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]

Market Overview - The gaming sector experienced a decline of 2.31% on October 14, with Kunlun Wanwei leading the drop [1] - The Shanghai Composite Index closed at 3865.23, down 0.62%, while the Shenzhen Component Index closed at 12895.11, down 2.54% [1] Individual Stock Performance - Notable gainers included: - Mingchen Health (002919) with a closing price of 17.56, up 6.30% on a trading volume of 202,100 shares and a turnover of 354 million [1] - Glacier Network (300533) closed at 38.10, up 4.24% with a trading volume of 232,600 shares and a turnover of 918 million [1] - Major decliners included: - Kunlun Wanwei (300418) closed at 42.31, down 5.45% with a trading volume of 808,500 shares [2] - ST Dazheng (600892) closed at 4.04, down 4.94% with a trading volume of 299,200 shares [2] Capital Flow Analysis - The gaming sector saw a net outflow of 729 million from institutional investors, while retail investors contributed a net inflow of 451 million [2][3] - Key stocks with significant capital flow included: - Glacier Network (300533) with a net inflow of 54.22 million from institutional investors [3] - Giant Network (002558) with a net inflow of 51.91 million from institutional investors [3] ETF Performance - Gaming ETF (product code: 159869) tracked the China Securities Animation and Gaming Index, with a recent net inflow of 55.89 million and a total share increase of 1.7 million [5] - Food and Beverage ETF (product code: 515170) saw a net outflow of 37.61 million, with a total share increase of 4 million [5]

Group 1: Q3 Mini Game Consumption - In September, the daily consumption of mini games across three major media platforms reached approximately 149 million, representing a growth of about 19.2% compared to Q1 [2] - The estimated daily consumption for each platform in September is as follows: Platform A: IAP + mixed consumption approximately 50.5 million, IAA consumption 14.8 million; Platform B: IAP + mixed consumption approximately 67.3 million, IAA consumption 6.9 million; Platform C: IAP + mixed consumption approximately 5 million, IAA consumption 0.5 million [2] Group 2: Q3 Mini Game Acquisition Data - The consumption share of strategy war games continued to decline in Q3, while the game "Endless Winter" by Dots Interactive ranked second in material investment [3] - The idle game category also showed a downward trend, but "Seeking the Great Thousand" by 37 Interactive maintained strong material investment [3] - Simulation games performed strongly in Q3, surpassing idle games in consumption for the first time in August [3] Group 3: Material Investment Volume - The total material investment volume in Q3 was approximately 5.3 million, a decrease of about 12.5% compared to Q2 [4] - IAP + mixed mini games saw a decline of over 13% in material investment, which was the main reason for the overall drop in Q3 [4] - IAA mini games also experienced an 8% decline in material investment, but still exceeded 1 million [5] Group 4: Number of Games in Investment - The number of games in investment exceeded 17,000 in Q3, representing a 4.5% increase compared to Q2 [6] - The number of IAA mini games increased by over 900, approaching 13,000, driven by the rise of silver economy and female-oriented products [6] - The IAP + mixed mini game sector is undergoing a transition, with some older products falling behind, leading to a decline in the number of games in investment [6] Group 5: Hot Investment Categories - The top three categories in Q3 for mini game participation were casual, elimination, and puzzle games, with light casual games remaining a key focus due to their low investment cost [7] - Female-oriented gameplay surged by approximately 15%, indicating the potential of this segment [8] - The tower defense category continued to expand, with new gameplay entering the market, leading to a more than 7% increase in the number of games in investment [8] Group 6: Theme Investment Trends - Modern themes maintained the highest share in Q3, followed by fantasy and Xianxia themes [9] - The number of games in the ACG (Anime, Comic, Game) category increased by over 10% due to the rapid development of the mini game sector [9] - Traditional themes like Three Kingdoms and martial arts saw a decrease in the number of games in investment, attributed to severe content homogenization [9] Group 7: Douyin Mini Game Acquisition Data - In Q3, the material investment volume exceeded 13 million, marking a nearly 50% increase compared to Q2 [10] - The IAA material investment volume saw significant growth, doubling compared to Q2 [10] - The number of games in investment exceeded 14,000 in Q3, reflecting a 22.5% increase compared to Q2 [12] Group 8: Douyin Mini Game Trends - The number of IAA mini games surged by over 25% in Q3, exceeding 11,000, with light casual games remaining dominant [13] - The IAP + mixed mini game sector also saw growth, with an increase of over 400 products compared to Q2 [13]

