Summary of Evergreen Games Conference Call Industry Overview - The conference focuses on the evergreen games sector, highlighting the potential for significant revenue growth through effective operations, as demonstrated by Tencent's Supercell game "Clash Royale," which achieved $140 million in revenue in Q2 2025, a 90% quarter-over-quarter increase and over 40% year-over-year growth [2][3] - Companies with evergreen game potential typically possess high Daily Active Users (DAU) and social gameplay attributes, or own classic native IPs that can be continuously iterated and updated, particularly in SLG (Simulation and Strategy Games) and MMO (Massively Multiplayer Online) genres, which have high player sunk costs and stronger user retention [2][5] Key Insights and Arguments - Evergreen game companies generally have valuations above the industry average, with companies like Nintendo, Take-Two, and Nexon showing strong forward Price-to-Earnings (PE) ratios, indicating high market expectations for future earnings [2][6] - As of early 2025, Nintendo's forward PE was 36, TikTok's was 27, and Nexon's was 26, averaging 26, which is higher than the average valuation of the A-share and Hong Kong game sectors, which is below 20 [7] - The operational methodology for evergreen games includes simple content updates, seasonal updates, and continuous iteration of core gameplay and monetization strategies, creating a platform that encourages ongoing player engagement and spending [9][10] Company-Specific Strategies - Tencent's strategy for 2025 emphasizes the operation of headlining games while adjusting its organizational structure to enhance producer incentives, focusing on long-term development and middle-tier games like "Crossfire" and "League of Legends" [4][11] - Nintendo aims to maintain user engagement by expanding gameplay on its platforms, creating "infinite" products that encourage continuous player interaction and consumption [12][13] - Tencent's overseas game revenue accounts for approximately 30%, with Supercell, Riot Games, and Miniclip being significant contributors [14] Potential Companies for Evergreen Games - Companies with successful evergreen game potential typically have large DAU advantages and social gameplay attributes, such as Tencent and Giant Network's new title "Supernatural Action Team" [5] - Companies with classic native IPs that can be continuously updated, like Nintendo with its Mario and Pokémon franchises, and Nexon with its Dungeon Fighter Online (DNF) IP, also show strong potential [5][29] - SLG and MMO games are identified as having longer lifecycle potential due to their inherent player engagement characteristics [30] Valuation Insights - Evergreen game companies are generally valued significantly higher than the industry average, with stable and continuous revenue growth being a key factor supporting these high valuations [6] - The report highlights the importance of maintaining a balance between hardware and software revenue, with Nintendo's software revenue becoming a more significant contributor as hardware sales plateaued [18][19] Conclusion - The evergreen games sector is characterized by companies that can maintain player engagement through continuous updates and strong IPs, leading to sustained revenue growth and higher valuations compared to the broader gaming industry. The strategies employed by leading companies like Tencent and Nintendo serve as benchmarks for success in this evolving market.

Group 1 - The core concept of the article revolves around the successful integration of K-POP culture into the animation film "K-POP Demon Hunter Girl Group," which has gained significant popularity on Netflix, topping charts in 41 countries shortly after its release [3][10]. - The film showcases a blend of K-POP elements and storytelling, despite criticisms regarding its narrative structure and logic, highlighting the appeal of its characters and high-quality audiovisual presentation [3][6]. - The K-POP industry has contributed 7% to the global music market revenue, with 17 out of the top 20 best-selling albums in 2024 being from K-POP artists, indicating the genre's strong commercial presence [11][12]. Group 2 - The K-POP market is experiencing a decline, with a 5.7% drop in 2024, marking the first decrease in nearly a decade, despite overall growth in the global music market [12][13]. - The article discusses the challenges faced by the K-POP industry, including fan fatigue from continuous consumption and the need for innovative products and experiences to sustain interest [12][26]. - The fusion of K-POP and ACG (Anime, Comic, and Games) cultures is accelerating, with various collaborations and cross-promotions emerging, reflecting a growing trend of cultural exchange and audience overlap [5][25]. Group 3 - The film "K-POP Demon Hunter Girl Group" features original songs produced by notable K-POP producers, enhancing its authenticity and appeal to fans [8][10]. - The animation medium allows for a visually stunning representation of K-POP performances, contributing to a high-quality viewing experience that compensates for narrative flaws [10][26]. - The collaboration between K-POP and ACG is not one-sided; both industries are engaging in resource exchange to expand their influence and reach a broader audience [25][26].

