HSBC's research report stated that, due to the strong contributions of Dungeon & Fighter: Origins and Honor of Kings, as well as the resilience of classic games with a high level of daily active users, Tencent's Mainland game revenue growth is expected to accelerate in the third and fourth quarters. In addition, with its overseas mobile game company Supercell showing strong recovery, Tencent's international gaming business growth may also accelerate.

On the other hand, considering the higher base of Justice and Egg Party mobile games, HSBC expects NetEase-S's game revenue to slow down in the third quarter year-on-year, and recover in the fourth quarter. Titles like Eternal Lost, World of Warcraft, and Once Human are expected to bring new contributions to NetEase. As for Bilibili-W's gaming revenue performance, it will depend on the player numbers in the third and fourth quarters of this year for Three Kingdoms: Strategy to Determine the World.

HSBC mentioned that although the macroeconomic environment is weak, it has a greater impact on high-level average revenue per user (ARPU) gaming, but driven by mobile games, the mainland gaming industry is still expected to outperform last year. The bank stated that based on the launch of new products by game developers and the potential for overseas expansion, the profit growth of gaming market leaders is expected to be more resilient and stable.Free cash flowSupporting sustainable total shareholder returns, hence bullish on the performance of Tencent and Netease.

Considering the above factors, HSBC has set Tencent H shares' target price at 500 yuan, with a 'buy' rating; NetEase H shares' target price at 156 yuan, with a 'buy' rating; and Bilibili's target price at 126.4 yuan, with a 'hold' rating.