Core Insights - The company has successfully completed a board restructuring, strengthening its governance foundation and continuing its "product + technology" dual-driven strategy to enhance its competitive advantage in the gaming market [1] Group 1: New Game Development - The company is focusing on new game reserves as a growth engine, targeting high-value and high-potential segments, with a "key breakthroughs and multiple developments" approach [2] - The SLG games "Code H" and "Code S" are in critical development stages, expected to support future revenue growth and are seen as potential core products following the "Miracle" series [2] - The lightweight game "Great Sage Hold On," launched in Q3 2023, has quickly achieved stable revenue, demonstrating the company's capabilities in casual gaming and enhancing its product matrix [2] Group 2: Product Matrix Construction - As of the first half of 2025, the company operates 19 game products, creating a multi-dimensional product matrix covering MMO, card games, SLG, and casual games [3] - The product matrix balances long-term revenue stability from heavy products and short-term revenue from casual games, effectively meeting diverse market demands [3] - The matrix is designed to cater to different user groups, enhancing the company's adaptability to the gaming market and creating a positive growth cycle [3] Group 3: Market Feedback and Future Outlook - The product matrix has shown strong resilience and growth potential, providing stable cash flow while new game reserves open up incremental opportunities [4] - The dual-driven model allows the company to withstand short-term market fluctuations with mature products while seizing opportunities in niche segments with new game launches [4] - As key new games like "Code H" and "Code S" approach their launch phases, the product matrix is expected to expand further, solidifying the company's leadership in high-quality development within the gaming industry [4]

Core Viewpoint - The mobile game "Goose Goose Duck," developed by Jinshan Shiyou, has officially launched its new testing phase in China, achieving 6 million pre-registrations and is a deeply localized version rather than a simple PC port [1][2]. Group 1: Company Strategy and Development - Jinshan Shiyou, an independent game company from Jinshan Group, aims to find its position in the competitive gaming industry, focusing on international and trendy content [2]. - The company has undergone restructuring, forming two game divisions: Xishanju and Jinshan Shiyou, with the latter focusing on internationalization [2]. - The choice of "Goose Goose Duck" as a key IP project is strategic, leveraging its previous success in the PC market to reduce market education costs [3][4]. Group 2: Localization and Collaboration - Jinshan Shiyou engaged in a "code-level cooperation" with Gaggle Studio to obtain original code and art resources for deep localization, which increases initial investment but lays a foundation for long-term operations [4]. - The company has spent nearly three years developing the mobile version and planning related content, which is why the game is only now entering large-scale testing [4]. Group 3: Commercialization and Growth Strategy - The commercialization strategy consists of three phases: focusing on game operations to achieve a million daily active users (DAU), developing derivative content like variety shows, and expanding into offline scenes and merchandise [5]. - Jinshan Shiyou will assess the health of the "Goose Goose Duck" IP using various metrics, including social spread index and content reproduction volume, to expand its influence sustainably [5]. - The shift from product operation to IP operation is a trend among game manufacturers, and for mid-sized companies like Jinshan Shiyou, this approach may provide a pathway to breakthrough amid competition [5].

Core Insights - The interactive game "盛世天下" has achieved significant success in both sales and quality since its launch on September 9, with over 1 million copies sold and nearly 400 million yuan in revenue [2][10] - The game has topped various app store charts in China and received positive reviews on platforms like Steam and TapTap, indicating strong market reception [2][3] Sales Performance - "盛世天下" ranks first in paid applications and entertainment categories on iOS in mainland China [2] - The game has generated approximately 400 million yuan in revenue based on its selling price of 39 yuan per copy [2] Market Context - The success of "盛世天下" follows the popularity of another interactive game, "完蛋！我被美女包围了," which previously dominated the Steam sales charts [3] - The interactive film game genre has seen a rise in interest, with "盛世天下" providing a new path for domestic interactive film works [3][10] Production Quality - The game has improved upon previous interactive titles in terms of production quality, featuring a well-structured narrative and engaging visuals [5][6] - The script, developed over a year, consists of over 300,000 words and offers approximately 1200 minutes of gameplay [6] Marketing Strategy - "盛世天下" has employed a comprehensive marketing strategy across multiple platforms, including social media and partnerships with brands, leading to significant online engagement [8][9] - The game has achieved over 1.2 billion in topic heat across various platforms, indicating a successful promotional campaign [8] Industry Outlook - The interactive film game sector is gaining traction in China, with "盛世天下" contributing to a growing market presence [10] - The game's profitability and the increasing number of interactive titles suggest a promising future for the genre in the domestic market [10]

