CICC: favorable policy+continuous valuation repair in the game industry during the product cycle

The Zhitong Finance App learned that CICC released a research report on June 24 that the State Press and Publication Administration issued the 6th batch of game editions during the year (147 domestic editions/11 imported editions/7 changes in approval information). In June, the number of domestic versions reached a record high in nearly 5 years, and the number of key products increased. The supply of domestic products has increased markedly since May, and the performance of new overseas trips is also impressive. Currently, the valuation of the A-share gaming sector is still in the middle of 5 years in history, and it is expected that valuation premiums will be achieved as leading manufacturers launch new product cycles and policy margins improve. Meanwhile, the steady and impressive performance of the product will also increase profit expectations and push the individual stock to double down on Davis.

CICC's main views are as follows:

Policy margins are improving, three-dimensional coverage, and the pace of version number is rising steadily

The policy side mainly revolves around three themes: gaming going overseas, cultural and technological development, and new consumption. In March of this year, the State Council's “Special Action Plan to Boost Consumption” mentioned gaming, media and entertainment consumption, etc. Recently, at the regional level, Guangdong, Zhejiang, Chengdu, and Beijing have all introduced incentive policies to strengthen financial support and approval optimization, industrial chain collaboration (digital culture, creativity/e-sports), and the international ecosystem. At the level of public opinion, People's Online, Xinhuanet, “Beijing Youth Daily”, etc. have all acknowledged the positive value of recent games in the game industry or popular products (such as the domestic interactive video game “Emotional Anti-Fraud Simulator”). At the edition level, the number of monthly distributions has fluctuated and increased since this year. In June, the number of domestic editions reached a record high in nearly 5 years, and the number of key products increased.

The supply of domestic products has increased markedly since May, and the performance of new overseas trips is also impressive

On the domestic side, since mid-May, new products have taken advantage of the pre-summer window. The number of scheduled launches has increased markedly, and the performance has also been impressive. These include Gibbit's “The Legend of Staff and Sword” (with sales volume of 200+ billion yuan in the first month), Giant Network's “Supernatural Action Group” (starting gradually in May, with an estimated turnover of 100 million yuan in June), and Friendship Time “Violent and Cute Kitchen” (DAU of over 1 million people in the 3 days before launch).

Overseas parties are excited about the companies “Ether” (international service launched on 6/5, with an estimated turnover of 100 million yuan in the first month, focusing on the progress of the National Service/Hong Kong, Macao and Taiwan Service launch in the second half of the year) and ST Huatong's “Kingshot” (according to SensorTower, the turnover doubled month-on-month in May, so you can keep an eye on the progress of the domestic version).

Entering July, you can pay attention to Xishanju's “Unrestricted Flight” (launched on 7/2, the benchmark for Chinese sci-fi games; market expectations will be around 2 billion yuan per year), 37 Entertainment's “Douro Continent: World of Soul Hunters” (launched on 7/11), NetEase's “Abandoned Planet” (space search and evacuation, proxy, global launch), etc.

The sector's leading new product cycle drives an increase in overall valuation, and follow-up attention is paid to product flow performance and sustainability

At the valuation level, the new product cycle of leading companies in the sector is one of the core engines driving the restructuring of the industry's valuation system. Currently, the valuation of the A-share gaming sector is still in the middle of 5 years in history, and it is expected that valuation premiums will be achieved as leading manufacturers launch new product cycles and policy margins improve. Meanwhile, the steady and impressive performance of the product will also increase profit expectations and push the individual stock to double down on Davis.

The industry's follow-up catalysts can focus on the July 2025 e-sports World Cup (accelerating the integration of traditional sports capital with the e-sports ecosystem, focusing on the game performance of key projects) and the August ChinaJoy (focusing on new industry directions, new product displays, etc.).

Aspect of the target

A-shares recommend Gigbit (603444.SH) /Giant Network (002558.SZ) /Kaiying Network (002517.SZ), and Hong Kong stocks recommend Xindong (02400) /NetEase (09999).

risk factors

Industry policy changes, macroeconomic fluctuations, and industry competition intensified.