Market & Product Situation - The game "Survival for 33 Days" by 37 Interactive Entertainment has rapidly climbed the WeChat mini-game sales chart, moving from rank 71 on November 27 to rank 26 by December 7, a rise of 68 positions in just 12 days [1][3][13] - The game is set in a post-apocalyptic world with themes of survival, where players act as survivor leaders to gather companions and build defenses against infected creatures [3][15] - The gameplay features a dual system of "core development + exploration," with character roles such as warrior, tank, support, and ranged, each capable of upgrading and unlocking new skills [3][16] - The game map employs a "fog of war" design, requiring players to meet conditions to unlock new areas, enhancing the sense of exploration and providing clear growth objectives [5][18] - The visual presentation uses a realistic apocalyptic art style, enhancing immersion, while combat effects are designed to maintain engagement without causing visual fatigue [5][18] Marketing Strategy - The advertising strategy for "Survival for 33 Days" began in mid-November with a modest daily ad volume of under 100, which increased significantly by late November [1][9][19] - The main advertising creatives focus on the themes of "survival" and "apocalypse," using straightforward messaging to quickly convey the game's core value [9][22] - The ads include nostalgic elements targeting users from the 80s and 90s, evoking memories of classic survival games, which helps stimulate download interest [9][20] - The marketing approach is characterized by low-key spending, allowing the company to gauge player interest without overwhelming exposure [9][22] Industry Insights - The survival RPG segment is still in a blue ocean phase, with unmet player demand, allowing 37 Interactive Entertainment to differentiate itself from competitors in the crowded survival SLG market [1][10][23] - The successful launch of "Survival for 33 Days" indicates the potential for diverse development within the survival mini-game genre, suggesting future expansions into various sub-genres [1][11][24] - The game has received an APP license, indicating potential for dual-platform operation, which could enhance user engagement and lifecycle value [1][10][23]

Core Viewpoint - Shenwan Hongyuan's research report indicates that Sanqi Interactive Entertainment is undervalued with high dividends and significant growth potential, especially following the recent fine resolution [1] Company Performance - The company's long-standing product has maintained stability, while the new self-developed MMO "Douluo Dalu: Hunting Soul World," launched in July, has met expectations but has not contributed significantly in the short term [1] - The new RPG mini-game "Survival for 33 Days" has quickly entered the top 25-30 of WeChat mini-game sales charts [1] - Continuous improvement in profitability is primarily attributed to the profit release from mini-games, including new products launched in the first half of the year [1] Product Pipeline and Strategy - The product pipeline is rich but expectations are low, with 2026 being a year for new product validation [1] - The company is enhancing its capabilities through investments and team acquisitions, such as investing in former Funplus producer Cui Bing's Happy Ark [1] - Direct or indirect investments have been made in companies like Zhipu Huazhang, Moon's Dark Side, and Starry Sky Technology, establishing a comprehensive industrial chain layout from "computing power infrastructure to large model algorithms to AI applications" [1] Dividend and Investment Outlook - The company continues to show impressive dividends, and considering the positive trend in marginal profit release, the dividend yield is notable, maintaining a "buy" rating [1]

Core Insights - The company has received an administrative penalty notice related to false records of shareholder holdings and significant omissions in disclosing related transactions, resulting in fines for the company and responsible individuals. However, it does not trigger any major illegal delisting situations or other risk warnings [1] Group 1: Financial Performance - The company has shown significant improvement in profitability driven by mini-games, with a notable expansion in mini-game revenue since 2023, although profits were initially reinvested for scale [1] - In Q2 and Q3 of 2025, the company’s profit margins continued to rise, with Q3 net profit margin reaching 23.8%, an increase of 8.4 percentage points year-on-year and 3.7 percentage points quarter-on-quarter [1] - The company distributed dividends of 4.62 billion in Q3, totaling 13.86 billion for the first three quarters, with a dividend payout ratio of 59% [2] Group 2: Product Pipeline and Innovation - The company has a robust pipeline with over 20 titles, focusing on MMO and SLG genres, with expectations set for 2026 as a year for new product validation [1] - The company is leveraging AI to enhance production efficiency across various aspects, including art asset generation and localization, while also investing in companies to strengthen its AI capabilities [2] Group 3: Future Projections - The company maintains its revenue forecasts, expecting revenues of 16.4 billion, 19 billion, and 20.3 billion for 2025-2027, with net profits projected at 3.21 billion, 3.53 billion, and 3.70 billion respectively [2] - The current price corresponds to a PE ratio of 14x for 2026 and 13x for 2027, indicating a positive trend in marginal profit release [2]

