Group 1 - The gaming sector is experiencing a rise, with the gaming ETF (159869) increasing nearly 1% in early trading on September 17, 2023, and a net inflow of funds amounting to 298 million yuan yesterday [1][2] - Major gaming companies such as Giant Network, which saw a more than 4% increase, and other companies like Iceberg Network and Huali Technology also reported gains [1] - According to Sensor Tower, Tencent, DianDian Interactive, and NetEase were the top three global revenue earners among Chinese mobile game publishers in August, with Giant Network's revenue increasing by 72% month-over-month due to the success of "Supernatural Action Group" [1] Group 2 - The gaming sector is being catalyzed by multiple factors including AI, content, and changes in commercialization models, with a focus on the investment opportunities within the gaming ETF (159869) that tracks the performance of A-share listed companies in the animation and gaming industry [2]

Core Viewpoint - The performance of A-share game companies in H1 2025 is expected to be strong, driven by industry dynamics and the emergence of "micro-horror search and destroy" and "overseas SLG" games, leading to performance and valuation upgrades for relevant companies [1][2] Group 1: Micro-Horror Search and Destroy - The "search and destroy" model creates a closed loop of "investment-risk-return," incentivizing players through high failure penalties and strong victory rewards, potentially leading to long-lasting game hits [2] - Games like "Delta Action," "Dark Zone Breakthrough," and "Fog Shadow Hunter" focus on combat, while "Supernatural Action Group" targets casual social gameplay, appealing to female audiences [2] - The game "Supernatural Action Group" is expected to become another evergreen title for Giant Network (002558.SZ), significantly enhancing the company's performance and stabilizing revenue streams [2] Group 2: Overseas SLG Market - The overseas SLG mobile game market is projected to reach $124.64 billion in 2024 and $73.08 billion in H1 2025, with year-on-year growth rates of 17% and 25%, respectively [3] - Chinese companies are expected to generate $185.57 billion in overseas revenue in 2024, with strategy games accounting for 41.38% of the top 100 overseas games, indicating a strong competitive advantage [3] - The success of overseas SLG games relies on user acquisition through advertising and brand promotion, with a focus on improving user lifetime value (LTV), click-through rates (CTR), and conversion rates (CVR) while reducing customer acquisition costs (CPM) [3] Group 3: Innovation and Market Expansion - Companies like Yuanqu with "Last War" and Diandian Interactive with "Whiteout Survival" have achieved breakthroughs in integrating secondary gameplay and casual gameplay, reducing acquisition costs and improving long-term retention [4] - The industry is entering a new expansion phase, with leading companies expected to continue product iterations, resulting in steady performance growth [4]

Core Viewpoint - The A-share gaming landscape has changed in the first half of the year, with Century Huatong leading significantly in revenue, followed by 37 Interactive Entertainment and Perfect World returning to the top three [3][5]. Revenue Performance - Century Huatong achieved revenue of 17.207 billion yuan, a year-on-year increase of 85.5%, far surpassing 37 Interactive Entertainment's revenue of 8.486 billion yuan [3]. - Perfect World reported revenue of 3.691 billion yuan, up 33.74%, primarily driven by a surge in film and television revenue, which reached 767 million yuan (up 756.35%) [3]. - Only Century Huatong and Perfect World maintained high growth among the top five gaming companies, while 37 Interactive Entertainment and Shenzhou Taiyue experienced revenue declines [3]. Profitability Analysis - Century Huatong emerged as the most profitable gaming stock in A-shares, with a net profit exceeding 2.6 billion yuan, the only company in the sector to surpass 2 billion yuan in net profit [4]. - 37 Interactive Entertainment ranked second with a net profit exceeding 1 billion yuan, while Heiying Network, Giant Network, and Gibit each reported net profits exceeding 600 million yuan [4]. - Century Huatong's net profit surged by 129%, while Gibit and Heiying Network also saw significant increases [4]. Market Capitalization - Century Huatong's market capitalization exceeded 140 billion yuan, reclaiming its position as the top gaming stock, followed by Giant Network at over 80 billion yuan and Heiying Network at over 50 billion yuan [4]. - 37 Interactive Entertainment fell to fourth place in market capitalization [4]. Overseas Revenue Insights - Century Huatong's overseas revenue reached 8.958 billion yuan, leading significantly, while 37 Interactive Entertainment and Shenzhou Taiyue each exceeded 2 billion yuan [7]. - Heiying Network and Perfect World had overseas revenues around 200 million yuan, indicating a reliance on the domestic market [7]. Product Development Focus - The leading A-share gaming companies are focusing on high-quality IP development to mitigate market risks and enhance user attraction [10]. - The SLG (strategy game) genre remains a core focus, with 37 Interactive Entertainment having 10 SLG products in development [11]. - The trend of launching both APP and mini-program versions simultaneously is becoming mainstream in the industry, with companies like Shenzhou Taiyue adapting to market demands [12].

