Event: as of the closing on February 22, affected by the rumor that the version number of the game industry has completely stopped issuing in 22 years, each game company has recorded a large decline in the past two days, among which [Xinxin company (- 11.79%), Wuhu 37 Interactive Entertainment Network Technology Group Co.Ltd(002555) (- 6.46%), Tencent (- 5.23%), netease-s (- 3.77%) and A shares [ Wuhu 37 Interactive Entertainment Network Technology Group Co.Ltd(002555) (- 9.96%), Shanghai Yaoji Technology Co.Ltd(002605) (- 9.64%), Kunlun Tech Co.Ltd(300418) (- 6.70%), Zhejiang Century Huatong Group Co.Ltd(002602) (- 5.63%)], Hong Kong stocks [celadon game (- 6.20%), heart company (- 5.17%) and middle hand game (- 4.38%)], The market sentiment is relatively fragile. We think it also has an impact on the concerns about the further supervision of Internet platform enterprises issued by the national development and Reform Commission on Friday.
Comments:
There is no need to worry too much about the regulation of the game industry. We don’t think we need to worry too much about the impact of policy regulation at present. The game version number has been substantially suspended since August 21, but the approval of the version number is still continuing, and the staff of the State Press and publication administration also refuted the rumor after hours on the 22nd. We believe that the purpose of edition number approval is to better promote the improvement of China’s game quality, protect minors and cultural output. It is not killing the game industry with a stick. In essence, it is an important institutional cornerstone for the overall long-term improvement of China’s game strength.
We pay more attention to the long-term and healthy growth of the game industry after supervision. In the second half of 2021, the regulatory policy of the game industry was tightened again, the implementation of new regulations to prevent addiction, the “cold winter” of key game enterprises being interviewed and version number approval continued, and the essence has long been expected. In the “2022 Spring Festival inventory of Internet giants” released on February 11, we stressed that the overall flow of the game industry during the Spring Festival is expected to decline compared with the same period last year, while Tencent Netease games are relatively stable compared with the same period last year. Mobile game marketing attempts to carry out linkage Spring Festival elements + short-term live broadcasting, but due to the lack of new games and the overall pessimistic atmosphere of lack of version numbers, The game industry is still around winter. We summarize the official account of the public’s “mobile games industry 21 years’ review and prospect, and the DataEye founder Wang TSE total 21 years’ purchase volume white paper sharing”. We mentioned that 22 years hand travel industry growth rate has reached 5%, which is already a more optimistic expectation. We should dig more opportunities for growth potential under the current pressure environment of the industry, such as going to sea and terminal travel. According to the mobile game report in January 2022 released by Gamma data, in January 2022, the actual sales revenue of China’s mobile game market was 22.24 billion yuan, an increase of 20.25% month on month and 17.76% year-on-year.
The game goes to sea with brilliant performance. From 2016 to 2021, China’s overseas revenue CAGR of self-developed Games was 20.0%, 3.3pcts higher than the compound growth rate of China’s revenue of self-developed games. The revenue of top 250 mobile games in various regions, with the market share of Chinese Games reaching 50% in Southeast Asia and no more than 30% in the US / Japan / South Korea market, still has great growth. In February, there were four new games developed by Chinese companies and one old game developed by Chinese companies in the top 10 of Japan’s IOS free list, with a total of five products launched by Chinese game companies, including the jrpg mobile game “air brave group” launched on February 16 and the platform fighting game “flashparty” launched on February 17. 22h1, Netease’s “Harry Potter” was launched overseas, and “Diablo” is expected to be officially launched, which is also worth looking forward to.
Investment suggestion: pay attention to Tencent (the game data showed stable performance from January to February of 22 years); Netease (Harry Potter goes online overseas, pay attention to the online time of Diablo); G-Bits Network Technology(Xiamen)Co.Ltd(603444) (Yinian Xiaoyao and asking questions performed brilliantly from January to February of 22 years, acting as the online agent of OBI Island: dream country for 22 years); Wuhu 37 Interactive Entertainment Network Technology Group Co.Ltd(002555) (the performance in 21 years was in line with expectations, Xinyou went to sea in February 22, and Douluo continent: duel between soul masters entered the payback period); Zhejiang Century Huatong Group Co.Ltd(002602) (“East digital West computing” starts catalytic IDC, and the game distribution cooperates with Tencent); Wuxi Boton Technology Co.Ltd(300031) (Industrial Internet, smart mine and other business flexibility, pay attention to the implementation of the self-developed final front); Perfect World Co.Ltd(002624) (the new version of magic tower linked with spirit cage and launched overseas in 22 years); Heart company (flashparty’s overseas release has performed well, and T3 22q1’s overseas launch is expected); Shanghai Yaoji Technology Co.Ltd(002605) (Yaoji fishing 3D launched its new tour in December 21, and the star card track has become a new growth point), etc
Risk factors: the game went to sea less than expected; Industry policy supervision risk; Continuously improve the risk of game R & D and distribution; Risks of intensified competition in overseas markets; The recovery of game version number is not as expected.
