Industry core view:
Before the 16th, the overall decline of the stock market and the pessimism of investors led to the decline of the media industry index. Since the 16th, the pessimism of the stock market has eased. On March 17, the media industry showed an overall recovery trend, more than 80% of the stocks showed an upward trend, and the overall index increased by 3.21%, of which the game (Shenwan) index increased significantly, with an overall increase of 5.13%; The online information office has improved the regulations on the protection of minors’ networks and re emphasized the phenomenon of recharge of minors’ games. According to the data published by some large game enterprises, the level of minors occupying the income of enterprises is generally low. The government’s measures to promote the prevention of minors’ addiction will not significantly affect the company’s income structure. We will continue to pay attention to the annual report data of major game companies, Track the changes in the company’s income structure caused by the flow of minors’ games.
Key investment points:
(I) the reasons for the strong recovery of the game sector are as follows: 1) the financial stability and Development Commission of the State Council held a special meeting to set the policy tone and enhance the investment confidence in the capital market. On March 16, the financial stability and Development Commission of the State Council expounded its policy stance on the current issues of general concern and sensitivity in the market, calmed the rapidly rising pessimism in the capital market, and prompted market participants to further understand the policy orientation and improve expectations. 2) The sharp rise of China concept stocks Tencent and Netease led to the recovery of the sector, and the rise in the limit of leading game companies showed that the market was optimistic about the recovery of the edition number. Under the positive influence of the financial committee meeting, China concept stocks Tencent and Netease showed a sharp upward trend, driving the A-share game sector to rebound. On this basis, as of the 17th, leading companies in the A-share game sector G-Bits Network Technology(Xiamen)Co.Ltd(603444) , Wuhu 37 Interactive Entertainment Network Technology Group Co.Ltd(002555) etc. all realized the daily limit, driving the overall game sector index to rise better than the market. This shows that the market has increased confidence in the resumption and issuance of game version numbers, is optimistic about the future development, and the game sector has received renewed attention from funds. 3) The epidemic situation is repeated, and home-based measures are implemented to benefit the game sector. The sharp decline of offline activities has promoted the improvement of game player activity and game duration, which is slightly good for the game sector.
(II) the Internet information office once again solicited public opinions on the regulations on the protection of minors’ networks. 1) The online information office has improved the regulations on the protection of minors’ networks and once again emphasized the phenomenon of recharge of minors’ games; 2) The game duration of minors in the game industry is significantly reduced, and the small proportion of running water does not affect the company’s income structure.
Investment suggestion: comply with the strict regulatory environment of the policy, promote industrial reform, and grasp the innovation needs brought by the post epidemic era and Z era. Game: the epidemic dividend has faded. It is suggested to pay attention to the individual stocks in the product line that are developed for the new generation of users, have well-known IP, have high expectations and good test feedback; With the continuous restriction of version number, the number of new online games has decreased significantly. It is suggested to pay attention to the head companies with rich version number reserves; At the same time, driven by the concept of “meta universe”, it is expected that the ecological construction of VR content will become the focus of the market in 2022.
Risk factors: stricter regulatory policies, delayed launch of Xinyou and its performance falling short of expectations, increased risk of overseas business, repeated epidemic risk and goodwill impairment risk
