Core Viewpoint - The capital market has witnessed significant trading activity, particularly with the stock of Century Huatong, which has seen a dramatic price increase and substantial investments from various stakeholders [1][14]. Group 1: Major Investors Increasing Holdings - Super investor Wei Wei invested 279 million yuan to acquire 22.6173 million shares of Century Huatong, achieving a floating profit of over 37 million yuan within just six days [1][4]. - Hainan Qibing Network Technology Co., a subsidiary of listed company Kaiying Network, has become the ninth largest shareholder of Century Huatong, holding 100 million shares, with a floating profit nearing 600 million yuan [5]. - Guotai Fund's manager Cheng Zhou has newly increased holdings in Century Huatong, acquiring 7.99 million shares valued at approximately 88.53 million yuan, representing 4.07% of the fund's net asset value [7][10]. Group 2: Major Investors Reducing Holdings - Jin Danli, previously the third largest shareholder, has reduced his stake in Century Huatong to below 1.45%, having exited the top ten shareholders by the end of the first quarter of 2025 [11][12]. - Hong Kong Central Clearing Limited has also decreased its holdings, reducing its stake from 1.76% to 1.64%, selling over 8.56 million shares [13][14]. Group 3: Company Performance and Market Sentiment - Century Huatong's half-year performance forecast indicates an expected revenue of approximately 17 billion yuan, a year-on-year increase of about 83.27%, with net profit projected to grow by 107.20% to 159.00% [14]. - The company's subsidiary, Diandian Interactive, has significantly contributed to revenue growth, with a reported 81% increase in revenue for the first half of 2025, driven by successful game titles [14]. - The market sentiment is further bolstered by the expectation that Century Huatong may lift its ST status by November 2025, following the completion of regulatory rectifications [14].

Summary of Key Points from the Equity Research Report on the Gaming Sector Industry Overview - The gaming sector in China is expected to perform strongly in the second half of 2025, with the Wind Internet Games Index rising 17% since June 2025, compared to a 7% increase in the CSI 300 index [2][10] - The sector is currently trading at a 2026 estimated average price-to-earnings (PE) ratio of 16x, slightly below the historical average of 17x [2][28] Core Insights 1. **Gaming Consumption Growth**: Domestic mobile gaming revenue reached RMB125.3 billion in the first half of 2025, marking a year-on-year increase of 16.6% [2][10] 2. **Product Releases**: A-share gaming companies are planning to increase product releases in the second half of 2025, which is expected to drive sustained earnings growth [2][10] 3. **Profit Margin Optimization**: Game developers are optimizing channel costs, which may lead to wider profit margins [2][10] Company-Specific Highlights Perfect World (002624 CH) - Current Price: RMB15.91, Target Price: RMB20.90, Rating: Buy - The game 'NTE' is anticipated to be a major success in the ACG category, with expected gross billing of approximately RMB5 billion in the first year post-launch, contributing to 73% of the company's net profit in 2026 [4][10] - Projected net profit growth of 143% year-on-year in 2026 [4][10] Ultrapower (300002 CH) - Current Price: RMB13.49, Target Price: RMB15.60, Rating: Buy - Key products 'Staller Sanctuary' and 'Next Agers' are expected to see large-scale commercialization starting in Q3 2025, contributing to a projected CAGR of 17% in net profit from 2025 to 2027 [5][10] Kingnet Network (002517 CH) - Current Price: RMB19.76, Target Price: RMB25.20, Rating: Buy - Expected net profit CAGR of 18% from 2025 to 2027, with a target PE multiple of 21x [9][10] Sanqi Entertainment (002555 CH) - Current Price: RMB17.40, Target Price: RMB23.80, Rating: Buy - Projected net profit CAGR of 10% from 2025 to 2027 [9][10] Key Product Tracking 1. **Game Exports**: Overseas revenue of Chinese games grew 11% year-on-year to USD9.5 billion in 1H25 [3][10] - Diandian Interactive's 'Whiteout Survival' ranked No. 1 in overseas revenue for the first half of 2025 [3][10] 2. **Commercial Promotions**: Giant Network's 'Chao Zi Ran Xíng Dong Zu' launched in July, achieving a peak iOS ranking of No. 11 [3][10] 3. **Beta Tests**: Perfect World's 'NTE' completed its second beta test in June, showing significant performance improvements [3][10] Market Trends and Risks - The gaming sector is experiencing rapid growth, particularly in overseas markets, with leading games performing well [8][10] - Risks include delayed game launches, regulatory changes, and potential operational challenges in overseas markets [9][10] Conclusion - The gaming sector in China is poised for strong growth in the latter half of 2025, driven by robust consumption trends, new product launches, and improved profit margins. Key companies like Perfect World and Ultrapower are well-positioned to capitalize on these trends, with favorable ratings and target prices indicating potential upside for investors [2][10]

