This week’s market
This week (22.2.21-22.2.25), the Shanghai Composite Index, Shenzhen Component Index, gem index and media board index rose by – 1.1%, – 0.3%, 1.0% and – 4.4% respectively. This week, the top three stocks in the sector rose Guizhou Bc&Tv Information Network Co.Ltd(600996) (31.7%), Lecron Industrial Development Group Co.Ltd(300343) (17.8%), Tianyu digital (17.1%), and the last three Jc Finance & Tax Interconnect Holdings Ltd(002530) (- 19.1%), Chengdu B-Ray Media Co.Ltd(600880) (- 18.6%) and Wuhu 37 Interactive Entertainment Network Technology Group Co.Ltd(002555) (- 16.4%). Stocks in the sector rose this week, including the top three Aurora (7.5%), Hong Kong Science and technology exploration (4.1%), Fubo group (2.1%), the last three heart companies (- 20.8%), Weimeng group (- 18.2%) and interesting headlines (- 15.5%).
This week’s view
Disturbed by relevant news and superimposed with geopolitical risk aversion, the game (CITIC) index rose or fell by – 6.24% this week, including [ Wuhu 37 Interactive Entertainment Network Technology Group Co.Ltd(002555) ] (- 16.41%), [ G-Bits Network Technology(Xiamen)Co.Ltd(603444) ] (- 5.5%), [ Perfect World Co.Ltd(002624) ] (1.06%) and [netease-s] (- 6.64%). We have long been optimistic about the fundamentals of the game industry. Since 2017, policy supervision has always focused on the two main lines of content quality and juvenile protection. The main purpose of policy supervision is to standardize the development of the industry, not to restrict the development of the industry. (1) Strong supervision will accelerate the refinement of content, the survival of the fittest and the strength of the strong. The stricter examination and approval of game version numbers puts forward higher requirements for game enterprises to operate existing version number resources, which is conducive to improving the quality of game content, prolonging the life cycle of game operation, and accelerating the elimination of low-quality games such as Chinese skin changing and Shanzhai; (2) In order to avoid short-term event disturbance, the game going to sea has become a necessary option. Disturbed by the news and inspired by successful precedents, game companies accelerate the process of going to sea. Under China’s self-confidence, reverse culture output is expected to start, and game companies holding high-quality game content benefit more; (3) Immersed in the Internet era, the popularity of new terminal devices such as VR / AR is expected to improve the interactivity and playability of game content, and games and film and television are expected to become the first C-end content products to open the situation.
In addition, the performance of the end game market deserves attention. The supply of the content industry determines the demand. The domestic end game has not been launched for three years since the launch of “against the current cold”, and the user’s demand for end game always exists. According to traveller star, in September 2021, Shanghai New World Co.Ltd(600628) (produced by Amazon, MMORPG) was launched on steam. On the first day of launch, 500000 people were online at the same time, and the highest number was 910000 (nearly half of them are estimated to be Chinese). The Bata test conducted in July had more than 200000 people online at the same time; In February 2022, the Lost Ark steam version was launched, with 980000 people online on the first day and more than 1.3 million on the next day. According to the official report of steam, the number of live users of such games in China is expected to reach 40 million by the end of 2018, and the number of live users in the world is expected to reach 60 million by the end of January to February. We believe that under the background of strong demand and lack of supply, game enterprises holding new end game products are expected to benefit.
Investment advice
(1) immersing in the Internet is the future development trend. Metauniverse is in the initial stage of development. Compared with the implementation of C-end applications (requiring the popularization of access terminals), we believe that b-end projects are expected to be implemented first. At present, various countries and local governments have gradually introduced relevant policies of the meta universe. City pavilions, exhibition halls, theme pavilions, enterprise pavilions and cultural tourism performance activities are expected to become the first application scenarios for virtual cultural and creative projects. Pay attention to the creative design leader of the exhibition hall [ Shanghai Fengyuzhu Culture Technology Co.Ltd(603466) ], the creative design leader of cultural and tourism activities [ Beijing Fengshangshiji Culture Media Co.Ltd(300860) ], etc.
(2) we are optimistic about the fundamentals of the game industry for a long time, and the tightening of short-term policy supervision is expected to promote the accumulation and development of the game industry. From the layout time point, focus on grasping before and after the release of the version number. At present, the share price of the game company has experienced a deep correction. There is a short-term game value before the release of the version number, and the certainty is established after the release of the version number, which has a long-term investment value. Pay attention to [ Perfect World Co.Ltd(002624) ] with high-quality R & D ability and end-to-end tour of Zhuxian world; [ Wuhu 37 Interactive Entertainment Network Technology Group Co.Ltd(002555) ] with strong operation ability, proven high-quality game R & D ability and sea distribution ability; Focusing on research and development, small and beautiful [ G-Bits Network Technology(Xiamen)Co.Ltd(603444) ]; [netease-s] and [Tencent holdings] with rich product matrix and strong risk resistance.
Risk tips
The risk of stricter policy supervision exceeding expectations, the development progress of metauniverse is less than expected, and the decline of game companies is more than expected.
