Core Insights - In July 2025, 32 Chinese game publishers made it to the global mobile game publisher revenue TOP 100, collectively generating $1.95 billion, accounting for 34% of the total revenue of the TOP 100 publishers during this period [1] Group 1: Top Performers - Tencent maintained its position as the top global mobile game publisher, with a 20% increase in revenue driven by popular titles like "Honor of Kings" and "PUBG MOBILE" [2] - Point Cloud Interactive secured the second position, with a 10% revenue increase, bolstered by strong performances from "Kingshot" and "Tasty Travels: Merge Game," which saw revenue growth of 34% and 52% respectively [2] - NetEase ranked third, with a 23% revenue increase attributed to the anniversary celebration of "Party of Eggs," which doubled its income [4] Group 2: Notable Revenue Growth - miHoYo's "Honkai: Star Rail" experienced a 325% revenue surge in July, marking a new high for 2025, contributing to a 28% increase in overall revenue for the company [4] - Florere Game's new title "Last Z: Survival Shooter" saw a 44% revenue increase, helping the publisher achieve a 24% overall revenue growth [4] - Paper Games' "Love and Deep Space" reached a record high in revenue following a major update, resulting in a 33% increase in overall income [5] Group 3: Emerging Publishers - Momo Technology's flagship title "Mobile Legends: Bang Bang" continued to perform well, with a 32% revenue increase, while its new title "Silver and Scarlet" debuted strongly in the iOS download charts [6] - Youka Network's two titles, "Three Kingdoms Kill" and "Finger Mountain and Sea," saw revenue increases of 110% and 252% respectively, leading to a doubling of overall income [6] - Giant Network's "Supernatural Action Group" experienced significant revenue growth of 76%, climbing to the 29th position in the revenue rankings [6] Group 4: Additional Publishers - Other Chinese game publishers that made it to the global TOP 100 include Bilibili and Mattel163, totaling 32 publishers [7]

Core Viewpoint - The game "Unbound Abyss," developed by Dreamhaven, faces significant challenges in its long-term operation due to its buyout model and the competitive landscape of the shooting game market [1][2][6]. Pricing and Market Position - "Unbound Abyss" is priced at $30 (approximately 215 RMB), which is lower than mainstream AAA games priced at $60-$70, making it more acceptable in the Western market [2][3]. - The game aims to leverage the "premium trust effect" from its development team, which includes former Blizzard executives, to justify its pricing [3]. Content and Gameplay - The game is a rule-driven multiplayer online competitive game that combines elements like spaceship battles and zero-gravity exploration, differentiating it from traditional military-style games [5][14]. - While initial player experiences may be positive, there is a risk of aesthetic fatigue over time, necessitating ongoing content updates to maintain player engagement [5][6]. Long-term Viability - The buyout model relies heavily on initial sales, and without a stable revenue stream from DLCs or expansions, sustaining long-term content updates may be challenging [6][7]. - The game may need to transition from a buyout model to a free-to-play model with in-game purchases to attract a broader player base [7]. Market Trends and Competition - The competitive landscape for the shooting game genre has evolved rapidly, with many titles exploring various gameplay mechanics and user engagement strategies [8][10]. - Games like "Dark Zone Breakthrough" have adapted by lowering barriers to entry and enhancing cross-platform experiences, indicating a shift in market dynamics [10][12]. Industry Innovations - The emergence of "actionized" gameplay within the shooting genre represents a potential new direction, with various companies exploring this trend [16][19]. - The focus on gameplay innovation rather than just thematic elements is crucial for standing out in a crowded market [15][19].

Key Points - A chip team in Shanghai has announced significant layoffs, compensating employees at N+3, which is higher than the legal N+1 standard, indicating a strategic shift rather than a complete exit from the WiFi chip sector [4] - Transsion Holdings has established a mobility division to explore the two-wheeled electric vehicle market, focusing on expansion in Africa and other developing countries [6] - GAC Group has committed to ensuring dealer rebates are fulfilled within two months, aligning with new regulations aimed at improving payment timelines for small and medium enterprises [9] - Baidu has launched a large-scale recruitment drive for top AI talent, expanding job openings by over 60% compared to previous years, with no salary cap for selected candidates [10] - Apple has regained the top spot in smartphone sales in China, with significant sales growth attributed to price reductions and the introduction of the iPhone 16 series [12] - Horizon Robotics' founder noted that while consumers enjoy discussing advanced driver assistance systems, they prioritize vehicle appearance, space, and safety when purchasing [13] - Toyota's chairman has sparked controversy by claiming that one electric vehicle's pollution is equivalent to three hybrid vehicles, emphasizing the need for a balanced approach to automotive transition [24][25] - Ant Group has undergone a leadership change, with CEO Han Xinyi becoming the legal representative, while former representative Jing Xiandong remains as chairman [17] - Skild AI has attracted investment from Nvidia and Samsung, raising its valuation to $4.5 billion, focusing on developing AI software for robotics [28]