Core Viewpoint - The gaming sector is experiencing active performance, with the gaming ETF (159869) showing a rise of over 1%, driven by strong performances from stocks like Fuchun Co., Tianzhou Culture, and Dihun Network [1] Group 1: Market Performance - As of October 30, the gaming ETF (159869) has reached a product scale of 10.965 billion yuan, facilitating investors in easily accessing leading A-share gaming companies [1] - The gaming sector is supported by a favorable policy environment, with the National Press and Publication Administration approving 159 domestic games and 7 imported games in October 2025, maintaining a high approval rate [1] Group 2: Industry Supply and Demand - From the beginning of 2025 to date, a total of 1,354 domestic game licenses have been issued, indicating a stable and abundant supply in the industry [1] - The diversity of approved products includes notable titles from major developers such as 37 Interactive Entertainment and Eagle Horn Network [1] Group 3: Future Growth Drivers - Guosen Securities remains optimistic about investment opportunities in the gaming sector, driven by a concentrated launch of new products and advancements in IP and AI technology [2] - The focus on Giant Network's popular product "Supernatural Action Group" highlights strong performance in Q3 and a robust product pipeline for future growth [1][2]

Market Overview - The A-share market saw all three major indices rise last Friday, with the Shanghai Composite Index up by 0.71%, the Shenzhen Component Index up by 2.02%, and the ChiNext Index up by 3.57%. The total trading volume in the Shanghai and Shenzhen markets reached 19,740.21 billion [1][7] - In terms of industry performance, the telecommunications, electronics, and defense sectors led the gains, while the oil, coal, and food and beverage sectors lagged behind. Concept sectors such as storage chips and state-owned enterprise reforms saw significant increases, while coal and rental rights concepts experienced declines [1][7] - The Hong Kong market also saw the Hang Seng Index rise by 0.74%, while the Hang Seng Technology Index remained unchanged. In overseas markets, all three major US indices rose, with the Dow Jones up by 1.01%, the S&P 500 up by 0.79%, and the Nasdaq up by 1.15% [1][7] Important News - Recent US-China trade talks took place in Kuala Lumpur, focusing on key economic issues such as maritime logistics, tariff extensions, and agricultural trade. Both sides reached a basic consensus on addressing mutual concerns and agreed to further define specific details [2][8] - The Ministry of Science and Technology emphasized the importance of strengthening strategic planning and innovation to seize opportunities in the new technological revolution and industrial transformation [2][8] Industry Insights - The recent Fourth Plenary Session of the 20th Central Committee outlined a blueprint for future economic development, emphasizing high-quality growth and structural reforms during the 14th Five-Year Plan period. The focus will be on developing new productive forces to drive economic transformation [9][10] - The session highlighted the need to build a modern industrial system, with advanced manufacturing as a backbone, and to accelerate the transition of traditional industries towards high-end, intelligent, and green development [10][11] - There is a strong emphasis on enhancing domestic demand and consumption to strengthen the domestic economic cycle, with plans to cultivate a complete domestic demand system [12] - The session also called for market-oriented reforms to improve resource allocation efficiency and expand high-level openness, aiming to break down barriers to the construction of a unified national market [12] Gaming Industry Update - In October, a total of 166 game licenses were approved, including 159 domestic games and 7 imported games. This high volume of approvals indicates a continued recovery in the gaming industry [13][14] - Notable games such as "Arknights" by Eagle Horn Network have been approved, which is expected to strengthen its position in the market. The game has seen significant success since its launch, with high download rates and positive reviews [14][15] - The overall trend in game license approvals suggests a normalization in the regulatory environment, which is expected to benefit leading companies with diverse product offerings and strong R&D capabilities [15]

Industry Overview - In October, a total of 166 games received approval for release, with 159 being domestic games and 7 imported games, marking the highest number of new game approvals in recent years [3] - The actual sales revenue of the Chinese gaming market for Q3 (July-September) was 880.26 billion yuan, representing a quarter-on-quarter growth of 6.96% but a year-on-year decline of 4.08% [5] Domestic Companies - NetEase's head of the tenth division, Li Kaiming, announced his departure to pursue entrepreneurship, with the company confirming that his exit will not affect the studio's operations [6] - Tencent announced that "Honor of Kings World" is set to be released in spring 2026 [6] International Developments - A report indicated that 26% of European developers faced layoffs in 2025, with 13% leaving the gaming industry altogether [8] - The price of in-game items in "CS2" plummeted following a patch that expanded the trade-up system, with the price of the Karambit Doppler skin dropping from over $2,700 to around $1,100 [10] - Koei Tecmo Holdings significantly raised its profit forecast for the first half of the 2025 fiscal year (April to September), expecting both ordinary profit and net profit to double, driven by strong game sales and effective cost control [11]

