) for clients [19][21]

Core Viewpoint - The mobile game "Goose Duck" has received mixed reviews during its "Duck Axis Test," indicating both positive and negative player experiences, which raises questions about its potential as a strategic pivot for Kingsoft Game's transformation into an IP operator [1][4][5]. Group 1: Game Launch and Features - The "Duck Axis Test" for "Goose Duck" officially launched on September 28, following a code-level collaboration between Kingsoft Game and Canadian Gaggle Studio, granting exclusive operating rights in mainland China [2]. - The test introduces new features such as the "Jungle Temple" map, the original mode "Super Golden Water Bell," and a personalized "Island Home" system, enhancing social and strategic gameplay [3]. - Player feedback highlights strong engagement and convenience of mobile play, although some report issues like lag and incomplete rule displays affecting the overall experience [3]. Group 2: Strategic Shift and Market Position - Kingsoft Game's focus on "Goose Duck" reflects a strategic shift away from single-game distribution towards long-term IP development, as stated by the company's vice president [4]. - The acquisition of the "Goose Duck" IP is seen as a cost-effective move, with the game appealing to younger audiences seeking lightweight, social gaming experiences [4]. - Industry experts suggest that Kingsoft Game's strategy to leverage the "Goose Duck" IP is a response to intense market competition, aiming to diversify revenue streams and reduce reliance on single blockbuster titles [5][7]. Group 3: Challenges and Future Outlook - The gaming market is saturated with similar products, and established titles dominate market share, posing a challenge for "Goose Duck" to differentiate itself [5]. - The success of the IP will depend on Kingsoft Game's ability to innovate and explore cross-industry collaborations, such as in variety shows and interactive events, to enhance its market presence [5][6]. - Experts emphasize the need for Kingsoft Game to improve its brand influence, IP reserve capabilities, and collaborative business strategies to fully capitalize on the "Goose Duck" opportunity [7].

Group 1 - The gaming sector initially weakened but has shown a continuous rise, with companies like Guomai Culture, Xinghui Entertainment, Huali Technology, and Mingchen Health leading in gains, while companies like Jibite, Giant Network, and Kaiying Network are among the biggest losers [1] - The gaming ETF (159869) has seen a net inflow of 2.423 billion yuan over the past 10 trading days, indicating strong investor interest, with a total product scale of 10.612 billion yuan [1] - According to Qimai Data, the popular game rankings for September 2025 show that "Valorant: Source Action," launched in August, has risen 6 places to become the top downloaded game, while "Delta Action" and "Honor of Kings" are ranked second and third respectively [1] Group 2 - The gaming sector is experiencing multiple catalysts including AI, content, and commercialization model transformations, with a focus on the gaming ETF (159869) tracking the performance of A-share listed companies in the animation and gaming industry [2]

Summary of Conference Call Notes Industry Overview - The report focuses on the **SMID (small-mid cap) Internet/Media sector in China** and reflects recent secular changes in the industry [2][4]. Key Companies and Ratings - **Damai**: Maintained an Overweight (OW) rating; price target raised from HK$0.58 to HK$1.20, reflecting a 107% increase [3][15]. - **37 Interactive Entertainment (37IE)**: Maintained OW rating; price target increased from RMB 23.00 to RMB 25.90, a 13% rise [4][15]. - **Maoyan**: Downgraded from OW to Equal-weight (EW); price target adjusted from HK$7.50 to HK$8.00, a 7% increase [6][15]. - **JOYY**: Maintained EW rating; price target raised from US$40.00 to US$62.00, a 55% increase [4][15]. - **IQIYI**: Maintained EW rating; price target increased from US$2.10 to US$2.30, a 10% rise [4][15]. - **Focus Media**: Preferred over Weibo due to expected growth from self-help initiatives [6]. Core Insights - **IP Derivatives Demand**: There is a growing demand for IP derivatives in China, with Damai positioned to benefit from its domestic sub-licensing business [3]. - **Long Video and Live-Streaming**: These sectors are entering a more favorable policy environment, with valuations currently below historical levels. Price targets for JOYY and HUYA have been lifted due to improving trends [4]. - **Gaming Sector**: Smaller game companies are experiencing a re-rating due to successful new titles, leading to raised earnings forecasts for 2025/26 [5]. - **Film Industry Challenges**: Film companies may face difficulties in re-rating due to muted industry growth and weaker visibility for fundamentals, leading to downgrades for Maoyan and others [6]. Additional Insights - **Branding Advertising**: The branding advertising industry is not expected to recover immediately, but Focus Media is seen as a better investment compared to Weibo due to its strategic initiatives [6]. - **Valuation Adjustments**: The report includes various valuation adjustments for companies based on earnings revisions and shifts to sum-of-the-parts (SOTP) valuation methods [15]. Market Performance - The report provides a detailed analysis of stock price performance over different time frames, indicating significant variances in performance among the companies covered [12]. Conclusion - The SMID Internet/Media sector in China is undergoing significant changes, with varying growth prospects across different segments. Companies like Damai and 37IE are favored for their growth potential, while challenges remain for the film industry and certain live-streaming platforms.

Core Insights - The gaming sector showed slight fluctuations after a strong opening on October 14, with the gaming ETF (159869) experiencing a peak increase of over 2% and currently showing a minor rise. [1] - As of October 13, the gaming ETF (159869) has seen a net inflow of 1.404 billion yuan over the past five trading days, indicating strong investor interest, with the product's scale reaching 10.748 billion yuan. [1] Market Size and Performance - According to Zheshang Securities, the Chinese gaming market is expected to maintain a high level in Q3 2025, although it may see a year-on-year decline due to a high base effect. [2] - The projected market sizes for July and August 2025 are 29.1 billion yuan and 29.3 billion yuan, reflecting year-on-year changes of +4.62% and -13.01%, respectively. The significant decline in August is attributed to the high base set by the game "Black Myth: Wukong" in August 2024. [1][2] - If the gaming market size in September 2025 remains relatively stable, the estimated market size for Q3 2025 would be approximately 87.4 billion yuan, showing a year-on-year growth of +0.8% and a quarter-on-quarter increase of +6.2%. [1] Factors Influencing Market Trends - The sustained high level of the gaming market in Q3 2025 is attributed to factors such as the "lipstick effect" from slowing economic growth, which boosts discretionary spending, and the release of multiple blockbuster games in the first half of 2025. [2] - Notable blockbuster games include "Endless Winter" and "Bouncing Kingdom" from ST Huatuo, "Supernatural Action Group" from Giant Network, and "Delta Action" from Tencent Holdings. [2] - The gaming market is expected to experience a slight quarter-on-quarter decline but a year-on-year increase in Q4 2025, driven by a significant rise in the number of blockbuster games compared to 2024. [2] Investment Opportunities - The gaming sector is undergoing transformations in AI, content, and commercialization models, presenting multiple catalysts for growth. [2] - The gaming ETF (159869) tracks the CSI Animation and Gaming Index, reflecting the overall performance of A-share listed companies in the animation and gaming industry, highlighting potential investment opportunities. [2]