According to Gamma data, the domestic game market size in September this year was 30.3 billion yuan, a year-on-year increase of 15%. Among them, the overseas market was 1.7 billion US dollars, a 34% increase, and the domestic mobile game market was 22 billion yuan, an 11% year-on-year growth, with sustained prosperity in the overseas market.

Bocom Intl released a research report stating that Tencent Holdings (00700) saw a 20% year-on-year increase in mobile game revenue in September, continuing the trends of July and August.

The high revenue growth of Tencent is gradually driving income growth, with an expected 16% increase in mobile game revenue in the third quarter, compared to about 10% in the first half of the year. Bullish on its stable business growth supporting valuation improvement.

Netease-S (09999) saw a recovery in PC games driven by the return of "Warcraft" and new games, but the growth was offset by the inability to compensate for the impact of high base numbers such as "Justice". The speed of mobile game growth depends on the schedule for launching new games.

Bilibili-W (09626) had a September revenue of 0.4 billion yuan for "Sangokushi", better than the bank's previous expectations, potentially driving mobile game revenue growth in the third quarter beyond the bank's/market's expectations by 83%/66%.

GTJA published a research report stating that the overall performance of the game sector has been weak this year, especially since Q2 when there was a decrease in product supply. From April to July, the game market revenue showed negative growth year-on-year, until August and September started to recover. Game market revenue increased by 15.1%/14.9% year-on-year, indicating a significant recovery trend. If supply continues to improve in the fourth quarter, the market is expected to further improve.

Due to the positive impact of policy improvements in industry regulations, increased player appreciation, diversified platforms for product launches, and extensive reserves held by many gaming companies, the team remains optimistic about the future of the gaming industry, continuing to be bullish on companies with high-quality product reserves that can demonstrate advantages in competition.

Gaming sector related Hong Kong stocks include:

Tencent Holdings (00700): Tencent's gaming revenue accounts for 30%, with an increasing proportion from overseas. International gaming revenue is part of Tencent's value-added services sector, accounting for 49% of total revenue in 2023, with domestic gaming at 21% and international gaming at 9%. In terms of gaming revenue, Tencent's overseas gaming revenue in 2023 was 53.1 billion yuan, accounting for 30% of the gaming sector. With its international expansion, Tencent's overseas gaming revenue proportion is gradually increasing, rising from 15% in 2019 to 30% in 2023. Keep an eye on the performance and launch status of games like "Operation Delta," "Rock Kingdom Mobile," "King of Glory World," and "Fearless Contract Mobile."

NetEase-S (09999): "Yanyun Sixteen Sounds," "FragPunk," "Code: Infinity."

XD Inc (02400): "Let's Go, Muffin," "Heartbeat Town" performed well, with future focus on expansion progress outside mainland China. The closed beta test of "Isa" will run from October 24th to November 4th.

Bilibili-W (09626): Long-term operation of "Three Kingdoms: Strategy to Rule the World," continues to invest in gaming business exploration.

Kingsoft (03888): (Xishanju) "Break Limit Machine" is exploring the field of mech battle PC games.

Baioo Interactive (02100): Strengthening core IP competitive advantages, continuously exploring AI technology to empower product development, and accelerating international market layout.