Group 1 - EA has laid off approximately 300 employees, including around 100 from Respawn, the studio behind popular titles like APEX Legends and Star Wars Jedi [1][3] - Respawn has decided to abandon two early incubation projects and make adjustments to the APEX Legends and Star Wars Jedi teams, with speculation about the canceled projects [3] - The layoffs represent about one-third of Respawn's total workforce, affecting development, publishing, and QA teams for APEX Legends and Star Wars Jedi [3][4] Group 2 - EA's Q3 FY2025 financial report showed net revenue of $1.883 billion, down from $1.945 billion in the same period last year, with executives expressing dissatisfaction with APEX Legends and planning a major update [4] - EA has faced ongoing project cancellations, restructuring, and layoffs since 2023, including significant layoffs at BioWare due to the failure of Dragon Age 4 and a focus shift to Mass Effect 5 [4] - Industry reactions to the layoffs have been critical, highlighting concerns about EA's management of its studios and the impact on game development quality [6]

Industry Trends - The gaming industry is experiencing diversified development, with domestic companies accelerating strategic adjustments amid legal disputes and policy support [1] - Newzoo's report indicates a 1.2% increase in annual revenue for PC games from 2021 to 2024, while console game revenue is projected to decline by 2.1% [3] - The 2025 National Cultural Innovation Experimental Zone Investment Conference signed three key projects aimed at promoting the integration of culture and technology [4] Company News - Zhongjiu Mobile appointed Wang Chunye as co-CEO, effective April 9, 2025, while current CEO Xiao Jian remains in his position [5] - NetEase's Zen division has been renamed to the Onmyoji division, with plans for organizational restructuring and new team development [6] - 2PGames and Double-Headed Dragon Studio addressed recent online controversies regarding their operations [7][8] - The "Black Myth: Wukong" art exhibition opened in Hangzhou, showcasing the game's artistic creation process [9] Legal and Regulatory Developments - Kaiying Network received over 300 million RMB in arbitration compensation related to a legendary IP dispute [10] - The Suzhou Industrial Park People's Court ruled in favor of Paper Games in a trademark infringement case against Zulong Technology, ordering Zulong to pay 100,000 RMB for trademark infringement and 50,000 RMB for unfair competition [11] International Developments - Krafton acquired a controlling stake in Indian game developer Nautilus Mobile for $14 million (approximately 102 million RMB) [12] - Yandex introduced market expansion solutions for Chinese manufacturers, including YandexPaySDK and EasyMonetization [13] - Unity China explained the removal of the Unity 6 engine and its future charging plans for the Unity engine professional and personal versions [14] - Blockchain gaming platform Ultra completed a $12 million financing round to enhance its services [15] Esports Events - The Snapdragon Esports Pioneer Global Championship kicked off in Jakarta on April 7, 2025 [16] - The KPL Annual Finals for Honor of Kings will be held at the Bird's Nest in the second half of 2025, expected to attract over 50,000 spectators [18] - The Hero Asian Champions League x CS2 China qualifiers commenced in Yancheng on April 10, 2025 [19]

Investment Rating - The report maintains a "Buy" rating for Tencent Holdings (0700.HK) with a target price of 559.92 HKD [3][8]. Core Insights - The report highlights strong growth in advertising driven by AI, alongside robust performance in gaming during the Q1 Spring Festival period [2]. - The forecast for IFRS net profit for 2024-2026 is adjusted to 194.1 billion, 226.1 billion, and 250.1 billion RMB respectively, reflecting an upward revision due to increased advertising and other revenues [3]. - Non-IFRS net profit estimates for the same period are projected at 222.7 billion, 257.6 billion, and 285.6 billion RMB [3]. Financial Performance Summary - For 2024, the expected operating revenue is 660.26 billion RMB, with a year-on-year growth of 8.41% [4]. - The operating profit for 2024 is forecasted at 200.1 billion RMB, showing a significant increase of 30.97% year-on-year [4]. - The attributable net profit for 2024 is projected at 194.07 billion RMB, reflecting a substantial growth of 68.44% year-on-year [4]. - The gross margin is expected to improve to 52.90% in 2024, up from 48.13% in 2023 [4]. - The net profit margin is anticipated to rise to 29.39% in 2024, compared to 18.92% in 2023 [4]. Revenue Breakdown - For Q4 2024, total revenue is reported at 172.4 billion RMB, with a year-on-year increase of 11% [8]. - The revenue from value-added services is expected to reach 79 billion RMB, growing by 14% year-on-year [8]. - Gaming revenue for Q4 2024 is projected at 49.2 billion RMB, reflecting a year-on-year growth of 20% [8]. - Marketing services revenue is anticipated to be 35 billion RMB, with a year-on-year increase of 17% [8]. - Financial technology and enterprise services revenue is expected to be 56.1 billion RMB, showing a 3% year-on-year growth [8]. Valuation Data - The report employs a Sum-of-the-Parts (SOTP) valuation method, with a target price of 559.92 HKD based on various business segments [3][10]. - The estimated market capitalization for Tencent's H shares is approximately 4.62 trillion HKD [8]. - The report provides a detailed breakdown of Tencent's business segments, including gaming, social advertising, and financial technology, with respective valuations [10][11].

