Core Viewpoint - Century Huatong has achieved significant market capitalization and revenue growth, but faces scrutiny due to financial misconduct and increasing competition in the gaming industry [6][7][20]. Group 1: Company Performance - In the first half of 2025, Century Huatong reported a revenue of 17.2 billion, representing a year-on-year growth of 85.5%, and a net profit of 2.656 billion, up 129.33% [10]. - The game "Whiteout Survival" has generated over 2.8 billion globally, while "Kingshot" has surpassed 200 million in revenue within six months of its release [10][12]. - Century Huatong's overseas revenue reached 8.958 billion, significantly exceeding that of its A-share peers [10]. Group 2: Key Products and Market Strategy - The success of Century Huatong is largely attributed to its subsidiary, Point Interactive, which has successfully launched games that appeal to both casual and hardcore gamers [10][12]. - The company has focused on leveraging its overseas market experience to enhance its domestic performance, particularly through the "exporting" of successful products back to China [12]. - The gaming landscape is becoming increasingly competitive, with many similar games entering the market, leading to higher customer acquisition costs [13]. Group 3: Challenges and Risks - Century Huatong's financial integrity has been called into question due to a five-year history of financial fraud, leading to its designation as "ST Huatong" [7][20]. - The company faces rising marketing costs, with sales expenses increasing by 120% year-on-year to 6.564 billion, outpacing revenue growth [20]. - The ongoing legal disputes over the "Legend" IP have created significant operational challenges and may hinder future profitability [18]. Group 4: Future Outlook and Innovations - Century Huatong is exploring AI technologies to improve efficiency in game development and marketing, with a focus on reducing costs and enhancing productivity [20][21]. - The company is investing in AI-driven game projects and has initiated collaborations with potential AI game developers [21]. - Despite current challenges, the company's ability to sustain long-term growth remains uncertain and will require careful monitoring [21].

Core Viewpoint - The company is expected to enter a new product cycle in 2025, with significant performance improvements anticipated due to AI optimization in marketing materials and algorithms for legendary games [1][2]. Group 1: Financial Projections - The company forecasts EPS of 1.85 CNY, 1.81 CNY, and 2.08 CNY for the years 2025-2027 [1]. - A target price of 24.20 HKD has been set for the company, with an initial "Buy" rating [1]. Group 2: Business Overview - Founded in 2015, the company is a leading internet enterprise in China, integrating development, operation, and promotion, with over 380 game products and more than 600 million registered users [1]. - The company’s average monthly active users (MAU) exceed 10 million, and its consumer goods business is projected to generate 100 million CNY in revenue in 2024, accounting for 1.8% of total revenue [1]. Group 3: IP and Game Development - The company possesses multiple classic IPs, including "Legend," "Douluo Dalu," and "Hot Blood Legend," and is actively exploring new IPs and markets [2]. - A recent collaboration with Zhongyou to launch "Douluo Dalu: Slime Academy" achieved top rankings on the APP Store and Taptap [2]. - The company has 11 games that have been operational for over 5 years and 28 games for over 3 years, showcasing its long lifecycle management capabilities [2]. Group 4: AI Integration - The company emphasizes the application of AI technology in gaming, utilizing a "self-research + investment" strategy to enhance efficiency in game development and distribution [2]. - The self-developed "Hetu" and "Luoshu" systems leverage AI for smart analysis and precise marketing, improving operations in game promotion and user acquisition [2]. - In May 2025, the company invested 10 million CNY in Hangzhou Jiyi Artificial Intelligence Technology to optimize the entire game development and operation process [2].

Core Insights - Chen Tianqiao, the former richest man in China, is making a significant return to the tech industry, focusing on artificial intelligence (AI) and brain science, marking a bold second gamble in his career [2][3][4] - The establishment of a new AGI startup led by Dai Jifeng, a prominent AI figure from Tsinghua University, signifies a shift towards foundational research in AGI rather than just application [3][4][6] Group 1: Company Developments - Chen Tianqiao's new AI company will allocate half of its profits to the team and reinvest the other half into research, indicating a strong commitment to innovation and talent retention [4] - The new company's research will focus on three main areas: AI-driven business decision-making, breaking the "information cocoon" of algorithm recommendations, and developing AI services for aging populations and youth [4][5] - The "Big Round Mirror Science Popularization" project, which utilizes AI-generated short videos to explain complex brain science concepts, has garnered over 20 million views across various platforms, showcasing the potential for AI in educational outreach [5][8] Group 2: Industry Context - Chen Tianqiao's previous investments in brain science, including the establishment of the Tianqiao Brain Science Research Institute with a $1 billion investment, highlight a long-term commitment to understanding mental health, aging, memory, and consciousness [7][12] - The recent advancements in brain-computer interface technology, such as the successful dual decoding of language and movement in a clinical application, position Chen's initiatives at the forefront of neuroscience [7] - The strategic integration of AI and brain science aims to create a feedback loop where research informs AI development, and AI tools address complex scientific questions, representing a dual-driven approach to innovation [7][8]