Market Performance - A-shares showed mixed performance on September 15, with the Shanghai Composite Index down 0.26% to 3860.50 points, while the Shenzhen Component Index rose 0.63% to 13005.77 points, and the ChiNext Index increased by 1.52% to 3066.18 points [1] - The total trading volume for the Shanghai market was 986.2 billion, while the Shenzhen market recorded 1,291.2 billion, and the ChiNext market had 620.8 billion [1] Sector Performance - Strong performance was noted in sectors such as gaming, automotive, and pork, with notable stocks like Ningde Times rising over 9% to reach a historical high, and several automotive stocks hitting the daily limit [1][2] - Conversely, sectors like satellite internet and cultural media saw significant declines, with stocks like Sanwei Communication dropping over 5% and Guomai Culture falling over 10% [1][2] Institutional Insights - According to Jifeng Investment Advisory, the market is expected to benefit from the gradual onset of the Federal Reserve's interest rate cut cycle, with A-shares and certain sectors likely to see upward trends [3] - CITIC Securities highlighted the ongoing transformation in the retail sector, with private enterprises undergoing management changes to enhance operational efficiency [3] - Huatai Securities noted the release of a new action plan for the storage industry, which is expected to promote long-term healthy development in the sector, with strong demand and reduced price competition [3] Policy Developments - The People's Bank of China in Shanghai reported a total cross-border RMB payment amount of 18.83 trillion yuan in the first seven months of the year, indicating a robust financial environment [4] - Guangzhou's plan for V2G (Vehicle-to-Grid) applications aims to establish a comprehensive network of smart charging stations and vehicles, with specific targets set for 2025 and beyond [5] Automotive Industry Initiatives - The China Association of Automobile Manufacturers released a payment standard initiative for automotive suppliers, with major companies like Dongfeng and BYD expressing commitment to this initiative to foster a collaborative ecosystem [6][7]

Market Overview - The market showed a mixed performance with the Shanghai Composite Index experiencing a slight decline of 0.26%, while the Shenzhen Component Index rose by 0.63% and the ChiNext Index increased by 1.52% [1][2] - The total trading volume in the Shanghai and Shenzhen markets was 2.28 trillion yuan, which is a decrease of 245.8 billion yuan compared to the previous trading day [1] Index Performance - Shanghai Composite Index closed at 3860.50, down by 0.26% with 772 stocks rising and 1480 falling [2] - Shenzhen Component Index closed at 13005.77, up by 0.63% with 1033 stocks rising and 1799 falling [2] - ChiNext Index closed at 3066.18, up by 1.52% with 494 stocks rising and 872 falling [2] Sector Performance - The gaming sector saw significant gains, with stocks like Xinghui Entertainment hitting the daily limit [2] - The automotive supply chain also performed well, with multiple stocks such as Zhejiang Shibao reaching the daily limit [2] - The computing power sector showed strength, with Qingshan Paper achieving a remarkable performance of 7 consecutive daily limits [2] - Energy storage concept stocks were active, with companies like CATL and Sungrow reaching historical highs [2] - In contrast, the cultural media sector faced a sharp decline, with Guomai Culture dropping over 10% [2][3]

