Investment Rating - The industry investment rating is "Overweight" indicating a positive outlook for the sector [9]. Core Insights - The report highlights strong performance in the gaming and cloud computing sectors, with several companies expected to achieve significant year-on-year revenue growth in Q3 2025 [3][4]. - The gaming industry is anticipated to maintain high growth due to relaxed regulations and innovative game categories, with a total of 1,195 game approvals in the first nine months of 2025, a 25% increase year-on-year [3]. - Companies like Tencent and Giant Network are expected to drive growth through new product launches and enhanced operational capabilities [3][4]. Summary by Sections Gaming Sector - Companies such as Giant Network, Century Huatong, and G-bits are projected to experience high growth driven by product launches [3]. - The demand from younger consumers and the potential of AI to create new gaming experiences are key growth drivers [3]. - The report emphasizes the importance of differentiated competition rather than price wars in the gaming market [3]. Cloud Computing and Internet Media - Cloud computing revenues are accelerating, with major players like Tencent and Alibaba investing heavily in AI and cloud services [3][5]. - The report notes that the competition in instant retail is expected to peak in Q3 2025, which will significantly impact profitability expectations [3]. - Companies like Kuaishou are positioned to leverage AI to enhance content and advertising efficiency [3]. Other Industries - The long video and drama sectors are showing signs of recovery, with new policies expected to stimulate growth [3]. - The advertising market is experiencing structural growth, particularly in entertainment and technology sectors [3]. - Companies such as Kuaishou and Bilibili are recovering, while others like Mango Super Media and Focus Media are facing challenges in Q3 [3][4].

智通财经APP获悉，中信证券发布研报称，1H25心动公司(02400)游戏、Taptap双侧收入增长全面超预 期，1H25公司营收同比+38.7%，经调整归母利润实现7.96亿元，同比+235.3%。游戏端，在《心动小 镇》、《火炬之光》等游戏的内容更新后流水增长以及《仙境传说M》初心服海外发行带来增量下，游 戏业务的收入增长和盈利能力改善均超预期。同时Taptap端，公司在产品周期影响MAU同比增速下通 过提高广告效率、用户粘性的方式推动收入超预期增长。展望未来，公司对于优质内容游戏的长线运营 能力以及海外发行能力有望支持游戏板块的持续增长，Taptap在产品周期修复推动用户数增加的同时， 商业化效率提升效果有望延续。维持"买入"评级。 ...

中信证券发布研报称，1H25心动公司(02400)游戏、Taptap双侧收入增长全面超预期，1H25公司营收同 比+38.7%，经调整归母利润实现7.96亿元，同比+235.3%。游戏端，在《心动小镇》、《火炬之光》等 游戏的内容更新后流水增长以及《仙境传说M》初心服海外发行带来增量下，游戏业务的收入增长和盈 利能力改善均超预期。同时Taptap端，公司在产品周期影响MAU同比增速下通过提高广告效率、用户 粘性的方式推动收入超预期增长。展望未来，公司对于优质内容游戏的长线运营能力以及海外发行能力 有望支持游戏板块的持续增长，Taptap在产品周期修复推动用户数增加的同时，商业化效率提升效果有 望延续。维持"买入"评级。 ...

Core Viewpoint - The company has shown significant growth in its mid-year performance, driven by new game releases and improvements in user engagement on the TapTap platform, leading to an optimistic outlook for future growth [1][2]. Group 1: Financial Performance - In H1 2025, the company achieved revenue of 3.082 billion yuan, a year-on-year increase of 39% [1]. - Adjusted profit reached 853 million yuan, up 206% year-on-year, while net profit attributable to shareholders was 755 million yuan, reflecting a 268% increase [1]. - The gross margin improved by 6 percentage points to 73%, primarily due to the increased share of net revenue from the overseas version of "初心服" [1]. Group 2: Game Performance and Growth Drivers - Game revenue for H1 2025 was 2.1 billion yuan, also up 39% year-on-year, with a gross margin of 68% [1]. - The average monthly active users for online games reached 11.41 million, a 20% increase year-on-year, while average monthly paying users grew by 21% to 1.32 million [1]. - The game "心动小镇" has maintained player interest through content updates, ranking significantly in iOS sales charts [1]. Group 3: Future Growth Potential - The company is expected to leverage long-term operations to create more enduring games, with plans for the international launch of "伊瑟" and the upcoming release of "仙境传说RO：守护永恒的爱2" [2]. - TapTap's revenue for H1 2025 was 1.01 billion yuan, a 38% increase year-on-year, with a gross margin of 84% [2]. - The introduction of AI game recommendation tools and the expansion into PC and mini-games are anticipated to sustain high revenue growth for TapTap [2].