Core Points - The European gaming industry is facing potential regulatory changes under the proposed Digital Fairness Act (DFA) and Consumer Protection Cooperation (CPC) guidelines, which may equate in-game currency transactions with real-money transactions, leading to increased bureaucratic processes for players and developers [1][5][22] - Supercell's CEO, Ilkka Paananen, expressed concerns that these regulations could ruin the gaming experience for millions of players in Europe, comparing it to a family needing multiple approvals for using tokens at a theme park [1][4][6] - The proposed regulations could significantly impact the free-to-play model, which is foundational to the success of the European mobile gaming industry, potentially leading to a decline in innovation and investment [21][23][26] Industry Concerns - The redefinition of in-game currencies as "digital representations of value" could require extensive legal processes for each transaction, fundamentally altering the gaming experience and possibly misleading players into thinking they can earn real money through gameplay [22][23][24] - The gaming industry has historically viewed in-game currencies as digital content, and the new interpretation could impose unnecessary burdens on developers, leading to downsizing or closure of studios [25][26] - The uncertainty surrounding these regulations is already affecting investment and innovation within the industry, with many companies considering alternative business models that may not align with user-friendly experiences [12][22][26] Cultural Impact - Video games have become an integral part of European culture, with over half of Europeans playing games, and the industry serves as a significant cultural export [6][15] - The success of companies like Supercell demonstrates that European innovation can compete globally, and the proposed regulations threaten to undermine this competitive advantage [7][15][17] - The decisions made regarding these regulations will determine whether Europe continues to thrive as a digital industry hub or becomes a cautionary tale of regulatory overreach [13][17]

Group 1 - The core point of the article is the establishment of Hangzhou Guangyue Interactive Entertainment Technology Co., Ltd., which is fully owned by Tencent Technology (Shanghai) Co., Ltd. [1][2] - The legal representative of the company is Lu Yao, who is also the technical center director of Tencent Interactive Entertainment's Photon Studio Group and has participated in the development of several games [3]. - The company's business scope includes software development, information technology consulting services, and various technical services [1]. Group 2 - Tencent has made multiple investments in Hangzhou in recent years, covering various sectors including gaming and cloud services [4]. - A new branch of Beijing Yonghang Technology Co., Ltd., which is affiliated with Tencent, is set to be established in Hangzhou, focusing on the development of products related to "QQ Dance" by July 23, 2025 [4].

Core Insights - Many investors have increased their exposure to foreign equities this year, particularly in emerging markets, leading to strong performance and returns [1] - The Avantis Emerging Markets Equities ETF (AVEM) has attracted significant inflows and has outperformed its benchmarks, returning 31.5% year-to-date [3] Fund Overview - AVEM charges a fee of 33 basis points and actively invests in emerging market stocks across all capitalizations, focusing on small-cap firms with strong profits and low valuations while underweighting large caps with low profits [2] - The fund aims to outperform the MSCI Emerging Market IMI Index [2] Performance Metrics - AVEM has returned 31.5% year-to-date, surpassing the ETF Database Category average of 24.3% and the Factset Segment average of 24.5% as of October 7th [3] - The fund has seen inflows exceeding $4 billion year-to-date [3] Key Holdings - Tencent Holdings (TCEHY) has returned 62.2% year-to-date, making it a significant part of many emerging market strategies [4] - Reliance Industries (RELIANCE) has returned 13.4% year-to-date, benefiting from its diverse exposure across multiple sectors [5] - NetEase (NTES) has shown strong performance with a 73% return year-to-date, operating major games in China for Western developers [6] Strategic Implications - AVEM's active management and adaptability may enhance returns in emerging markets, particularly in response to trends like currency fluctuations and interest rate cuts [6] - The ETF could be a valuable addition for investors looking to diversify their equity allocations beyond U.S. markets [6]