Core Insights - The Apple Worldwide Developers Conference (WWDC) 2025 featured the Apple Design Awards, where Chinese game developer Paper Games won the "Visual and Graphics" category for their game "Infinite Warmth," marking the first time in four years that a domestic game has received such an award [1][4] - "Infinite Warmth" is the fifth installment in the Warmth series, launched globally on December 5, 2024, and is notable for being the first open-world game developed on the UE5 engine across multiple platforms [1][4] - The game received high praise from international media, scoring 9 out of 10 from IGN and 80 on Metacritic, highlighting its deep exploration gameplay, engaging storyline, and visually stunning costumes [1][4] Company and Industry Highlights - Paper Games implemented over a hundred self-developed innovations to enhance fabric details and lighting effects, allowing for realistic physical dynamics in clothing [4] - The game combines fashion collection with open-world exploration, which has resonated well with players, leading to discussions and enthusiasm both domestically and internationally [4] - The CEO of Paper Games, Yao Runhao, noted that players quickly immersed themselves in the game, as indicated by the average online duration on the first day [4] - Paper Games has a strong relationship with Apple, having quickly announced a Vision Pro version of "Love and Deep Space" following the release of Apple's MR device, Vision Pro, indicating Apple's recognition of Paper Games' technical capabilities [5] - Tim Cook, Apple's CEO, visited Paper Games in Shanghai to experience their games, further solidifying the partnership between the two companies [5]

Investment Rating - The report assigns a "Buy" rating to Kuaishou Technology with a 12-month price target of HK$63.00, indicating an upside potential of 15.6% from the current price of HK$54.50 [1][12]. Core Insights - Kuaishou's Kling AI has surpassed expectations with an Annualized Revenue Run Rate (ARR) exceeding US$100 million as of March 2025, and monthly subscription bookings exceeding RMB100 million (approximately US$14 million) in April and May [1][3]. - The launch of Kling 2.1 has significantly reduced costs, making it more competitive in the market, with per video costs dropping to US$0.27-0.47, which is 60-80% lower than the previous version [2][32]. - The revenue outlook for FY25 has been raised to US$100 million, with potential for further upside due to expanding use cases and increased promotional budgets [3][19]. Financial Projections - Revenue projections for Kuaishou Technology are as follows: - FY24: RMB 126.9 billion - FY25: RMB 140.7 billion - FY26: RMB 153.7 billion - FY27: RMB 165.8 billion [6][16]. - EBITDA is expected to grow from RMB 27.1 billion in FY24 to RMB 40.5 billion in FY27, indicating a strong growth trajectory [6][16]. - EPS is projected to increase from RMB 4.02 in FY25 to RMB 5.87 in FY27, reflecting a positive earnings outlook [6][16]. Market Position and Competitive Landscape - Kling AI has captured approximately 30% of the video generation AI model market, outpacing competitors like Runway and Google's Veo 2 as of May 2025 [20][23]. - The revenue mix for Kling AI indicates that 70% comes from 2C/2P subscription revenue, primarily from professional content creators, while 30% is derived from 2B API calling revenue [26][32]. - The company is focusing on expanding its user base, particularly in overseas markets, leveraging its technological advantages and improving user experience [23][32]. Valuation and Comparison - Kuaishou is currently trading at a forward P/E of 10X, which reflects its core video platform and advertising/eCommerce business, while Kling AI is expected to justify a premium valuation due to its growth potential [18][19]. - Comparatively, leading AI startups have ARR and valuations that suggest significant growth potential, with Kling AI's estimated ARR for FY25 at US$124 million [21][19].

Investment Rating - The report assigns a "Buy" rating for the company, indicating a positive outlook for its stock performance in the near term [6]. Core Insights - The company is recognized as a leading developer of classic IP games, with a new product cycle expected to begin after the second half of 2025, which is anticipated to drive revenue and profit growth [1]. - The company has recently announced a share buyback plan, intending to repurchase HK$300 million worth of shares over the next 12 months, with 1 million shares already repurchased as of May 29 [1]. - A strategic investment in Century Huatong is expected to significantly boost profits by 2025, as the company has acquired 8 million shares, representing 1.1% of Century Huatong's total shares [2]. - The company has established a joint venture with Century Huatong to manage the distribution of certain "Legend" IP games, leveraging Century Huatong's successful titles like "Whiteout Survival" and "Kingshot" [2]. - The company's classic IP games, including "Legend," "Miracle," and "Hot Blood Legend," provide a solid foundation, with new games expected to gradually gain traction starting in 2026 [3]. Financial Projections - The company is projected to achieve revenues of HK$58.4 billion, HK$74.3 billion, and HK$90.2 billion for the years 2025, 2026, and 2027, respectively, with corresponding net profits of HK$8.15 billion, HK$7.07 billion, and HK$8.92 billion [4]. - The current price-to-earnings (P/E) ratios are estimated to be 10, 11, and 9 for the years 2025, 2026, and 2027, respectively, indicating a favorable valuation [4]. - The financial summary indicates a revenue growth of 4.71% in 2025, followed by 27.11% in 2026 and 21.40% in 2027, with net profit margins improving over the forecast period [12].