Summary of Key Points from the Conference Call Industry Overview - The domestic self-developed online game revenue has shown significant growth, with mobile game revenue reaching 125.3 billion RMB, a year-on-year increase of 16.6% [1][3] - Mini-program game revenue reached 23.3 billion RMB, with a remarkable year-on-year growth of 40%, indicating a recovery in the gaming industry [1][3] - The overall gaming market in China saw actual sales revenue of 168 billion RMB in the first half of 2025, reflecting a year-on-year growth of 14.1% [3] Key Players and Performance - Leading gaming companies such as Tencent, NetEase, and miHoYo have achieved growth through stable operations of long-standing games [1][7] - Tencent expanded its market share in games like "CF" and "Delta Force," while NetEase's "Identity V" reached a historical revenue high [1][7] - Mid-tier companies have also shown strong innovation, with titles like Giant's "Supernatural Action Group" and G-bits' "Sword Legend" exceeding market expectations [1][8] Role of Gaming Community Platforms - Gaming community platforms like Taptap and Xiaohongshu are becoming crucial channels for game distribution and advertising, especially as user acquisition costs rise [1][5] - Taptap, as a leading gaming community, is expected to reach 100 million monthly active users (MAU) in the future, with significant advertising revenue potential [2][10] Policy Support - Increased policy support for the gaming industry has been noted, with the supply of game licenses rising, providing more opportunities for new product launches and stable operations of existing products [1][9] Taptap Insights - Taptap's MAU reached 44 million by the end of 2024, a 23% year-on-year increase, and is positioned as a primary distribution channel for game developers due to its no-commission model [1][13] - The platform's advertising revenue grew by approximately 22% in 2024, with ad exposure increasing by 43% [18] - Future projections suggest Taptap's MAU could reach between 110 million to 140 million, with potential annual advertising revenue of 4 to 6 billion RMB [19][21] Legend Box Insights - Legend Box focuses on the "Legend" genre games, with a monthly active user count of 400,000 to 450,000 and a repurchase rate exceeding the industry average by 200% [2][28] - The platform's core business model relies on advertising, with potential growth in live streaming revenue [30] - Future projections indicate that with exclusive IP rights, Legend Box could see its annual revenue grow significantly, potentially reaching 1.5 to 3 billion RMB [32] AI Developments - Kaiying Network is expanding into AI with products like the emotional companion game "Eve" and an AI game creation platform "Soon," which are expected to perform well upon launch [33] Future Outlook - Heartbeat Company is expected to see strong performance in the second half of 2025, driven by new product launches and high player engagement [25] - The gaming community's development trend indicates a shift towards community platforms for advertising, with Taptap and Legend Box being key players to watch [35]