Market Performance - The Shanghai and Shenzhen stock indices opened higher on September 15, with the Shanghai Composite Index experiencing a slight decline of approximately 0.39% before rebounding to close slightly up at 3879.28 points, a gain of 0.22% [1] - The Shenzhen Component Index closed at 13061.86 points, up 1.07%, while the ChiNext Index rose by 2.13% to 3084.68 points [1] - The total trading volume for the Shanghai market was about 646.1 billion yuan, while the Shenzhen market saw a trading volume of approximately 860.8 billion yuan [1] Sector Performance - Key sectors showing strong performance included automotive chips, semiconductors, EDA concepts, and electrical equipment, with electrical equipment and automotive sectors leading the gains [1] - Conversely, sectors such as communication equipment, real estate, and military information technology experienced notable declines [1] Economic Indicators - In August, the total retail sales of consumer goods reached 39,668 billion yuan, reflecting a year-on-year growth of 3.4%, with retail sales excluding automobiles growing by 3.7% [3] - The industrial added value for large-scale industries in August increased by 5.2% year-on-year, with the manufacturing sector growing by 5.7% [4] - The service sector production index rose by 5.6% year-on-year, with significant growth in information transmission, software, and financial services [4] Industry Initiatives - The China Automobile Industry Association issued a proposal for payment norms between automotive manufacturers and suppliers, focusing on key aspects such as order confirmation, delivery, and payment settlement [5]

Core Viewpoint - The gaming sector continues to strengthen, with notable stock performances from various companies [1] Group 1: Company Performance - Xinghui Entertainment reached a 20% limit-up [1] - Perfect World previously hit a limit-up [1] - Other companies such as 37 Interactive Entertainment, Giant Network, Iceberg Network, Shenzhou Taiyue, and Kaiying Network also experienced gains [1] Group 2: ETF Performance - The gaming ETF Huatai Bairui (516770) increased by 3.83% [1] - The trading volume for the ETF was 30.11 million yuan [1]

Summary of NetEase Inc. (NTES) Conference Call Company Overview - **Company**: NetEase Inc. (NTES) - **Market Cap**: $97.0 billion - **Enterprise Value**: $77.6 billion - **Industry**: Gaming, Entertainment & Healthcare Tech in China Key Points and Arguments 1. **Stock Performance**: NetEase's share price has increased by 74% year-to-date and 19% following the 2Q25 results, outperforming the broader Chinese Internet sector [1][12] 2. **Evergreen Titles**: The success of legacy games, particularly the Fantasy Westward Journey (FWJ), has driven better-than-expected sales growth, with FWJ's PC version reaching a record 3.15 million concurrent players, a 15% increase from three months ago [2][16] 3. **Market Strategy**: The removal of prepaid game cards and the introduction of a simplified gameplay version have lowered entry barriers, attracting new and returning players, especially among younger demographics [2][16] 4. **Future Growth**: Anticipated strong results in 2H25 from legacy titles and a favorable product cycle in 2026 with potential blockbusters like Sea of Remnants and Ananta [1][18] 5. **Revenue Forecasts**: Revenue projections for 2025E have been raised to RMB 115,857.2 million, reflecting a 10% year-over-year growth [4][30] 6. **Earnings Per Share (EPS)**: EPS estimates for 2025E have been increased by 2-3% due to stronger game revenue growth and improved gross profit margins from higher-margin titles [18][30] 7. **Valuation Metrics**: Current valuation stands at 16-17X 12-month forward P/E, with target prices raised to $161 for NTES and HK$252 for 9999.HK [1][18] 8. **Marketing Efforts**: Proactive marketing strategies have contributed to the resurgence of Eggy Party, which is expected to show solid year-over-year growth [3][16] Additional Important Insights 1. **User Engagement**: The introduction of KOLs (Key Opinion Leaders) livestreaming FWJ has expanded its audience, particularly among younger players [2][16] 2. **Deferred Revenue**: Deferred revenue (excluding Youdao) is expected to maintain a 20% year-over-year growth level for 2H25 [24] 3. **Competitive Position**: NetEase's defensive business model has allowed it to extend the Evergreen game franchise effectively, positioning it well for future growth despite a lack of new titles [16][18] 4. **Upcoming Events**: Key upcoming events include Ananta's update at the Tokyo Game Show and the first round of testing for Sea of Remnants, which is expected to launch in 2026 [17][18] Financial Highlights - **EBITDA Growth**: Projected EBITDA growth of 23.1% for 2025E [11][30] - **Dividend Payout**: Dividend payout ratio is expected to remain around 36.6% for 2025E [14][30] - **Cash Flow**: Anticipated free cash flow of RMB 41,926.7 million for 2025E [15][30] This summary encapsulates the key insights and projections regarding NetEase Inc. as discussed in the conference call, highlighting its strong market position, growth potential, and strategic initiatives.