Core Insights - The article discusses the historical significance of Shengda Network and its transformation into Shengqu Games, highlighting the emotional connection of the "Sheng Warriors" to the company's legacy and their aspirations for its future [1][4][6]. Group 1: Company History and Transformation - Shengda Network, founded by Chen Tianqiao, acquired the rights to the game "The Legend of Mir 2" in 2001, which significantly changed the company's trajectory and reshaped entertainment for Chinese youth [2][4]. - The success of games like "Bubble Hall" and "Adventure Island" led to Shengda's IPO on NASDAQ in 2004, establishing it as a major player in the gaming industry [4][6]. - The rebranding of Shengda Games to Shengqu Games in 2019 marked a formal separation from Shengda Network, although it retained significant brand value and user base [5][6]. Group 2: Leadership and Vision - Peng Cheng's return as CEO of Shengqu Games in 2024 is seen as a symbolic "Sheng Warrior return," aiming to revive the company's former glory and complete unfinished business [1][6]. - Peng Cheng emphasizes the need for a cultural and strategic shift within the company, focusing on innovation and revitalizing old IPs to drive growth [6][24]. Group 3: Financial Performance - Century Huatong's mid-year performance forecast indicates a revenue increase of approximately 83% to around 17 billion yuan, with a projected net profit growth of 107% to 159% [6][24]. - Shengqu Games has maintained a positive growth trajectory by refining gameplay and content, successfully rejuvenating the popularity and commercial value of its legacy IPs [6][24]. Group 4: Challenges and Strategies - The company faces challenges such as an aging workforce and the need for talent rejuvenation, with plans to lower the average age of employees while retaining experienced staff [18][19]. - Peng Cheng's strategy includes consolidating operations and focusing on core competencies, particularly leveraging existing IPs before exploring new product lines [24][25]. Group 5: Market Trends and Future Outlook - The gaming industry is evolving, with a focus on "evergreen games" and the challenge of reviving classic IPs while appealing to modern players [28][29]. - The company aims to balance nostalgia with contemporary gaming preferences, ensuring that new versions of classic games resonate with both old and new audiences [28][29].

Group 1: Company Performance and Strategy - The report highlights that Guoquan (锅圈) is expected to achieve a net profit of approximately 180-210 million yuan in H1 2025, representing a year-on-year increase of about 111%-146% compared to 85.5 million yuan in H1 2024 [4] - The core operating profit for Guoquan is projected to be around 180-210 million yuan, up approximately 44%-68% from 125 million yuan in the same period last year, driven by revenue growth and operational efficiency improvements [4] - Guoquan continues to implement its community central kitchen strategy, expanding its instant retail store network and enhancing store operational efficiency through a multi-channel approach [4] Group 2: Market Trends and Competitive Landscape - Jitu Express (极兔速递) has seen a significant increase in business volume, achieving 1.69 billion parcels in Q2 2025, a year-on-year growth of 65.9%, benefiting from the e-commerce demand in Southeast Asia and effective pricing strategies [8][9] - The company is expected to maintain its aggressive pricing strategy to capture more market share, with a projected revenue growth of 16% to 149.94 billion yuan by 2027 [11] - The report indicates that the demand for AI chips in China is anticipated to reach approximately 50 billion USD in the next two to three years, with Nvidia's H20 chip resuming supply in China potentially boosting its market presence [14][18] Group 3: Collaborations and Partnerships - Shengqu Games (盛趣游戏) has entered into a deep cooperation agreement with Tianqiong Interactive to explore the multi-dimensional value of the "Legend" IP, which is expected to enhance the ecosystem of these classic IPs in the mobile and film sectors [22] - The partnership allows Tianqiong Interactive exclusive rights to various derivative products related to the "Legend" and "Legend World" games, while Shengqu Games will focus on developing official products to improve user experience [22] Group 4: Policy and Urban Development Insights - The report discusses the central urban work conference held in July 2025, emphasizing the need for cities to transition from large-scale expansion to improving existing urban quality, aligning with the "People's City" concept [24][25] - It outlines the importance of innovation, livability, environmental sustainability, resilience, and cultural preservation in building "good cities" that meet the aspirations of the people [25][29][30]

Investment Rating - The report does not provide a specific investment rating for the company [2] Core Insights - The report highlights a deep cooperation between Shengqu Games and Tianqiong Interactive, focusing on the multi-dimensional value of the "Legend" IP [6] - Shengqu Games will continue to develop official products for "Legend" and "Legend World," enhancing user experience [6] - The partnership allows Tianqiong Interactive exclusive rights for derivative games, IP protection, and related products in mainland China, marking a new phase for these classic IPs [6] - The company anticipates a significant increase in net profit for the first half of 2025, projected between 2.4 billion to 3 billion yuan, representing a year-on-year growth of 107.20% to 159.00% [5] Recent Performance - The stock of ST Huatuo has shown impressive performance, with a 12-month increase of 295.4%, significantly outperforming the CSI 300 index [4] - As of July 15, 2025, the stock price is 13.01 yuan, with a market capitalization of approximately 96.96 billion yuan [4] Related Reports - A previous report dated August 14, 2023, discusses the establishment of a win-win framework for the "Legend" IP, which is beneficial for the company's long-term development [5]