Industry Overview - In October, a total of 166 games received approval for release, with 159 domestic games and 7 imported games, marking the highest number of new approvals in recent years [3] - The actual sales revenue of the Chinese gaming market for Q3 (July-September) was 880.26 billion yuan, representing a quarter-on-quarter growth of 6.96% but a year-on-year decline of 4.08% [5] Domestic Companies - Among the 159 approved domestic games, 155 are mobile games, 12 are client games, and 5 are web games, with notable titles including "Survival 33 Days" by 37 Interactive Entertainment and "Tomorrow's Prologue" by Meituan [4] - NetEase's Li Kaiming, head of the tenth division, announced his departure to pursue entrepreneurship, with the company confirming that his exit will not affect the studio's operations [6] - Tencent announced that "Honor of Kings World" is set to launch in spring 2026 [6] International Developments - A recent report indicated that 26% of European developers faced layoffs in 2025, with 13% leaving the gaming industry altogether [8] - The price of in-game items for "CS2" plummeted following a patch that expanded the trade-up system, with the price of the Karambit Doppler skin dropping from over $2,700 to around $1,100 [10] - Koei Tecmo Holdings significantly raised its profit forecast for the first half of the 2025 fiscal year (April to September), expecting both ordinary profit and net profit to double, driven by strong game sales and effective cost control [11]

Investment Rating - The industry investment rating is "Outperform the Market," indicating an expected relative increase of over 10% in the industry index compared to the broader market over the next six months [4][7]. Core Insights - The approval volume of game licenses in October remains high, with a total of 159 domestic games and 7 imported games approved, contributing to a total of 1,354 domestic games approved year-to-date [2]. - The launch of the client version of "Arknights" by Eagle Dynamics is expected to strengthen its leading position in the two-dimensional tower defense genre, having generated nearly 600 million yuan in revenue in its first month and achieving a download count of 30.92 million [2]. - The overall supply side continues to release, with a normalization trend in license issuance, indicating a sustained recovery in the industry [3]. Summary by Sections Game License Approval - In October, 159 domestic games and 7 imported games received approval, maintaining a high issuance volume [2]. - Year-to-date, 1,354 domestic games and 87 imported games have been approved [2]. Market Performance - The client version of "Arknights" has achieved significant market success, ranking in the top 15 of the iOS bestsellers shortly after launch and maintaining a high rating on platforms like TapTap and App Store [2]. - The game is noted for its unique art style and rich narrative, contributing to its popularity and extensive fan engagement [2]. Investment Recommendations - The report suggests focusing on leading companies with product reserves, R&D capabilities, and diverse thematic layouts, as the industry continues to recover and expand [3].

Group 1: Market Overview - The overall market showed a slight recovery with major indices closing up, including the Shanghai Composite Index rising by 0.22% to 3922.41 points and the CSI 300 Index increasing by 0.30% to 4606.34 points [7][10] - The performance varied across different market segments, with large-cap stocks leading while small-cap stocks lagged behind [8][10] - The trading volume in the market was approximately 16607.09 billion, reflecting a decrease of 295.48 billion compared to the previous trading day [7] Group 2: Industry Dynamics - In October 2025, the National Press and Publication Administration approved 159 domestic video game licenses, marking a year-on-year increase of 46 licenses [24][25] - The National Energy Administration reported that the total electricity consumption in September 2025 reached 8886 billion kWh, a year-on-year growth of 4.5% [26][27] - The production of industrial feed in September 2025 was 30.36 million tons, showing a year-on-year increase of 5.0% [28][29] Group 3: Company Updates - Juhua Co., Ltd. reported a total revenue of 20.394 billion with a year-on-year growth of 13.89% for the first three quarters of 2025, and a net profit of 3.248 billion, up 160.22% year-on-year [30][31] - Lihua Technology's revenue for the first three quarters of 2025 was 558 million, with a net profit growth of 2.18% year-on-year [32][33] - Hunan's electric vehicle exports reached 8.62 billion in the first three quarters of 2025, a significant increase of 85.9% year-on-year [34][35]

Core Viewpoint - The article highlights the approval of 166 games in October 2025, maintaining a high level of game approvals, which is significant for the gaming industry in China [2][5]. Game Approval Summary - In October 2025, a total of 159 domestic games and 7 imported games received approval, totaling 166 games [2]. - Among the 159 domestic games, 73 are categorized as mobile-casual games, and 70 are categorized as mobile games, with the rest falling into various categories [2]. Company Performance and Market Trends - Several listed companies have products that received approval, including 37 Interactive Entertainment's "Survival for 33 Days," Kying Network's "Blue Moon Hero," and Glacier Network's "I Want to Be the Ancestor" [5]. - The total number of games approved in 2025 has reached 1,440, with 1,354 being domestic and 86 imported [5]. - The A-share gaming sector has seen significant growth, with the Shenwan secondary gaming index rising approximately 66% year-to-date, ranking eighth among all Shenwan secondary industries [5]. Stock Performance - Multiple gaming stocks have doubled in price this year, with ST Huatuo up 271.6%, Giant Network up 219.47%, and G-bits up 119.05% [7]. - Other companies like Glacier Network, ST Kevin, Kying Network, and Star Shine Entertainment have also seen increases exceeding 70% [7]. Earnings Forecasts - G-bits expects a net profit of 1.032 billion to 1.223 billion yuan for the first three quarters of 2025, representing a year-on-year growth of 57% to 86% [7]. - Glacier Network anticipates a net profit of 435 million to 565 million yuan, indicating a turnaround from losses in the previous year [7].