Core Viewpoint - Daiwa has downgraded Tencent Holdings' revenue forecast for the last quarter due to weak overall performance, particularly in the gaming sector, while maintaining a "Buy" rating but lowering the target price from HKD 750 to HKD 725 [1] Group 1: Revenue Performance - Tencent's local gaming business revenue for the last quarter is estimated to be RMB 37.3 billion, reflecting a year-on-year growth of 12% but a quarter-on-quarter decline of 13% [1] - The slowdown in domestic gaming revenue is attributed to seasonal factors and a high base effect from the previous year [1] Group 2: Future Projections - Daiwa has revised its earnings per share estimates for Tencent for 2026 to 2027 down by 1% to 2% [1] - The international gaming business, after an exceptionally strong performance in the third quarter, is expected to stabilize [1] Group 3: Operational Costs - The recruitment of AI talent and the costs associated with GPU leasing are anticipated to exert upward pressure on operating expenses [1]

Group 1 - The core viewpoint of the report is that Tencent's domestic gaming business is expected to slow down due to seasonal factors and high base effects, while the international gaming business is stabilizing after a strong performance in Q3 [1] - The report predicts that Tencent's local gaming revenue for the last quarter will be 37.3 billion yuan, representing a year-on-year growth of 12% but a quarter-on-quarter decline of 13% [1] - The company has lowered its earnings per share forecast for Tencent for 2026 to 2027 by 1% to 2%, while maintaining a "buy" rating but reducing the target price from 750 HKD to 725 HKD [1]

Group 1 - A strategic partnership has been established between Kingsoft Game and Rovio Entertainment to facilitate the return of the Angry Birds series to mainland China [1] - The first step of this partnership includes the launch of two core Angry Birds IP titles for the Chinese market: "Angry Birds: Classic Return" and "Angry Birds: Dream Blast" [1] - "Angry Birds: Classic Return" features a 3D engine, dynamic level design, and a new magic system, while "Angry Birds: Dream Blast" offers a casual bubble-popping puzzle experience [1] Group 2 - Rovio Entertainment, known for the Angry Birds IP, has achieved over 5 billion downloads globally since its launch in 2009, making it one of the most iconic mobile game IPs [2] - The company has expanded its brand beyond gaming into animation, entertainment content, consumer products, and brand licensing [2] - Rovio operates multiple game studios worldwide, with headquarters in Finland and additional studios in Sweden, Denmark, Spain, Canada, and Turkey [2] Group 3 - Kingsoft Game, established in 2020 as a subsidiary of Kingsoft Corporation, is headquartered in Beijing and has R&D centers in Wuhan and Zhuhai [4] - The company has previously launched successful titles such as "Bubble Pop" and the "Cat and Soup" series [4] - Recently, Kingsoft Game and Huya jointly released the social deduction mobile game "Goose Duck" which gained over 5 million new registered users within 24 hours of its launch [4]

1月21日上午，《愤怒的小鸟》官方发文宣布重返中国市场，由金山世游独家发行并运营。随后，# 愤 怒的小鸟CEO感谢中国玩家#等话题登上微博热搜，引发热议。 Rovio首席执行官亚历山大·佩尔蒂埃-诺曼德表示："中国玩家长久以来的热情与期待始终是我们最强大 的动力源泉。"他还指出，中国玩家是最有创意的玩家。 据悉，此次《愤怒的小鸟：经典归来》在标志性弹弓玩法的基础上，推出全新魔法系统及国服独占的地 图编辑器"捣蛋工坊"实现全面升级。 1月21日上午，《愤怒的小鸟》官方发文宣布重返中国市场，由金山世游独家发行并运营。随后，# 愤 怒的小鸟CEO感谢中国玩家#等话题登上微博热搜，引发热议。 Rovio首席执行官亚历山大·佩尔蒂埃-诺曼德表示："中国玩家长久以来的热情与期待始终是我们最强大 的动力源泉。"他还指出，中国玩家是最有创意的玩家。 据悉，此次《愤怒的小鸟：经典归来》在标志性弹弓玩法的基础上，推出全新魔法系统及国服独占的地 图编辑器"捣蛋工坊"实现全面升级。 责任编辑：王翔 责任编辑：王翔 ...