Summary of ChinaJoy 2025 Highlights Industry Overview - The report focuses on the **China online gaming industry**, particularly highlighting the activities and trends observed during **ChinaJoy 2025** held in Shanghai from **August 1-4, 2025**. [1] Key Companies and Their Highlights Century Huatong - Century Huatong's booth was strategically placed next to Tencent's, themed "Game for Gamers" - The booth prominently featured **Whiteout Survival**, which attracted significant audience engagement through gameplay demos and lucky draws [2] - The company is noted for its collaborative efforts with other major players like Tencent and NetEase to drive traffic [1] Giant Network - Giant Network experienced increased traffic due to the launch of **Supernatural Action**, a new party game that has gained popularity for its unique gameplay and frequent content updates [3] - Existing titles like **Battle of Balls** also drew considerable audience interest [3] Perfect World - Perfect World showcased a variety of eSports titles, including **CS: Go** and **Dota 2**, with a notable audience presence at the CS: Go tournaments [4] - The company announced the upcoming launch of **Zhuxian 2** on **August 7, 2025** [4] Kingnet - Kingnet did not have a dedicated booth but showcased new games like **Soul Land** at Tanwan Games' booth [7] - The company promoted its **996 Game Center**, which features various Chuanqi games [7] IGG - IGG's booth featured all existing titles under the theme "Gamers at Heart," successfully attracting higher traffic through gameplay demos and rewards [8] Huya - Huya promoted its upcoming **Huya AI Robot**, expected to launch by late 2025 or early 2026, indicating a focus on AI in gaming [9] Market Sentiment and Future Outlook - The overall sentiment towards the **China online gaming market** remains positive, with expectations for healthy and sustainable development driven by product innovation and creativity [1] - There is an increasing awareness and interest in **hardcore AAA titles** and AI-related gaming products, suggesting a shift in consumer preferences [1] Investment Recommendations - Within the A-share gaming sector, **Century Huatong** and **Kingnet** are identified as preferred picks, while **Giant Network** and **Perfect World** show increasing upside risks [10] - Greater downside risks are anticipated for **G-Bits** and **XD** [10] Conclusion - The report highlights a vibrant and evolving landscape in the China online gaming industry, with significant participation from major companies and a positive outlook for future growth driven by innovation and market expansion [1][10]

Core Insights - The "cultural going global" trend is gaining momentum amid intensified global competition and deep digital technology empowerment [2] - Key drivers for the success of Chinese cultural products overseas include industrial "hard power," cultural "confidence," and user "empathy" [2][3] - The diversification of market expansion is evident, with Chinese companies targeting not only Europe and the US but also Southeast Asia, Africa, and Latin America [4] Group 1: Key Drivers of Success - Industrial "hard power" refers to the advanced technology and complete industrial chain that Chinese cultural products have developed over decades, leading to successful global launches [2] - Cultural "confidence" guides the creative direction, encouraging companies to draw from traditional Chinese culture and adapt it for contemporary global resonance [3] - User "empathy" is crucial for success, as products must resonate emotionally with users, particularly in the Z-generation consumer era [3] Group 2: Market Expansion Strategies - Companies are encouraged to adopt a long-term perspective in their overseas strategies, focusing on understanding foreign consumer habits and market dynamics [5][6] - The importance of user co-creation and leveraging AI for enhanced user engagement in content creation is emphasized [5] - The gaming sector, particularly casual and strategy games, is highlighted as a key area for growth, with companies needing to adapt to changing advertising and consumer behavior [6] Group 3: ESG Compliance Challenges - ESG compliance has become an essential aspect of overseas operations for Chinese companies, transitioning from a "nice-to-have" to a "must-have" [7] - New stringent ESG regulations, particularly from the EU, pose significant challenges for companies, including requirements for transparency in supply chains [8] - Initiatives are being developed to assist companies in navigating ESG compliance, including diagnostic tools and innovative financial products [8]

