Event: on April 11, the State Press and Publication Administration restarted the issuance of domestic game version numbers after an interval of 8 months. A total of 45 domestic game titles were distributed this time, including 5 end-to-end games, 37 mobile games, 2 leisure and puzzle games and 1 game console, specifically involving Wuhu 37 Interactive Entertainment Network Technology Group Co.Ltd(002555) ‘s dream voyage, Party star of heart company, tower hunter of G-Bits Network Technology(Xiamen)Co.Ltd(603444) subsidiary thunder network, etc.
The release of version number is restarted, and the quantity is too tight. Before the suspension of the first round of version numbers, 9384 domestic game version numbers were issued in 2017, with an average of 782 per month; Due to the adjustment of regulatory authorities, the version number was suspended from April to November 2018. The average monthly payment is 1384 and 110 in 2020, respectively. Before the suspension of the second round of version numbers, 679 domestic game version numbers were issued from January to July 2021, with an average of 97 per month. Therefore, from the number of copies issued this time, it is tight on the whole. Since this round of supervision is mainly aimed at strengthening the rectification efforts in the early stage in terms of inadequate implementation of minors’ protection, shortening minors’ game time, strengthening minors’ real name and face authentication, cracking down on violations such as online rental and sale accounts, and strengthening the constraints on the supply side from the aspects of content, subject matter and approval process, it is expected that the follow-up supervision style will continue and the supply of edition numbers will remain in a tight balance, The high-quality operation of existing version products is more important.
The head advantage is further highlighted, and the second growth curve is established when going to sea. The scarcity of edition numbers further highlights the importance of product R & D and long-term operation. The two rounds of strict industry supervision also cleared the tail manufacturers, and the advantage of large head manufacturers was further established. In addition, under the background of the peak of Chinese mobile users and purchase volume dividends, the trend of going to sea has been further established. Chinese game manufacturers have established the strategy of going to sea, and the proportion of overseas market revenue is also increasing. For example, in 2021q4, the game revenue of Tencent game international market increased by 34% year-on-year, and the proportion of game revenue in the current quarter increased by 5.67pct to 30.84% month on month Wuhu 37 Interactive Entertainment Network Technology Group Co.Ltd(002555) in 2021h1, the overseas revenue doubled year-on-year, and the proportion of revenue increased by 15pct to 27.13%. Overseas, according to the sensor tower ranking, tiktok’s overseas downloads continue to occupy the top three of the list and become one of the world’s hottest mobile applications. Subsequent games going to sea are expected to benefit from tiktok’s overseas traffic bonus.
Investment suggestion: the restart of the version number means that the launch of new game products is accelerated and the certainty of performance is further enhanced. At present, PE (TTM) of A-share game sector is mostly between 15-20 times, which is relatively at the bottom of history. Subsequently, driven by the boost of performance and the increasing proportion of revenue from going to sea, the valuation of the sector is expected to gradually return to the value center (more than 20-30 times in History). It is recommended to pay attention to Wuhu 37 Interactive Entertainment Network Technology Group Co.Ltd(002555) , G-Bits Network Technology(Xiamen)Co.Ltd(603444) , Perfect World Co.Ltd(002624) , and maintain the rating of “synchronous market” in the industry.
Risk tips: policy and regulatory changes; Delayed launch of game products; The running water is less than expected.