此次AI伙伴系统功能的推出，是游族网络推行AI优化玩家体验的又一重要落地。《新盗墓笔记》作为 公司旗下的重要IP产品，此次尝试将为游族在未来游戏产品中更广泛地应用AI技术提供经验。 游族网络表示，这种基于IP性格的AI伙伴研发相较于一般AI对话生成系统难度更高，需要通过对原著和 海量衍生内容进行深度学习，并在此基础上做细致的调优工作，才能确保AI伙伴在与玩家交互中做到 言行始终贴合原著设定。 北京商报讯（记者 张茜琦）9月12日，游族网络宣布旗下《新盗墓笔记》手游四周年庆版本上线，AI伙 伴系统成核心亮点。该系统经原著内容深度学习，实现角色性格精准还原与实时互动，搭配"友情值"机 制增强用户情感联结。此外，版本同步推出多元玩法与福利活动。 ...

Core Viewpoint - The gaming industry is expected to rejuvenate in 2025 after undergoing self-restructuring and external changes from 2021 to 2024, with a notable growth of 19% in the domestic self-developed online game market in the first half of 2025 [1] Industry Overview - The gaming market experienced nearly 20% growth in the first half of 2025, driven by a recovery in both supply and demand, leading to an increase in total gaming hours and ARPU [3] - The number of monthly game approvals has doubled over the past two years, with a peak of 166 domestic game approvals this year, significantly enhancing the supply of new games [3] - The demand for gaming remains resilient, with a 13% year-on-year increase in ARPU in the first half of 2025 [3] User Demographics - The gaming audience continues to be predominantly young, with over 45% of users under 30 years old, and a significant increase in female players, with the female gaming market expected to grow by 124% year-on-year in 2024 [4] Competitive Landscape - The competition among leading companies is easing, with firms focusing on their strengths and specific game genres, leading to a reduction in the pressure on mid-sized companies [5] - Mid-sized companies are increasingly excelling in niche markets, such as female-oriented horror games and SLG genres, with notable successes like "Supernatural Action Group" and "Endless Winter" [6] Marketing and Distribution Changes - Traditional marketing methods are declining, with a shift towards content-driven marketing and community engagement, resulting in improved profit margins for gaming companies [7] - The performance of gaming community platforms has exceeded expectations, with significant revenue growth reported by platforms like TapTap and Huya Live [7] Impact of AI - AI is enhancing game development efficiency, with a notable decrease in R&D expense ratios from 48% in Q1 2023 to 29% in Q2 2025 [8] - Native AI games are emerging, with advancements in AI NPC interactions and the potential for AI-driven UGC games [8] Future Outlook - The gaming sector is expected to see significant growth in Q3 2025, with a robust pipeline of new game releases scheduled for major holidays [9] - The valuation of the gaming industry is anticipated to align with previous high points, supported by improved fundamentals and a favorable competitive landscape [10]