Group 1: Global Game Market Insights - The global mobile and PC game market is expected to regain growth momentum, with a combined market size projected to exceed $120 billion by 2028 [1] - Mobile game in-app purchase revenue is forecasted to grow by 4% year-on-year in 2024, surpassing 2020 levels, and will continue to increase by 6% in 2025, reaching $85.4 billion [1] - The global PC game market is also showing significant growth, with a projected 22% year-on-year increase in 2024 and a further 12% rise in 2025, nearing $12 billion [3] Group 2: Mobile Game Market Trends - The overseas mobile game market continues to thrive, with $34 billion in in-app purchase revenue achieved in the first half of 2025, indicating robust growth [7] - Despite slower growth in mature markets like the US, Japan, and South Korea, emerging markets in Southeast Asia, Latin America, and the Middle East are becoming key drivers of mobile game revenue growth [7] Group 3: Game Genre Performance - Strategy mobile games saw a significant revenue increase of 24% year-on-year, reaching $7.4 billion in the first half of 2025, making it the highest-grossing genre in overseas mobile games [11] - Sub-genres such as 4X strategy games, simulation, and card battle games experienced revenue surges of 20%, 97%, and 75% respectively, reflecting a growing enthusiasm among overseas players for casual gameplay [11] Group 4: Company Performance - The game "Kingshot" has quickly gained traction, achieving over $200 million in global cumulative revenue by the end of July 2025, contributing significantly to the performance of the publisher, DianDian Interactive [15] - DianDian Interactive reported an 81% year-on-year revenue increase in the first half of 2025, leading the overseas mobile game publisher rankings in both revenue and growth [15]

Core Insights - The article highlights the performance of Chinese mobile games in overseas markets, with Sensor Tower reporting revenue and download rankings for June 2025, showcasing strong growth and competition among various titles [1][2]. Revenue Rankings - The top revenue-generating mobile game is "Whiteout Survival" by DianDian Interactive, with global cumulative revenue surpassing $2.8 billion [1]. - "Gossip Harbor: Merge & Story" by Lemon Microfun ranks second, with a month-over-month revenue increase of 11% [4]. - "Kingshot," a new 4X strategy game, has shown remarkable growth, with a 56% revenue increase in June, entering the top three in just four months since its launch [2][3]. Notable Performances - "Genshin Impact" by miHoYo achieved a 55% increase in overseas revenue, ranking sixth in the revenue chart [4]. - "Zero Zone" celebrated its first anniversary with a significant revenue surge of nearly 200%, moving up 13 positions to rank tenth [4]. - "Ningchao" by Kuro Games saw a 48% increase in overseas revenue, marking its second-highest level since launch and returning to the top ten at ninth place [5]. Growth Rankings - "Wittle Defender" by Haipi Games debuted at eighth in the growth rankings, combining tower defense, Roguelike, and card strategy elements [6]. - "Crystal of Atla" launched internationally, quickly climbing to the top of download charts in multiple regions, ranking ninth in growth and thirty-second in revenue [9]. - "Persona 5: The Phantom Night" also made a strong debut, topping download charts in Japan and the US, ranking tenth in growth [9]. Download Rankings - "Block Blast!" by Hungry Studio continues to lead the download rankings with nearly 530 million total downloads [10]. - "Moto Race Go" by XGAME STUDIO saw a 120% increase in downloads, moving up to second place [13]. - "Mini Games: Calm & Relax" experienced a 40% increase in downloads, rising to third place [13].

Core Viewpoint - ST Huatuo (Century Huatuo, 002602.SZ) has a market value of 88.7 billion yuan, ranking 155th in A-share total market value, and has seen its stock price increase nearly 300% over the past year, significantly outperforming its competitor Giant Network by 40 billion yuan in market value [1][2]. Group 1: Stock Performance - On July 4, ST Huatuo's stock rose by 3.75% to 11.90 yuan per share, reaching its highest level since August 2020 [2]. - Following a period of risk warning due to false financial disclosures, the stock experienced a four-day limit down, dropping to around 4 yuan, before entering a significant upward trend after a month of adjustment [2]. Group 2: Game Development and Market Success - Century Huatuo's success is attributed to its game development, particularly in overseas markets, with its self-developed games achieving major breakthroughs [4]. - The games "Whiteout Survival" and "Endless Winter" have set records in the SLG genre, consistently ranking high in global game release charts, with "Whiteout Survival" surpassing 100 million downloads globally [4][5]. - The company has adopted a "dual-hit" strategy, focusing on revitalizing classic IPs and breaking into niche markets, which has led to sustained performance from multiple successful titles [5]. Group 3: Shareholder Dynamics - Hainan Qibing Network Technology Co., Ltd. emerged as a significant beneficiary of ST Huatuo's stock surge, holding 100 million shares, which accounted for 1.35% of the total shares, and realizing over 500 million yuan in profits during the stock's rise [7]. - The Huaxia Zhongzheng Animation Game ETF, which initially held 168 million shares, had to sell off its holdings due to the stock being classified as ST, missing out on the subsequent price increase [8].