Investment Rating - The report maintains a "Buy" rating for Tencent Holdings (00700.HK) with a target price of 559.92 HKD [3][8]. Core Insights - The report highlights strong growth in advertising driven by AI, alongside robust performance in gaming during the Q1 Spring Festival period [2]. - The forecast for IFRS net profit for 2024-2026 is adjusted to 194.1 billion, 226.1 billion, and 250.1 billion RMB respectively, reflecting an upward revision due to increased advertising and other revenues [3]. - Non-IFRS net profit estimates for the same period are projected at 222.7 billion, 257.6 billion, and 285.6 billion RMB [3]. Financial Performance Summary - For 2024, the expected operating revenue is 660.26 billion RMB, with a year-on-year growth of 8.41% [4]. - The operating profit for 2024 is forecasted at 200.1 billion RMB, representing a year-on-year increase of 30.97% [4]. - The attributable net profit for 2024 is projected at 194.07 billion RMB, showing a significant year-on-year growth of 68.44% [4]. - The gross margin is expected to improve to 52.90% in 2024, while the net margin is anticipated to be 29.39% [4]. - The earnings per share (EPS) for 2024 is estimated at 21.09 RMB [4]. Revenue Breakdown - The report anticipates that value-added services revenue will reach 790 billion RMB in Q4 2024, with a year-on-year growth of 14% [8]. - Gaming revenue for Q4 2024 is expected to be 492 billion RMB, reflecting a year-on-year increase of 20% [8]. - Marketing services revenue is projected at 350 billion RMB for Q4 2024, with a year-on-year growth of 17% [8]. - Financial technology and enterprise services revenue is expected to be 561 billion RMB in Q4 2024, showing a year-on-year increase of 3% [8]. Valuation Metrics - The report employs a Sum-of-the-Parts (SOTP) valuation method, indicating a target price of 559.92 HKD [3][10]. - The estimated price-to-earnings (P/E) ratio for 2025 is projected at 22 times [4][10]. - The price-to-sales (P/S) ratio for 2025 is estimated at 2.5 times [10].

Investment Rating - The report maintains a "Buy" rating for Tencent Holdings [5][7] Core Views - Tencent's Q4 2024 performance exceeded expectations with revenue of 174.2 billion RMB, a year-on-year increase of 11%, and adjusted net profit of 55.3 billion RMB, up 30% year-on-year [7] - The company is accelerating its AI ecosystem development, with significant contributions from gaming, advertising, and financial technology sectors [7] - The target price is set at 684 HKD, indicating a potential upside of 34% [7] Financial Data and Profit Forecast - Revenue projections for Tencent are as follows: - 2023: 609 billion RMB - 2024: 660.3 billion RMB - 2025E: 719.9 billion RMB - 2026E: 779.4 billion RMB - 2027E: 833.3 billion RMB - Adjusted net profit forecasts: - 2023: 157.7 billion RMB - 2024: 222.7 billion RMB - 2025E: 251.3 billion RMB - 2026E: 282.2 billion RMB - 2027E: 311.3 billion RMB - Earnings per share (EPS) estimates: - 2023: 16.68 RMB - 2024: 24.03 RMB - 2025E: 27.32 RMB - 2026E: 30.69 RMB - 2027E: 33.85 RMB - Return on equity (ROE) projections: - 2023: 19.5% - 2024: 22.4% - 2025E: 20.9% - 2026E: 19.73% - 2027E: 18.49% [4][10] Company Commentary - The gaming segment showed strong performance with domestic and overseas revenues growing by 23% and 15% respectively in Q4 2024, with new titles contributing significantly [7] - Advertising revenue in Q4 2024 grew by 17%, driven by AI enhancements, with video account advertising increasing over 60% [7] - Financial technology and enterprise services revenue grew by 3% in Q4 2024, with notable growth in enterprise WeChat and AI cloud services [7] - Capital expenditures for 2024 were 76.8 billion RMB, representing 12% of revenue, with plans for lower double-digit capital expenditure as a percentage of revenue in 2025 [7]

Core Viewpoint - The article discusses the rapid rise and subsequent decline of the game "I Am Surrounded by Beauties!" and highlights the volatility of trends in the gaming industry, emphasizing the need for a sustainable business model rather than chasing fleeting fads [1][2][3]. Group 1: Game Performance and Market Reaction - "I Am Surrounded by Beauties!" achieved significant success shortly after its launch, with a peak of 65,435 concurrent players and over 30 million in revenue within 24 hours [1]. - The game topped the Steam China sales chart and generated over 1 billion views on social media platforms like Douyin [1]. - The success of the game led to a surge in stock prices for companies associated with the "short drama + game" model, with some stocks nearly doubling in value within 17 trading days [1]. Group 2: Business Model Analysis - The game operates on a buyout model, priced at 42 yuan, allowing players to experience a unique narrative, which is similar to existing female-oriented romance games [4]. - The article suggests that the core competitive advantage lies in content creation, but the sustainability of such content is questionable due to the lack of barriers to entry in artistic creation [4][6]. - The gaming industry's evolution from text-based narratives to interactive experiences is noted, but the article warns that the novelty may wear off quickly as competition increases [5][6]. Group 3: Investment Considerations - The article advises caution for investors, suggesting that companies should not rush to capitalize on trends without a clear understanding of their business model and competitive advantages [6][7]. - It emphasizes the importance of establishing a sustainable competitive edge (moat) in the market, particularly in content creation, which is difficult to maintain over time [6]. - Investors are encouraged to focus on companies that can build a moat rather than those that merely chase trends for short-term gains [6][7].