6月9日早盘，游戏板块震荡攀升，游戏ETF（159869）现已翻红微涨。持仓股涨跌互现，上涨方面，博 瑞传播、掌趣科技、奥飞娱乐等均涨超2%；下跌方面，天舟文化、祥源文旅、北纬科技等跌幅居前。 游戏板块强势打开布局通道，游戏ETF（159869）近5个交易日连续获得资金净流入，累计"吸金"达2.39 亿元，游戏板块持续受资金青睐。 暑期大档期临近，聚焦优质内容产品周期的开启，新品强势表现在目前市场仍具备较强弹性交易机会。 华源证券认为，在游戏方面，优质产品上线表现对公司弹性贡献仍较为突出。例如，友谊时光的派对游 戏产品《暴吵萌厨》5月28日上线后，带动友谊时光市值表现强势拉升；由心动公司研发的策略回合制 RPG手游《伊瑟》国际服率先定档6月5日上线，国服目前也在筹备中；吉比特新产品《杖剑传说》也爬 升至iOS游戏畅销榜TOP15；此外，AI陪伴产品《EVE》也即将开启测试。该机构建议，重视头部游戏 公司在AI+游戏范式探索上的示范效应，相关游戏产品表现如果超预期有望推动相关上市公司的价值重 估，同时部分公司重点游戏陆续定档，关注新游产品周期的开启。 相关ETF：游戏ETF（159869）聚焦A股IP游戏产业龙 ...

Industry Developments - Chengdu government has introduced new policies to encourage the development of gaming and esports companies, indicating increasing local government support for the ACG industry [2][3] - The Chengdu government announced 15 policy measures aimed at enhancing game content creation, strengthening esports competitiveness, promoting industry integration, and improving development factors to elevate the gaming and esports industry [3] Company News - Yuewen Group announced a plan to acquire a 26.67% stake in Wuhan Yihua Kaitian Cultural Communication Co., Ltd. for 325 million yuan, increasing its ownership from 5.17% to approximately 31.48% [4] - After the acquisition, Tencent, the controlling shareholder of Yuewen, will hold a total of 61.82% of Yihua Kaitian, becoming the largest shareholder [4] - Xishanju's sci-fi mech battle game "Jiexianji" is set for global public testing on July 2, 2025, and will be available on PC, Steam, and Xbox Series X|S [5] - The highly anticipated domestic single-player game "Mingmo: Yuanshu Zhi Yu" has released a new trailer and is scheduled for official release on July 24 [6] Regulatory Updates - Following a U.S. ruling against Apple, the European Commission has mandated that Apple must open third-party payment options within 30 days in the EU market, with a potential fine of 500 million euros (approximately 4.096 billion yuan) for non-compliance [7] International Developments - Riot Games has announced its entry into the physical card game market with "Runeterra," based on the League of Legends IP, set to launch this year [8] - South Korean developer Shift Up has unveiled its flagship new game "Project Spirit," themed around "Eastern Fantasy," which is a cross-platform subculture project [9] - Niantic, the developer of "Pokémon GO," has confirmed the sale of its gaming business to Scopely for $3.5 billion, which includes titles like "Pokémon GO" and "Monster Hunter Now" [10]

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]

Core Viewpoint - A major operational incident occurred in the game "Yinian Xiaoyao" under the A-share game company Gigabit, where game items worth approximately 500,000 yuan were mistakenly distributed to all players, leading to significant disruptions in the game's economy and balance [3][5]. Group 1: Incident Details - On May 31, during the Dragon Boat Festival, "Yinian Xiaoyao" mistakenly issued 99,000 high-value items called "Any Treasure Box" to all players due to human error, valued at around 500,000 yuan [3][5]. - The project team initiated an emergency response on the same day and announced on June 2 that they would not implement the common industry practice of a "full server rollback," but instead opted for a "point-to-point rollback" for affected players [5][6]. - Players who received the erroneous items were temporarily banned from listing on the official trading platform, and the project team offered compensation of 20 "Any Treasure Boxes" to affected users [5][6]. Group 2: Financial Performance - Gigabit's annual report indicated that "Yinian Xiaoyao" generated 596 million yuan in revenue for 2024, a decrease of 42.49% from 1.036 billion yuan in 2023, making it the worst-performing among Gigabit's three major games [6][7]. - Overall, Gigabit reported a revenue of 3.696 billion yuan in 2024, down 11.69% year-on-year, with net profit declining by 16.02% to 945 million yuan [7][8]. - In the first quarter of 2025, "Yinian Xiaoyao" continued to see a revenue decline of 22.94%, while the company benefited from the launch of a new game, "Wanjian Changsheng," leading to a 22.47% increase in overall revenue [8]. Group 3: Industry Context - The incident highlights a recurring issue in the gaming industry, where operational errors can lead to significant player dissatisfaction and potential loss of users, as seen in previous cases with other major games [9]. - Industry analysts emphasize the importance of implementing tiered review systems before large operational changes to minimize errors and ensure effective crisis management following incidents [9].

