On the 17th, the world's largest game company-$Activision Blizzard (ATVI.US)$Announce and$NetEase, Inc.-S (09999.HK)$"formal breakup" has attracted the attention of the market. Behind it is the focus of Buffett, the company's largest institutional investor, which has been among the top ten heavy stocks.

What is noteworthy is that on the evening of the 17th, the State Press and publication Administration released the approval information of domestic online games in November 2022, a total of 70 games were approved. Include$TENCENT (00700.HK)$Alloy warhead: awakening,$NetEase (NTES.US)$A Chinese Odyssey: return, etc.

A number of analysts believe that with the gradual return of market awareness of the game industry, investors should actively pay attention to the new round of product drivers ushered in by the game industry, and the subsequent release of version numbers will return to the normal pace. With Tencent, NetEase, Inc,$37 Interactive Entertainment Network Technology Group (002555.SZ)$、$Perfect World (002624.SZ)$After getting the version number of the core products stored by the head game company, it will become an important driving force for the performance and valuation of the game sector, and the plate is expected to usher in an upward inflection point in performance.

Blizzard backstabs NetEase, Inc behind: Buffett is the largest institutional investor

Activision Blizzard, the world's largest gaming company, released an official "breakup statement" on Nov. 17, saying that its cooperation with NetEase, Inc expires in January 2023 and will not renew its contract, and will suspend most of Blizzard games on Chinese mainland. As a result, Hong Kong shares of NetEase, Inc fell sharply, closing down 9.05 per cent.

According to a person familiar with the matter, the core reason for the break between Blizzard and NetEase, Inc is that the transaction price has not been agreed between the two sides. In recent years, Activision executives are increasingly looking forward to Blizzard's revenue, including not only the acquisition from Microsoft Corp, but also the tremendous pressure brought by Warren Buffett. At present, Buffett, the "god of shares"$Berkshire Hathaway-B (BRK.B.US)$Activision Blizzard is already the largest institutional investor, and Buffett has long preferred stocks that pay dividends generously.

At present, Activision Blizzard has been in Buffett's top 10 positions in the ninth, and the position is higher than Taiwan Semiconductor Manufacturing Co Ltd. Berkshire holds 60.14 million shares, making it the company's largest institutional investor, with a market capitalization of $4.471 billion, higher than newcomer Taiwan Semiconductor Manufacturing Co Ltd's $4.1 billion, according to Berkshire's third-quarter 2022 report.

Berkshire added Activision Blizzard during the fourth quarter of 2021, with about 14.66 million shares worth $975 million, or about 2 per cent, according to Wind. In January 2022, Microsoft Corp announced the purchase of Activision Blizzard for $68.7 billion at a price of $95 per share.

Buffett then sharply increased Berkshire's stake in Activision blizzard from about 2% to 9.5%. Then, during the second quarter of 2022, Berkshire held 68.4 million shares, or 8.74%, with a market capitalization of $5.325 billion. According to the latest third-quarter 2022 report, the number of shares fell by 8.34 million to 60.14 million, or 7.69 per cent.

At present, among Buffett's top 10 heavy stocks, technology stocks are$Apple (AAPL.US)$, Activision Blizzard,$Taiwan Semiconductor Manufacturing (TSM.US)$These three, but the sum of the positions of these three stocks is close to 45%. In the past two years, Buffett continues to increase the position of technology-type companies, we can see that the "stock god" is optimistic about technology, meta-universe, games and other directions. It is worth noting that in late November, the United States will announce a review decision on Microsoft Corp's acquisition of Blizzard.

The domestic game sector rose nearly 20% in November.

When Blizzard moves frequently, the domestic game market is also agitated. Video games have long been rid of the single attribute of entertainment products and have become an industry of great significance to a country's industrial layout and scientific and technological innovation, according to a commentary on the people's Daily online on the 16th.

On the same day, in the Tencent financial report conference call, Tencent executives said that the game version number problem will always be solved. "there will be a version number issued in the near future. To some extent, Tencent needs to be prepared for this. After the release of the version number, Tencent will have more prepared games to launch, and the headwind factors in the game industry will certainly be alleviated. "

Entered the 17th, driven by the above positive, animation game plate (930901) volume rose, the plate as a whole rose 4.76%, a new high in nearly 3 months. At present, the valuation of the anime game index has been at an all-time low, with PE at about 22 times in the past five years, near 47% of the historical quantile.

ETF (159869), the largest game in the A-share market, jumped short and opened higher, up 5.21% on the day, with a turnover of more than 100 million yuan. The ETF has risen 19.35 per cent since November. Component stocks Perfect World, Panax notoginseng mutual entertainment, gigabit limit. The tourist network has increased by more than 8%, and the Kaiying network, the soul network, Zhejiang digital culture and so on have soared.

In addition, northward funds have also continued to increase positions in the game plate recently. Since November, Beixiang Capital has bought 10 online game stocks.$Zhejiang Century Huatong Group (002602.SZ)$, Perfect World and$Talkweb Information System (002261.SZ)$The growth of shareholdings is in the forefront. The performance of the head game company exceeded expectations. Taking Perfect World as an example, the company realized operating income of 5.711 billion yuan in the first three quarters, realizing net profit of 1.442 billion yuan belonging to shareholders of listed companies, an increase of 80.26% over the same period last year, and deducting non-net profit of 921 million yuan, an increase of 64.13% over the same period last year.

Analysts are optimistic that the game sector will usher in a performance inflection point.

Jiao Juan, an analyst at Anxin Securities, believes thatLooking back on the game sector in the past five years, it has experienced two major pressures of policy tightening and industry clearing, the fading and overlaying policy of flow dividends continues to be stricter, and the valuation of the sector has continued to decline in the past five years. The game sector ushered in the end of the policy in 2022: as the strongest scientific and technological content in the content industry, games play an important role in the development of advanced technologies and industries such as 5G, chip industry, artificial intelligence and so on. With the improvement and landing of anti-addiction regulations, the market's understanding of the game industry has gradually returned to objectivity and rationality. This article represents the recognition of game technology and cultural attributes at the policy level.

Wang Guanran, an analyst with CITIC, thinksRegulatory policies are expected to stabilize, while the game industry will prefer high-quality content games, and head game companies with strong R & D capabilities are expected to remain competitive. Superimposed cultural self-confidence, games out to sea, the combination of virtual and real digital base and other broad development space, the game industry is still expected to maintain the driving force of steady development.

"the game sector is expected to usher in an upward inflection point in performance from the fourth quarter of this year. "Fang Guangming, an open source securities analyst, saidWe should actively pay attention to the new round of product drivers and continue to increase the configuration of the game plate. Recently, the release of new games has accelerated significantly, and we judge that the release of subsequent version numbers is expected to return to the normal pace. With Tencent, NetEase, Inc, Sanqi Mutual Entertainment, Perfect World and other head game companies' reserve core products coming online one after another, it will become an important driving force for plate performance and valuation, superimposed consumption recovery and historical base effect, and the game plate is expected to usher in an upward inflection point in performance.