Core Viewpoint - The media sector is expected to outperform the market in 2025, driven by a recovery in industry sentiment, abundant product supply, and stable approval of licenses, with the gaming sub-sector leading the growth [1][2]. Group 1: Sector Overview - The media sector is projected to increase by 24.75% in 2025, outperforming the market and ranking 8th among 31 sub-industries, with gaming leading the sector with a 60.67% increase [2]. - The industry experienced a revenue growth of 5.92% and a profit growth of 37.12% in the first three quarters, driven by earnings per share (EPS) [2]. - Current industry valuations are at the 47th percentile level over the past three years, indicating attractive valuations for gaming and film sectors [2]. Group 2: Gaming Sector - The mobile gaming market is expected to achieve sales revenue of 257.08 billion yuan in 2025, reflecting a year-on-year growth of 7.92% [3]. - New game releases such as "Supernatural Action Group" and "Staff Sword Legend" have exceeded expectations, while established titles like "Honor of Kings" and "Peace Elite" continue to perform well [3]. - The approval process for game licenses in 2025 is stable, benefiting supply-side growth, and various game companies are completing organizational adjustments, leading to a new product cycle [3]. Group 3: Film and Television Sector - The implementation of the "Broadcasting 21 Articles" policy in 2025 is favorable for long-form dramas and variety shows [4]. - The domestic short drama market is projected to reach 67.79 billion yuan in 2025, a year-on-year increase of 34.4%, with IAA accounting for 71% of the market [4]. - The overseas short drama market is expected to grow by 145.7% to 21.07 billion yuan in 2025, with increased competition among platforms [4]. Group 4: AI Applications - AI model capabilities are continuously iterating, with major models like Gemini 3 and ChatGPT 5.2 gaining traction [5]. - The commercialization of AI is accelerating, with OpenAI's annual recurring revenue expected to reach 12 billion USD by July 2025, and various vertical applications generating over 100 million USD in annual revenue [5]. - Investment opportunities in AI applications are anticipated to grow, particularly in AI video, advertising, and gaming sectors [5]. Group 5: Recommended Stocks - Companies to watch include Giant Network, Kaiying Network, Perfect World, Century Huatong, 37 Interactive Entertainment, G-bits, Shenzhou Taiyue, Zhejiang Shuculture, Kunlun Wanwei, Kuaishou, Xindong Company, Yaoji Technology, Shanghai Film, Mango Super Media, Southern Media, and Wanxin Media [6].

Summary of Key Points from Conference Call Records Industry Overview - The conference call discusses the media and gaming sectors, highlighting trends and developments in 2026, particularly focusing on AI applications and their impact on the industry [1][2][4]. Core Insights and Arguments - **AI Application Commercialization**: In 2026, AI applications are transitioning from backend cost savings to frontend value creation, significantly impacting the media sector [1][2]. - **Gaming Market Growth**: The domestic gaming market's actual sales revenue reached 350 billion yuan in 2025, marking an 8% year-on-year increase, with a user base of 683 million [1][5]. - **Technological Innovations**: Major gaming companies are integrating AI into gameplay, enhancing player experiences and operational efficiencies. For instance, Giant Network's initiative connects monsters to AI models for real-time interaction [1][5]. - **Content Marketing Evolution**: Leading firms are shifting towards private domain operations and content marketing strategies, exemplified by Huya's VR game releases [1][5]. - **Film Market Performance**: The film market saw a 58% year-on-year increase in December 2025 box office revenue, totaling approximately 3.7 billion yuan, with a full-year growth of 22% [1][7]. Important but Overlooked Content - **Long Video Platforms**: In December, long video platforms experienced a rebound in viewership, attributed to popular series during the holiday season. iQIYI and Tencent Video saw market share increases due to hit shows [3][10]. - **Regulatory Developments**: The State Administration of Radio and Television reported a peak in the number of registered productions in November, indicating a significant increase in mid-length and online story films [3][11]. - **AI Manhua Development**: AI-generated comics have made substantial progress, lowering production barriers and aligning with users' fragmented consumption habits. This trend is expected to continue growing in 2026 [1][12]. - **Future AI Directions**: Key future directions for AI applications include enhancing multimodal capabilities and exploring new monetization models within the industry [1][13]. Conclusion - The media and gaming industries are poised for significant growth driven by AI advancements, evolving consumer preferences, and regulatory support. Companies like Huya and Kuaishou are highlighted as potential investment opportunities due to their innovative approaches and market positions [1][4][12][13].