Summary of Key Points from the Conference Call Industry Overview - The gaming sector's valuation remains relatively low compared to the broader consumer entertainment and overseas gaming companies, with sustainable growth expected until 2026 [1][3] - The gaming industry is experiencing a solid fundamental performance, with several companies projected to perform well in Q3 2025 [1][6] Company Highlights Xindong Company - Expected H1 2025 revenue of at least 3.05 billion yuan, a year-on-year increase of 37%, and net profit of at least 790 million yuan, a growth of over 215% [1][10] - The game "Xindong Town" significantly improved its iOS sales ranking due to collaboration with "My Little Pony" [10][11] - The game "Iser" generated over 100 million yuan in its first month in overseas English-speaking regions [1][11] Giant Network - The game "Supernatural Action Group" saw a 168% month-on-month increase in domestic iOS revenue in July 2025, benefiting from summer user engagement and commercialization iterations [1][13] - The anniversary event for "Ball Ball Battle" helped it regain a higher sales ranking [1][14] - New game "Ming Jiang Sha" received a license and is expected to contribute to revenue in the second half of 2025 [1][15] Gibit - The new product "Sword Legend" exceeded expectations in both domestic and overseas markets, with significant revenue from collaborations with Japanese light novel IPs [1][16][17] ST Huatuo - The game "Wild Survival" maintained stable global revenue, while "King Short" saw a 27% increase in overseas revenue [1][18] - Expected Q2 2025 revenue median of approximately 8.9 billion yuan, a year-on-year increase of 77% [2][18] Perfect World - The game "P5X: Persona 6" performed well in overseas markets, with July revenue exceeding 20 million USD [1][19] - The company plans to launch a key project "Yihua" in 2026 [1][20] Market Trends and Innovations - The gaming industry is witnessing innovation in themes and gameplay, with a notable trend of multi-platform releases and AAA games [1][7] - AI applications in gaming are expanding, with over 7,800 AI products on the Steam platform, representing 20% of games released in 2025 [1][9] Future Outlook - The gaming sector is expected to maintain strong performance in the second half of 2025, with new product launches potentially impacting market dynamics [1][23] - The ChinaJoy 2025 event saw increased popularity and introduced new IP derivative product displays, indicating a growing trend in the market [1][24][25] Recommendations - Companies to watch include Xindong Company, ST Huatuo, Gibit, and Giant Network, all of which have shown stable and high-frequency performance data [1][34]

Industry Overview - Goldman Sachs updated its views on mid-sized game publishers, highlighting that domestic expansion opportunities have generally narrowed due to market consolidation, with Tencent and NetEase outperforming smaller peers in China [1][2] - The demand for new games has shifted towards high-quality and casual/mini games, putting pressure on traditional games from mid-sized publishers [1][2] - Despite challenges, there are opportunities for single games to achieve annual revenues of RMB 2-3 billion through differentiated gameplay [1] Company Insights - Tencent and NetEase remain Goldman Sachs' top picks in the Chinese internet/gaming sector, while Bilibili is viewed positively due to its advertising strength and profit margin expansion potential [3][7] - Goldman Sachs upgraded Xindong Company to neutral due to longer game lifespans and profit expansion through marketing discipline [3][10] - G-bits was downgraded to sell due to weak performance in traditional games and a lack of new product launches [3][12] - 37 Interactive was downgraded to neutral due to intense competition in mini-games and high customer acquisition costs [3][21] - Perfect World maintains a neutral rating, with key focus on upcoming game releases [3][28] Financial Projections - Bilibili is expected to see a 21% year-over-year revenue growth in 2025, driven by the anniversary of "Three Kingdoms: Strategic Edition" and new game releases [7][8] - Goldman Sachs anticipates a 3% year-over-year revenue decline for G-bits in 2025, with operating profit expected to drop by 17% [12][16] - For 37 Interactive, a 1% revenue decline and a 5% drop in operating profit are projected for 2025 [21][27] - Perfect World is expected to see a 16% year-over-year revenue growth in 2025, with operating profit estimated at RMB 2.17 billion [28][31] Rating Adjustments - Goldman Sachs maintains a buy rating for Bilibili, with a target price of RMB 23.7, reflecting a 35% upside [5][7] - Xindong Company’s rating was upgraded to neutral with a target price of HKD 34, reflecting improved visibility in its game business [10][11] - G-bits was downgraded to sell with a target price of RMB 194, indicating a 19% downside [5][12] - 37 Interactive's rating was downgraded to neutral, with a target price of RMB 16.3, reflecting a 9% upside [5][21] - Perfect World maintains a neutral rating with a target price of RMB 11.8, indicating a 12% downside [5][28]