Market Growth - The mini-game market, also known as mini-program games, has experienced explosive growth, with a compound annual growth rate of 182.3% from 2022 to 2024, reaching nearly 400 billion yuan in 2024, a year-on-year growth of 99.18% [2][3] - Douyin's mini-game business saw a 130% increase in revenue and a 320% growth in paid user base in 2024 [2] Industry Potential - The mini-game market is expected to become the "second curve" of growth for the gaming industry, alongside the potential for PC games to leverage short video platforms for long-term marketing [3] - Tencent's mini-game platform has reached 1 billion users, with 500 million monthly active users and over 240 games generating over 10 million yuan in quarterly revenue [3] Company Strategies - Companies like Mingchen Health are increasing investments in mini-games, indicating that mini-games will be a key focus for future development [4] - 37 Interactive Entertainment has launched several successful mini-game products, with titles like "Time Explosion" and "Heroes No Flash" performing well in sales rankings [5] - Fuchun Co. plans to continue testing and optimizing mini-game products, aiming for a breakthrough in profitability by early 2025 [5] Monetization Models - The IAAP model, combining in-app advertising and in-app purchases, has emerged as a mainstream monetization strategy for mini-games, challenging previous assumptions about revenue limitations [2][6] - Mini-game developers are focusing on long-term growth strategies, ensuring player experience through thoughtful design and leveraging IP collaborations for sustained engagement [6]

Core Viewpoint - The gaming market in China is witnessing the return of two major titles, Tencent's "Victory Goddess: New Hope" and Bilibili's "Shining! Yujun Girl," both of which have shown unexpected market performance after their respective launches [1][22]. Group 1: Game Performance - "Shining! Yujun Girl" had a long development cycle of five years and was initially launched in Japan in February 2021, generating over 5.1 billion yuan in its first month and approximately 50 billion yuan in total revenue for the year [3][17]. - The game returned to the Chinese market on May 22, 2023, after nearly two years of absence, but its performance has been underwhelming, with only 203 million yuan in revenue over 12 days on iOS [6][12]. - "Victory Goddess: New Hope" generated 24 million yuan in revenue within its first 12 days, which is significantly lower than other major titles like "Dungeon and Fighter: Origin" [32][37]. Group 2: Market Dynamics - Both games faced challenges in their marketing strategies, with "Shining! Yujun Girl" opting for a low-profile re-launch that coincided with the release of "Victory Goddess," impacting its visibility and player engagement [16][37]. - The download trends for "Shining! Yujun Girl" showed a decline, with approximately 66,000 downloads over 12 days, indicating a lack of sustained interest [12][25]. - The competitive landscape in the Chinese mobile gaming market is intensifying, with players becoming more selective and demanding higher quality content, making it increasingly difficult for overseas titles to succeed upon their return [37][38]. Group 3: Future Outlook - The future success of "Shining! Yujun Girl" will depend on the developers' willingness to invest in marketing and content optimization to attract new and returning players [16][37]. - The performance of "Victory Goddess" is being closely monitored, as its initial results are considered average compared to expectations set by its overseas success [32][37]. - The overall trend suggests that the chances of overseas games succeeding in the Chinese market are diminishing, with local developers having a better chance of success with self-developed titles [37][38].

Core Insights - The startup project led by former producer of "White Night Extreme," known as "墨犬科技," has ceased development after initial excitement and funding expectations [1][15]. Company Overview - The founder, 贾晨, previously worked at Tencent's subsidiary, 北京永航科技, where he was the producer and art director for "White Night Extreme" [1]. - The new company, 北京墨犬科技, aimed to create a significant and innovative product, with a team comprising several key members from 永航科技 [1]. Project Details - The initial project, internally named "Code:墨犬一号," was a 3D ARPG developed using UE5, but it was still in a very early stage with a rough appearance [3]. - The game was intended to feature open-world exploration elements, allowing players to collect resources and engage in combat with various monsters [3][9]. - The project faced skepticism due to the team's lack of experience in 3D game development and the high costs associated with such projects [11]. Market Context - The gaming industry has seen a significant increase in competition, particularly in the 2D and open-world genres, making it challenging for new entrants [11]. - "White Night Extreme" had a promising start but ultimately faced a decline in performance, leading to its shutdown in late 2023 [13][15]. Future Directions - Following the project's cancellation, the company is reportedly pivoting to a new urban evolution-themed game set in the Northeast industrial era [18]. - Recent job postings indicate a shift in focus towards creating high-quality effects in a magical realism style, suggesting a change in artistic direction [18]. Industry Dynamics - The departure of key personnel from 永航科技 has led to internal restructuring, with new companies being formed and existing ones undergoing significant changes [18]. - The competitive landscape remains intense, with established companies also struggling to maintain momentum in their projects [11].