Summary of the Conference Call for Sanqi Media Company Overview - **Company**: Sanqi Media - **Industry**: Gaming and Media Key Points Transition to Self-Developed Games - Sanqi Media successfully launched its self-developed game "RO" for the Hong Kong, Macau, and Taiwan markets in January 2026, indicating a successful transition from agency publishing to self-development, with plans to increase the proportion of self-developed teams to enhance profit margins and drive business growth [2][4][8] Global Market Presence - The company achieved a global presence with its flagship product "Puzzle Survival," which has garnered significant success in Europe and the United States, contributing to approximately 40% of its overseas revenue. Sanqi Media is recognized as one of the earliest companies to enter the overseas market from China [2][5] Performance in Mini Program Games - Sanqi Media holds a leading position in the domestic mini program gaming market, launching high-revenue products such as "Xun Dao Da Qian" and "Time Explosion." The mini program gaming market is projected to reach nearly 40 billion yuan in 2024, with a compound annual growth rate of approximately 150% from 2021 to 2024 [2][6] Future Product Pipeline - The company plans to continue focusing on mini program games and SLG (Simulation Game) categories, with around 20 new products expected in the first half of 2025, including 10 SLG titles, indicating strong future growth potential [2][7] Financial Health and Investment Appeal - Sanqi Media has a robust cash reserve and a high dividend payout ratio, with a dividend yield of approximately 5%, leading in the media industry. The expected price-to-earnings (PE) ratio for 2025 is around 17 times, decreasing to 15-16 times in 2026, making it an attractive investment opportunity [2][7][9] Regulatory Challenges and Profitability - In 2025, Sanqi Media successfully addressed several regulatory issues. Although revenue growth was not significant, net profit showed a marked improvement in the first three quarters, primarily due to cost reduction and efficiency enhancement measures [3] Investment in Technology - The investment team at Sanqi Media is actively investing in AI and new technology sectors, building a comprehensive ecosystem for mini program games. The integration of semi-operational models is expected to enhance competitiveness and lay a solid foundation for future development [2][8] Overall Financial Outlook - Revenue is projected to reach 17.5 billion yuan in 2026, with significant income growth driven by the increase in new products. The anticipated profit growth from these new launches further supports the positive investment outlook for the company [3][9]

Core Insights - The mobile game "Love and Deep Space" celebrated its two-year anniversary by recreating its in-game home in front of the Oriental Pearl Tower, providing an immersive experience for players [1] - The event attracted thousands of young players, showcasing the blending of cultural landmarks with gaming experiences to foster community and emotional connections [5][9] Group 1: Event Details - The immersive exhibition took place from January 16 to 20, occupying 1,000 square meters, with over 400 square meters dedicated to the recreated villa [1] - The exhibition featured various rooms from the game, including a living room, kitchen, and garden, allowing players to feel a sense of "coming home" [1] - The event was designed to break the traditional boundaries of cultural landmarks, transforming them into platforms for youth engagement and community culture [1][5] Group 2: Player Engagement - Players had to meet specific criteria to attend, such as reaching level 60 in the game and being female, which aimed to prevent ticket scalping [2] - The event included both "check-in" and "interactive" areas, with the latter allowing players to interact with live actors portraying game characters [2] - Many players expressed a strong desire to return to the event, indicating a high level of engagement and emotional investment in the experience [3] Group 3: Cultural Impact - The event reflects a broader trend in Shanghai, where cultural landmarks are increasingly integrating with IP-driven experiences to attract young audiences [9][10] - The Oriental Pearl Tower's initiatives, such as collaborations with various IPs, demonstrate a commitment to creating immersive experiences that resonate with youth culture [8][9] - The city's vibrant two-dimensional ecosystem supports a continuous flow of events, enhancing the emotional connection between players and the city [6][9] Group 4: Marketing and Promotion - The game launched extensive advertising campaigns across 13 cities, with Shanghai receiving the highest number of promotional displays [6] - The integration of various commercial spaces with gaming IPs has created a rich landscape for players to explore, enhancing their overall experience [7] - Social media platforms have become vital for players to share their experiences and organize meet-ups, further solidifying community bonds [7]

