Group 1 - The gaming sector is experiencing fluctuations, with the gaming ETF (159869) slightly declining by around 0.5%, but it has seen a net inflow of funds for 10 consecutive trading days, totaling 1.994 billion yuan [1] - In 2025, a total of 127 domestic game licenses and 7 imported game licenses will be issued, indicating a stable quantity and frequency of approvals, which is expected to boost market confidence in the gaming industry [1] - The number of game licenses issued in the first half of the year has significantly increased compared to the same period in 2024, with 884 domestic and 62 imported licenses issued, reflecting a strong growth trend in the gaming market [1] Group 2 - The gaming sector is catalyzed by multiple factors including AI, content, and commercialization model transformations, with the upcoming annual gaming event ChinaJoy presenting potential investment opportunities in the gaming ETF (159869) [2]

Core Viewpoint - The approval of domestic and imported games in China has reached a record high in June 2025, indicating a recovery in the gaming industry with a total of 158 new games approved, surpassing previous months' records [3][5]. Group 1: Game Approval Statistics - In June 2025, a total of 158 games received approval, including 147 domestic and 11 imported games [1][3]. - For the first half of 2025, 812 games were approved, the highest in five years, with 757 domestic and 55 imported games [5]. - The average monthly approval rate for games in the first half of 2025 was 135, an increase from 115 in the same period last year [5]. Group 2: Major Game Releases and Issues - Tencent received 7 game approvals in the first half of 2025, including 4 imported and 3 domestic games [5][8]. - Notable games include "Honor of Kings World," which has high expectations with over 860,000 reservations and a score of 8.1 on Taptap [6]. - "Star Resonance," another Tencent game, faced significant issues at launch, including server instability and negative reviews, leading to a score drop to 4.0 on Taptap [6]. Group 3: Competitor Activities - NetEase secured 6 game approvals, including 3 imported and 3 domestic titles, with "The Last Home of Ice and Fire" receiving mixed reviews [10][12]. - Kyeing Network emerged as a significant player, holding over 10 game approvals and signing licensing agreements for popular IPs [12][14]. - Other companies like Perfect World and 37 Interactive Entertainment are also in the process of developing multiple games, with "Eternal Ring" generating high anticipation [15]. Group 4: Market Performance - The gaming industry in China is showing signs of recovery, with sales revenue exceeding 1.4 trillion yuan in the first five months of 2025, a year-on-year increase of 16.99% [17]. - Stock prices of gaming companies have generally risen, with 21 out of 26 companies seeing increases, and some experiencing significant gains of over 80% [17][18].

Core Viewpoints - The A-share market experienced a collective decline on Wednesday, with the Shanghai Composite Index down by 0.09%, the Shenzhen Component down by 0.61%, and the ChiNext Index down by 1.13%. The total trading volume in the Shanghai and Shenzhen markets reached 1.376727 trillion yuan [2][6] - In the Shenwan industry sector, steel, coal, and building materials led the gains, while electronics, communications, and defense industries lagged behind. Concept sectors such as low-radiation glass, silicon energy, and special steel saw significant increases, while military restructuring, brain-computer interface, and EDR concepts faced declines [2][6] Market Performance - Domestic market performance showed the Shanghai Composite Index closing at 3,454.79 with a decrease of 0.09%, the Shenzhen Component at 10,412.63 down by 0.61%, and the ChiNext Index at 2,123.72 down by 1.13% [4] - Internationally, the Dow Jones closed at 44,484.42 down by 0.02%, the S&P 500 at 6,227.42 up by 0.47%, and the Nasdaq at 20,393.13 up by 0.94% [4] Important News - The National Development and Reform Commission has allocated over 300 billion yuan to support the third batch of "two heavy" construction projects for 2025, completing the annual allocation of 800 billion yuan for such projects [3][7] - In the U.S., the ADP employment numbers for June unexpectedly decreased by 33,000, marking the first negative growth since March 2023, with service sector jobs declining by 66,000, the largest drop since the pandemic [3][7] Industry Insights - The electronic industry has outperformed the Shanghai and Shenzhen 300 Index since the beginning of 2025, with Q1 performance showing record highs in revenue and net profit [8] - Investment opportunities are identified in semiconductor self-sufficiency, AI computing power construction, and terminal innovation, driven by intensified U.S.-China tech tensions and the ongoing AI wave [8][9] - The semiconductor industry is expected to see accelerated domestic substitution due to increased demand for advanced process semiconductor equipment and materials, with significant room for growth in domestic production capabilities [8][9] Investment Recommendations - Focus on semiconductor equipment and materials, particularly in advanced process semiconductor supply chains, and leading companies in semiconductor equipment and materials [10][11] - Monitor developments in AI chips, especially those from domestic leaders like Huawei, as their market share continues to grow [10][11] - Pay attention to the storage chip sector, where domestic manufacturers are likely to benefit from rising prices due to supply adjustments by overseas manufacturers [10][11] - The PCB market is expected to grow rapidly due to global AI computing power demands, with domestic companies well-positioned to capitalize on this trend [10][11] - In the mobile phone sector, observe leading manufacturers as they release new AI-enabled products, which could drive demand across the supply chain [10][11]

Investment Rating - The industry investment rating is "stronger than the market," indicating an expected relative increase of over 10% in the industry index compared to the broader market within the next six months [7]. Core Insights - The report highlights a record high in game license approvals in June, with 147 domestic games and 11 imported games receiving approval, marking a total of 757 domestic games approved year-to-date [2]. - Tencent is increasing its focus on the FPS game segment, with two FPS titles, "Crossfire: Rainbow" and "Tactical Squad: Dawn Assault," receiving approval. These games are expected to leverage Tencent's established IP and development expertise for market success [2][3]. - Kingsoft's "Duck Duck Goose," a social deduction game, has also received approval for its mobile version, positioning it as a strong competitor against other party games in the market [3]. Summary by Sections Game License Approvals - In June, a total of 147 domestic games and 11 imported games were approved, with notable titles from major developers such as Tencent and Kingsoft [2]. - The approval of these games reflects a diverse range of genres and established companies, indicating a robust supply side in the gaming industry [2]. Tencent's FPS Strategy - Tencent's approval of two new FPS games demonstrates its commitment to this genre, with "Crossfire: Rainbow" being a new installment in a well-known series and "Tactical Squad: Dawn Assault" being a localized version of an existing game [2]. - The development teams behind these games have significant experience in FPS game production, which may enhance their market performance [2]. Competitive Landscape - The approval of "Duck Duck Goose" is expected to intensify competition in the party game segment, particularly against titles like NetEase's "Egg Party" and Tencent's "Dream Star" [3]. - The report suggests that the gaming market is becoming increasingly competitive, with new entrants and established players vying for market share [3].

Group 1 - The National Press and Publication Administration approved 147 domestic online games in June 2025, breaking the previous record of 130 games approved in May 2025 [1] - A total of 766 domestic online games have received approval from January to June 2025, representing a year-on-year increase of 21.97% compared to 628 games in the same period of 2024 [1] - Among the approved games in June, 61 are categorized as casual and puzzle games, accounting for 41% of the total approved games [1] Group 2 - In June, 11 imported games also received approval, maintaining a steady update frequency of one per month for imported games this year [1] - Notable game developers such as Kaineng Network and Lilith Games received approvals for their titles, including "Douluo Dalu: Soul Master Battle" and "Pameng Battle Diary" respectively [1] - Tencent and NetEase both secured approvals for their games, with Tencent obtaining licenses for "Crossfire: Rainbow" and "Tactical Squad: Dawn Assault" [2]