Today, Hong Kong's A game stocks continued to be strong.
As for Hong Kong stocks, as of press release,$NTES-S (09999.HK)$An increase of nearly 5%,$FRIENDTIMES (06820.HK)$An increase of more than 3%,$CMGE (00302.HK)$An increase of more than 1%,$TENCENT (00700.HK)$,$BILIBILI-W (09626.HK)$There was a slight increase.
In terms of A-shares, the gaming sector has rebounded for three consecutive trading days. As of press release, the cumulative increase was more than 6%. On individual stocks, as of press release,$Yoozoo Interactive (002174.SZ)$,$Dasheng Times Cultural Investment (600892.SH)$rise and stop,$37 Interactive Entertainment Network Technology Group (002555.SZ)$,$Ourpalm Co.,Ltd. (300315.SZ)$,$Giant Network Group (002558.SZ)$Wait for it to follow suit.
When going out to sea
As competition in the domestic game market becomes more intense, many domestic game companies are sailing overseas, and overseas markets have also become an important growth engine for China's game industry.
Recently, the SensorTower store intelligence platform revealed the latest mobile game sales list. 37 Chinese game makers were selected for the November TOP100 global mobile game publisher revenue list, drawing a total of 1.87 billion US dollars, including$G-bits Network Technology (603444.SH)$,$Zhejiang Century Huatong Group (002602.SZ)$,$37 Interactive Entertainment Network Technology Group (002555.SZ)$,$Beijing Ultrapower Software (300002.SZ)$Game companies that are listed on A-shares, etc.
Furthermore, according to the “2023 China Game Industry Report”, in 2023, the output value of the Chinese game industry surpassed 300 billion for the first time this year, and the actual overseas sales revenue of self-developed products was 16.366 billion US dollars. The United States and Japan are the main overseas markets for mobile games in China, accounting for 32.51% and 18.87% respectively.
At the same time, the policy also encourages game makers to actively go overseas. Section 50 of the “Measures for the Administration of Online Games (Draft for Comments)” issued on December 22 clearly encourages international cooperation and encourages online game publishing companies to explore overseas markets.
It is worth noting that many listed companies are further increasing their efforts to sell their products overseas this year. Shenzhou Taiyue plans to launch the SLG+ simulation game Dreamland overseas in 2024.
The beast-themed SLG mobile game “Mechadomination” under 37 Mutual Entertainment has been tested overseas. It is currently being adjusted in the middle and late stages. It will target the general user market and await subsequent promotion. “The Legend of Mortal Immortals” will also be released in other regions around the world.
Guolian Securities pointed out that based on the first-mover advantage of domestic game companies in mobile game development and operation, the size of the overseas market for domestic games is expected to continue to grow. Driven by the company's strategic focus, product advantages, and policy incentives, gaming overseas is expected to be an important performance increase for domestic game companies.
Sector valuations are in a low position
Since December 22 of last year, the State Press and Publication Administration drafted the “Administrative Measures on Online Games”, which triggered an “earthquake” in the industry, the game sector has continued to dive. However, with the release of domestic game versions exceeding expectations in December, leading listed game companies taking steps to buy back shares, and favorable news such as NetEase and Blizzard's suspected restart of cooperation gradually released, the sector began to rebound higher on the 28th.
Currently, after the game sector has undergone major adjustments, the valuation level of major game companies is in a low position, and institutions are generally optimistic about the sector's future development opportunities.
Cinda Securities pointed out that the game industry is currently at an all-time low due to market sentiment. The valuation center of A-share game companies in 23-24 was 17x/13x, respectively, and the valuation center of Hong Kong stock game companies was 16x/11x, respectively, which highlighted leading companies with stable fundamentals.
Huaxi Securities said that maintaining low recommendations in the game industry, judging that the disputed terms are unsettled. Subsequent game versions will be less affected. It is optimistic that the industry will continue to develop healthily. It focuses on recommending targets with strong performance certainty and layout of applet games and overseas business. The beneficiaries include 37 Entertainment, Shenzhou Taiyue, Kaiying Network, and Mingchen Health.
Debon Securities believes that after undergoing major adjustments, the current valuation level of major game companies is in a low position. While focusing on risk, we will continue to be optimistic about the opportunities brought by continuing versions, new products, going overseas, AI/MR technology, and emotional healing. After the adjustment, the A-share side suggests focusing on: Shenzhou Taiyue, Tomcat, Kaiying Network, 37 Entertainment, Youzu Network, Perfect World, Shengtian Network, Gibbit, Xinghui Entertainment, etc.; for Hong Kong stocks, it is recommended to focus on:$TENCENT (00700.HK)$,$NTES-S (09999.HK)$.
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