Group 1 - The media sector outperformed the index in 2025, with a 24.75% increase, ranking 8th among 31 sub-industries, driven primarily by a 60.67% rise in the gaming sector [1][14][21] - The overall revenue growth for the media industry in the first three quarters of 2025 was 5.92%, while net profit increased by 37.12%, indicating strong earnings per share (EPS) performance [1][21][24] - The current valuation of the media industry is at the 47th percentile of the past three years, with attractive valuations in the gaming and film sectors [1][24][25] Group 2 - The mobile gaming market in 2025 achieved sales revenue of 257.08 billion yuan, a year-on-year increase of 7.92%, indicating a recovery in market sentiment [2][26] - New game releases such as "Supernatural Action Group" and "Staff Sword Legend" exceeded expectations, while established titles like "Honor of Kings" and "Peace Elite" continued to perform well [2][26] - The approval process for new game licenses remained stable in 2025, benefiting the supply side of the gaming industry [2][34] Group 3 - The short drama market in China reached a scale of 67.79 billion yuan in 2025, growing by 34.4% year-on-year, with a significant portion attributed to IAA [3][22] - The overseas short drama market is expected to grow by 145.7% in 2025, reaching a scale of 21.07 billion yuan, indicating strong international demand [3][22] - AI-driven animated dramas are emerging rapidly, with the market size expected to exceed 20 billion yuan, benefiting from lower production costs and enhanced efficiency [3][29] Group 4 - AI model capabilities continued to iterate in 2025, with significant advancements in models like Gemini 3 and ChatGPT 5.2, leading to accelerated commercialization [4][38] - The annual recurring revenue (ARR) for OpenAI reached 12 billion USD in 2025, with various AI applications generating over 100 million USD in annual revenue [4][38] - Investment opportunities in AI applications are expected to grow, particularly in AI video, advertising, animated dramas, and gaming [4][38] Group 5 - Recommended companies for investment include Giant Network, Perfect World, Century Huatong, and others, indicating a focus on firms with strong product pipelines and market positions [5][10]

Macro and Strategy - The macroeconomic report indicates a recovery in China's economy with a monthly GDP growth of 4.5% in December 2025, an increase of 0.4 percentage points from the previous month [6][7] - The service sector is recovering faster than industrial production, with high-tech manufacturing showing significant growth compared to traditional industries [6] - The demand side shows a structural characteristic of weak domestic demand and strong external demand, with exports remaining a crucial support for the economy [7] Industry and Company Agriculture Industry - The report highlights a bullish outlook for cattle prices, indicating a potential reversal in the beef cycle, with prices for fattened cattle at 25.66 CNY/kg, up 0.59% month-on-month and 9.38% year-on-year [11][12] - The pig market is expected to stabilize, with prices at 12.69 CNY/kg, reflecting a week-on-week increase of 1.44% [11] - The poultry sector shows mixed signals, with chicken prices slightly increasing while egg prices are under pressure due to high supply levels [11][12] Banking Industry - The banking sector is facing challenges due to an expanding gap between deposits and loans, with the gap reaching approximately 58 trillion CNY in 2025, up from about 40 trillion CNY in 2019 [16][17] - The report suggests that banks need to diversify their middle business operations to address this issue, with smaller banks focusing on wealth management and larger banks enhancing their comprehensive service capabilities [17] - The forecast for 2026 indicates a significant reduction in the decline of net interest margins, suggesting a potential recovery in the banking sector's fundamentals [18] Pharmaceutical Industry - The pharmaceutical sector is underperforming compared to the overall market, with a reported decline of 0.68% in the biopharmaceutical sector [19] - The report notes the successful IPO of Rebio Biotech, which focuses on small nucleic acid drugs, and highlights its partnerships with major pharmaceutical companies, indicating strong growth potential in this niche [19][20] Tencent Holdings - Tencent is expected to report a revenue of 194.6 billion CNY for Q4 2025, a year-on-year increase of 13%, driven by stable growth in gaming and advertising sectors [20][21] - The company is increasing its investment in AI, which is anticipated to enhance its operational capabilities and support future growth [20][23] - The gaming segment is projected to generate 58 billion CNY in revenue, with strong performances from titles like "Honor of Kings" and "Peacekeeper Elite" [21][22]