According to the information on the official website of the State Press and publication administration, the version number of domestic online games was issued in April 2022. A total of 45 game products obtained the version number this time, including 5 client games, 1 switch host game and 39 mobile games.
Key investment points:
Several products of listed companies have obtained version numbers. According to the information released, at the relevant level of listed companies, G-Bits Network Technology(Xiamen)Co.Ltd(603444) products include two end game products, box fission and tower hunter, Party star of heart company, Yoozoo Interactive Co.Ltd(002174) chronicles of the Three Kingdoms: Pocket battle, Shenzhen Zqgame Co.Ltd(300052) foundry switch game, Wuhu 37 Interactive Entertainment Network Technology Group Co.Ltd(002555) dream voyage, beware of candles, friendship time zero relic, Kingnet Network Co.Ltd(002517) dragon legend The end tour of Xishanju's sword net 3 origin has obtained the edition number.
The length of suspension was the same as that in 2018, but the number of version numbers issued decreased significantly. Since July 2021, the suspension time of this edition number has reached 263 days, which is almost the same as 265 days in 2018. However, in terms of quantity, the number of version number games released in April 2022 was only 45, which was significantly lower than that of the first three batches of 164, 281 and 233 after the resumption of version number distribution at the end of 2018 and the beginning of 2019. At the same time, it was also significantly lower than the average monthly distribution in 2019, 2020 and 2021. At present, it is still a trend to strictly control the quantity of game products on the supply side. The regulatory authorities hope to guide the standardized development of the industry in the form of reduction and quality improvement and reduce disorderly competition. The development orientation of high-quality products has not changed.
Mainstream game companies have strong compliance awareness and R & D ability, and may be less impacted by regulation. We believe that the supervision of the industry is still focused on the key areas such as preventing addiction of minors, advocating positive creation and strengthening krypton gold control. Specifically, game products need to be connected to the juvenile addiction prevention system and implemented in strict accordance with the regulations; In the direction of content creation, refer to the framework system of the detailed rules for game review and scoring for the R & D and production of game products; The control of krypton gold should avoid cheating krypton, inducing krypton gold and other excessive consumption behaviors. Mainstream game companies have strong product R & D ability and compliance awareness, and can better adapt to the current regulatory framework. Therefore, the regulatory impact may be relatively small.
The strategy of going to sea will continue. In the market environment where going to sea has become the general trend of China's game industry, game products without version number can be launched in overseas areas first. The project objectives and development strategy of game companies' globalization can avoid the uncertainty risk caused by the dilemma of version number to a certain extent. At the same time, going to sea of game products is also one of the cultural output directions advocated by national policies. From the distribution of the latest batch of edition numbers, considering that the distribution quantity may be relatively small, which is difficult to meet the rhythm of the long-term product launch of game companies, and the strong growth of Chinese game products in the overseas market in the past two years, we believe that the pace of Chinese game companies accelerating going to sea will basically not change, and even the distribution of some products overseas and then in China or only in the overseas market may become the norm of the industry in the future.
The core of promoting the market is to convert game products into performance and verify the improvement of fundamentals. Looking back on the period from March to December 2018 when the release of edition numbers was stopped, there was a significant correction in the trend of CITIC game index in the same period. After the release of 2019q1 version number was resumed, the game index recovered to a certain extent, but it did not last long. Until August 2019, with the release of the semi annual report of listed companies, the products launched by game companies were gradually realized and transformed into running water and performance. The release of version number promoted the improvement of industry fundamentals, which was verified, and the trend of the game sector entered a continuous upward range. This edition has been reissued after a long period of suspension. Referring to the trend of the game sector from 2018 to 2019, we believe that the short-term may boost the market's confidence in the game sector, but the core of promoting the market in the more medium and long-term stage is the need to convert the online game products into actual water and profits. From the current situation, some product reserves of listed companies have version numbers or are in the stage of applying for version numbers. After the version number is reissued, the game company can start to reasonably schedule and launch the existing products, so as to promote the improvement of the company's performance and fundamentals. However, due to the characteristics of the pre cost and sales expenses of game products, it may still take some time to confirm the improvement of Fundamentals.
Investment suggestion: so far, the price earnings ratio (TTM, excluding negative value) of CS game sector is 19.17 times, which is in a historically low range. The version number policy has a certain suppression on the valuation of the sector and the performance of listed companies. With the normal issuance of game version numbers, the suppression factors will gradually weaken, repair the valuation of the sector and drive the performance recovery of relevant companies.
It is suggested to pay attention to the distribution rhythm and quantity of subsequent version numbers, the game product reserves of listed companies and the acquisition of version numbers. Under the background of improving the quality and reducing the quantity of game products on the supply side, products with low quality, short life cycle and no core competitive advantage will be more impacted. Therefore, it is suggested to pay attention to companies whose R & D ability, long-term operation ability and sea going strategy have been verified, and Wuhu 37 Interactive Entertainment Network Technology Group Co.Ltd(002555) , G-Bits Network Technology(Xiamen)Co.Ltd(603444) , Perfect World Co.Ltd(002624) .
Risk warning: the release rhythm and quantity of version number are lower than expected; The progress of online game products and market performance are not as expected; Further tightening of regulatory policies; Increase in purchase volume and cost
