On April 11, 2022, the State Press and Publication Administration officially released the approval letter of domestic network in April, and a total of 45 games obtained the version number.
The game version number has been restarted and the trend of high-quality products in the industry has not changed. From the perspective of product ownership, the companies that have obtained the version number this time are mainly Chinese second-line game manufacturers and small and medium-sized game manufacturers, and the key products include Wuhu 37 Interactive Entertainment Network Technology Group Co.Ltd(002555) ‘s dream voyage, G-Bits Network Technology(Xiamen)Co.Ltd(603444) ‘s Tower hunter, Yoozoo Interactive Co.Ltd(002174) ‘s Chronicles of the Three Kingdoms: Pocket battle, and Kingnet Network Co.Ltd(002517) ‘s Dragon legend, the way forward, etc; Chuang mengtiandi’s “Beware of fire and candle” and heart’s “party star” are also on the list. In terms of quantity, 45 games have been approved this time, which is lower than the average number of version numbers issued during 2020. The overall trend of game approval is still gradually tightened, and the trend of high-quality products in the game industry is obvious.
The reserve products are expected to enter the normal online rhythm. Under the influence of the suspension of edition numbers, the online rhythm of Chinese game manufacturers’ research products has been interrupted, the growth rate of China’s game industry has slowed down, and the growth rate of the industry has fallen to single digits. With the reissue of the game version number, some manufacturers have basically completed the research and development of game products, which will be launched after the version number is approved and implemented. The manufacturer’s performance will be repaired and drive the recovery and growth of the industry. At present, major manufacturers have not obtained the key reserve products of the edition number, including “dawn awakening” held by Tencent, Netease’s “eternal robbery mobile game”, “handed down light” of Wuhu 37 Interactive Entertainment Network Technology Group Co.Ltd(002555) and G-Bits Network Technology(Xiamen)Co.Ltd(603444) of “Fengshen fantasy world” and Perfect World Co.Ltd(002624) of “Tianlong Babu 2”. In addition, some manufacturers have shifted their game projects under development to focus on going to sea during the suspension of version number. Some games have been launched overseas. The restart of version number approval may enable some games that have been released overseas to regain the Chinese market.
The minor protection policy has been implemented, and the release of the version number was not accompanied by the upgrading of control. The suspension of the version number occurred after the implementation of the minor protection policy. During the control period, the leading manufacturers in the industry strictly implemented the national regulatory strategy on anti addiction and minor game control, and the industry order was significantly improved compared with the suspension of the version number in 2018. The resumption of this edition was not accompanied by the further overweight of regulatory policies. During the suspension of edition, relevant departments still gave a positive evaluation of the cultural value of high-quality games and actively encouraged the game to go to sea. In the notice on several measures to promote the reform and innovation of trade and investment facilitation in the pilot Free Trade Zone issued by the State Council in September 2021, it is proposed to promote the pilot work of online game audit in the location of the qualified pilot Free Trade Zone, which is expected to further delegate the game audit power.
Since the suspension of the investment proposal version, the valuation of the game sector has continued to decline and is currently at a historical low. We believe that with the resumption of version number approval, the valuation of the game sector and the performance of game companies will be repaired. We mainly recommend head game companies with R & D strength and strong certainty of going to sea. Recommended targets include: Tencent Holdings (0700.hk), BiliBili -sw (9626.hk), Xinxin company (2400.hk), G-Bits Network Technology(Xiamen)Co.Ltd(603444) .
Risk tips: industry policy supervision is becoming stricter, the number and timeliness of version numbers are less than expected, the competition in the game market outside China is intensifying, the impact of the epidemic, etc.