Investment Rating - The report maintains a "Buy" rating for Tencent Holdings [4] Core Views - The company has exceeded revenue and profit expectations, with Q1 2025 revenue reaching 1800.2 billion yuan, a year-on-year increase of 12.9%, surpassing Bloomberg's consensus estimate of 1756.0 billion yuan. Non-IFRS net profit was 613.3 billion yuan, up 22.0% year-on-year, also exceeding expectations [2][14] - AI is making substantial contributions to the gaming and advertising industries, enhancing product differentiation and driving revenue growth [3][4] Summary by Sections Revenue and Profit Performance - Q1 2025 revenue was 1800.2 billion yuan, up 12.9% year-on-year, exceeding expectations [2][14] - Non-IFRS net profit for Q1 2025 was 613.3 billion yuan, reflecting a year-on-year increase of 22.0%, also above consensus estimates [2][14] Gaming Business - Online gaming revenue reached 595 billion yuan in Q1 2025, a 23.7% year-on-year increase, surpassing expectations [20] - Domestic gaming revenue was 429 billion yuan, up 24.3% year-on-year, while international gaming revenue was 166 billion yuan, up 22.1% year-on-year [21] Advertising Revenue - Advertising revenue for Q1 2025 was 319 billion yuan, a 20.4% year-on-year increase, exceeding expectations [24] - The growth in advertising revenue is attributed to increased user engagement, AI upgrades, and optimization of the WeChat ecosystem [24] Financial Technology and Enterprise Services - Financial technology and enterprise services revenue was 549 billion yuan in Q1 2025, a 5.0% year-on-year increase, slightly below expectations [28] - The growth in financial technology is driven by consumer loan services and wealth management services [28] Profitability Metrics - Overall gross margin for Q1 2025 was 56%, up 3 percentage points year-on-year, driven by high-margin revenue sources [33] - The gross margin for value-added services was 60%, reflecting growth in both domestic and international gaming revenue [33] Future Earnings Forecast - The report forecasts adjusted net profits of 2441 billion yuan, 2693 billion yuan, and 2984 billion yuan for 2025, 2026, and 2027 respectively, with corresponding PE ratios of 18, 16, and 14 times [4][43]

Tencent Holdings Conference Call Summary Industry and Company Overview - The conference call pertains to Tencent Holdings, a leading technology and entertainment company in China, focusing on gaming, advertising, and AI applications. Key Highlights - **Financial Performance**: Tencent's Q4 2024 revenue and operating profit slightly exceeded expectations, with revenue growing 11% year-over-year and 3% quarter-over-quarter. GAAP profit reached 55.3 billion yuan, a 30% increase year-over-year [3][12]. - **Gaming Business**: The gaming segment showed strong performance with a 23% year-over-year growth in domestic game revenue, driven by popular titles like "Honor of Kings" and "Peacekeeper Elite," as well as the new release "Dungeon & Fighter." The overseas market also grew by 16% at constant exchange rates [4][5]. - **Advertising Business**: Advertising revenue grew by 17%, surpassing market expectations, attributed to the expansion of the video account platform and improvements in AI technology that enhanced ad placement efficiency [4][6]. - **Capital Expenditure**: Capital expenditure for Q4 2024 reached 36.6 billion yuan, with total annual spending exceeding 70 billion yuan, above market expectations. The company anticipates a low double-digit percentage of revenue for capital expenditure in 2025 [4][8]. - **Gross Margin Improvement**: The high-margin advertising business contributed to an overall gross margin increase of 2.6 percentage points to 52.6% [4][9]. - **Shareholder Returns**: Tencent plans to exceed 80 billion HKD in stock buybacks in 2025, with a 32% increase in cash dividends to 4.5 HKD per share, totaling approximately 112 billion HKD [4][11]. Additional Insights - **Market Predictions**: The market remains cautious regarding Tencent's 2025 revenue forecasts, estimating a 10% growth in gaming and 10%-15% in advertising. These predictions do not fully account for potential gains from increased AI ad inventory or reduced iOS revenue sharing [4][13]. - **AI Technology Impact**: AI applications have significantly influenced Tencent's performance, with user engagement in AI-native applications increasing dramatically. The company is actively exploring investment opportunities in the cloud computing infrastructure chain [7][14]. - **Investment Value**: Tencent's non-GAAP profit valuation is approximately 18 times, aligning with historical median levels, indicating that the company has not reached its ceiling in terms of investment value [4][13]. Conclusion - Tencent's robust performance in gaming and advertising, coupled with strategic investments in AI and cloud computing, positions the company favorably for future growth. The commitment to shareholder returns and the potential for increased revenue from AI applications further enhance its investment appeal.