Core Viewpoint - The article discusses Tencent's potential acquisition of Nexon, a significant player in the gaming industry, for approximately $15 billion, which could mark a historic deal in China's internet sector [2][3][4]. Group 1: Tencent's Acquisition Interest - Tencent is reportedly considering acquiring Nexon, the parent company of Neople, for $15 billion (approximately 107.7 billion RMB) [2][3]. - This acquisition could surpass Tencent's previous record of acquiring 84.3% of Finnish game company Supercell for $8.6 billion, making it the largest acquisition in the history of Chinese internet companies [3][4]. Group 2: Historical Context - Tencent's relationship with Nexon dates back to 2008 when it secured the rights to operate DNF (Dungeon & Fighter) in China after a lengthy negotiation process [5][6]. - DNF became a massive success in China, generating over $500 million in revenue for Neople in 2015, which accounted for 87.6% of its total revenue [5][6]. Group 3: Nexon's Market Position - Nexon, known for classic IPs like DNF and Bubble Fighter, has a significant market presence and was valued at approximately $15.8 billion (about 114 billion RMB) as of recent reports [9][10]. - The company has a history of successful acquisitions and growth, having gone public in 2011 and becoming a major player in the gaming industry [7][9]. Group 4: Challenges and Considerations - The potential acquisition faces challenges due to the recent passing of Nexon's founder, Kim Jung-ju, and the subsequent management transition to his family, which complicates negotiations [9][10]. - The current valuation of Nexon appears reasonable given its historical performance and market position, making the acquisition an attractive opportunity for Tencent [12].

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].

Core Viewpoint - The article emphasizes the importance of game operation in the current era of stagnant growth in the gaming industry, highlighting that effective player management and engagement are crucial for retaining users and extending the lifecycle of games [8][16][54]. Group 1: Game Operation Challenges - The gaming industry is transitioning into a phase where retaining existing users is more critical than acquiring new ones, as evidenced by a mere 0.94% growth in China's gaming user base in 2024 [15][16]. - The operational strategies of game companies must adapt to the new reality of stagnant user growth, necessitating a focus on player retention and satisfaction [16][54]. - A significant operational incident in the game "绝地潜兵2" illustrates how poor management can lead to player dissatisfaction, despite initial successes [5][7]. Group 2: Player Engagement Strategies - Effective player operation involves understanding user behavior and proactively addressing potential churn risks, with companies employing data-driven strategies to monitor player engagement [27][30]. - Companies are increasingly using personalized communication and incentives to keep players engaged, such as sending tailored messages or rewards to those showing signs of disengagement [28][30]. - The concept of "超预期服务" (exceeding expectations) is highlighted, where companies go beyond standard service to create emotional connections with players, thereby enhancing loyalty [42][45]. Group 3: Historical Context and Evolution - The evolution of game operation practices over the past two decades reflects a shift from basic customer service to sophisticated user lifecycle management, driven by technological advancements and market competition [46][50]. - The rising costs of acquiring new players have made it imperative for companies to invest in retaining existing users, as the cost of acquiring a light user has increased to 35-40 yuan by 2024 [53][54]. - Historical insights reveal that early game companies did not prioritize extensive user engagement, but the current landscape demands a more nuanced approach to player relationships [56][58].

Core Viewpoint - The article emphasizes the importance of game operation in the current market, highlighting that success or failure often hinges on effective player engagement and retention strategies in a saturated gaming environment [6][18][56]. Group 1: Game Operation and Player Engagement - The recent incident in "Battlefield 2" illustrates how crucial game operation is, as player dissatisfaction arose from perceived operational flaws despite the game's initial success [3][5]. - Tencent's strategic officer noted that stagnation in a game often points to issues within the operational team rather than the game itself, stressing the need for the right personnel to manage player engagement [15]. - The gaming industry is transitioning from a phase of rapid growth to one focused on retaining existing players, making player operation more critical than ever [17][18][19]. Group 2: Challenges in Player Retention - In 2024, China's gaming user growth was only 0.94%, indicating a shift towards a more competitive landscape where retaining existing players is paramount [17]. - Companies are now tasked with keeping older games engaging for long-term players, which presents unprecedented challenges for player operation roles [19][30]. - Effective player operation involves monitoring user behavior and intervening before players decide to leave, utilizing data-driven strategies to enhance user experience [28][30]. Group 3: Evolution of Game Operation - The evolution of player operation has been significant, moving from basic customer service to a comprehensive lifecycle management approach that addresses user needs at every stage [49][52]. - The cost of acquiring new players has increased dramatically, necessitating a focus on retaining existing users to justify the investment made in acquiring them [55][56]. - Companies are learning from successful long-standing games, implementing strategies to extend their lifecycle and maintain player interest [57][58]. Group 4: The Role of Player Operation Teams - Player operation teams are now expected to provide "exceeding expectations" services, creating emotional connections with players to enhance retention [43][48]. - Successful player operation involves not just addressing complaints but also proactively engaging with players through personalized interactions and community-building activities [43][44][67]. - The emotional aspect of player operation is highlighted, as operators often form bonds with players, which can lead to increased loyalty and reduced churn [66][72].