Investment Rating - The report maintains a "Positive" outlook on the gaming sector, highlighting a monthly high in game approvals and encouraging summer promotions [4]. Core Insights - The gaming sector is expected to benefit from a significant increase in new game approvals, with 158 new games (147 domestic and 11 imported) approved in June, marking a new monthly high for the year. This trend indicates a clear easing of regulatory constraints [4]. - The mid-term growth drivers include the expansion of overseas markets and the consumption demands of the post-90s and post-00s generations, improved competitive dynamics leading to better-than-expected profit margins, and AI developments enhancing valuation options [4]. - Key companies such as Giant Network, Huya, and others are expected to show strong performance, with new game launches and innovative strategies aimed at attracting younger users [4]. Summary by Sections Gaming Sector - The report emphasizes the ongoing recommendation for the gaming sector, driven by new game approvals and summer promotional activities. The mid-term logic includes overseas expansion and evolving consumer preferences [4]. - Notable companies like Tencent, NetEase, and Giant Network are highlighted for their expected revenue and profit growth, with specific projections for 2025 and 2026 [6]. AI and Internet Media - AI applications in platforms like Kuaishou and Meitu are showing better-than-expected commercialization, with significant user engagement and innovative content offerings [4]. - The report discusses the potential of AI in education and advertising, with companies like New Oriental launching AI educational products and Tencent enhancing ad efficiency through AI [4]. Consumer Trends - The report identifies high-demand consumer segments in collectibles, music, and live events, with companies like Pop Mart and NetEase Music showing strong growth trajectories [4]. - The report also notes the resilience of advertising platforms like Focus Media, which is expected to benefit from partnerships that enhance media value [4].

Group 1 - The article highlights significant changes in the revenue rankings of mobile games, with "Whiteout Survival" by 点点互动 maintaining the top position, while "Gossip Harbor" by 柠檬微趣 surged to second place with an 8% month-over-month increase and a 254% year-over-year increase [2][8] - 柠檬微趣's new game "Flambé: Merge & Cook" has also shown continuous revenue growth, ranking 12th in the revenue list [2] - 点点互动's SLG game "Kingshot" achieved remarkable success, ranking 5th in the overseas mobile game revenue list just three months after its launch [2][37] Group 2 - The international version of "Delta Force" saw a 36% year-over-year revenue increase and a 108% month-over-month increase, reaching nearly $30 million in revenue [5][25] - "Gossip Harbor" and "Seaside Escape" have shown strong performance, with "Gossip Harbor" achieving an estimated monthly revenue of $36 million and "Seaside Escape" exceeding $16 million [10] - The new game "Lands of Jail" by 益世界 has quickly gained traction in the overseas market, with a 68% revenue increase in May, marking its entry into the revenue rankings [39][41] Group 3 - The female-oriented gaming market is expanding, with 柠檬微趣 leading the charge through successful titles like "Gossip Harbor" and "Seaside Escape," which leverage narrative-driven gameplay and classic mechanics [7][21] - The article notes that the SLG genre is evolving, with new titles like "Kingshot" and "Lands of Jail" demonstrating the potential for innovation and market disruption [35][39] - The competitive landscape is intensifying, with established titles maintaining their positions while new entrants are emerging, emphasizing the need for continuous innovation in game development [42]

Core Insights - In May, ByteDance maintained a significant lead in overseas revenue among non-gaming Chinese companies, while Ruqi Software saw a revenue surge of over 32.4% due to its AI-enhanced app features [3][4] - Meitu's overseas revenue increased by over 12.4% driven by its AI features in the app "Wink," contributing to its stable ranking [3] - Xiaohongshu, rebranded as "rednote," experienced a 75% increase in overseas revenue, helping its parent company rise in rankings [4] Non-Gaming Companies - ByteDance ranked first with 78 apps, maintaining its leading position in overseas revenue [1] - Ruqi Software's app "PictureThis" achieved an estimated monthly revenue of nearly 100 million yuan, marking a continuous growth trend [3] - Meitu's "BeautyCam" and other apps are part of its strategy to embrace AI, contributing to revenue growth [3] - Xiaohongshu's global strategy has led to a stable monthly active user base exceeding 10 million [4] - Youku's overseas version saw an 18.9% revenue increase due to popular content, allowing it to return to the rankings [4] Gaming Companies - Diandian Interactive's new game "Kingshot" saw a revenue increase of over 81.7%, reaching an estimated 190 million yuan [7] - Lilith's game "AFK Journey" experienced a revenue growth of over 54.9%, particularly in the U.S. market [7] - NetEase's new game "Dunk City Dynasty" generated over 1 million USD in less than ten days, indicating potential for future growth [8] - Jiangyu Interactive's "Top Heroes" achieved an estimated revenue of nearly 230 million yuan, contributing to its ranking improvement [8] - Yishijie’s new game "Lands of Jail" generated over 8.21 million USD, with a growth rate of over 75.4% [9]