The Zhitong Finance App learned that on February 27, many Hong Kong game stocks rose, and individual stocks such as Bilibili W (09626), NetEase - S (09999), China Mobile Games (00302), and Zen Tour Technology (02660) rallied. On the same day, the State Press and Publication Administration released approval information for domestic online games in February 2024. A total of 111 games were approved, including 40 mobile games, 61 “mobile-casual puzzle” games, 5 client-side games, 4 “mobile, client” games, and 1 “Infinite Warmth” “mobile, client, game console (PS5)” game launched by Paper-Stacking Games. Great Wall Securities pointed out that judging from the timing and quantity of edition numbers, policy corrections continue to send positive signals. The bank believes that in the context of a marginal increase in the number of editions distributed, the game industry is booming. It is recommended to pay attention to subsequent testing of new products and marginal changes brought to the company by launch.
Notably, “Black Myths: Goku” is also on the list of approved editions this month. This game is an action role-playing game (ARPG) produced by Game Science. Because of the promotional video and game demo video released in 2020, it stunned the global game industry. It is regarded as “the pinnacle of domestic stand-alone 3A”, and is even hailed as “the hope of domestic games.” According to reports, “Black Myths: Goku” has previously been officially announced and will go on sale at the end of August this year.
At the same time, casual puzzle mobile games account for more than half of this batch of editions. Game industry analyst Zhang Shule said that a large number of casual puzzle mobile games have been reviewed, which may seem like a coincidence, but this is probably due to the huge success of “Egg Boy Party”, which inspired more manufacturers to attack casual games last year, causing this once tepid genre to have a big explosion of version applications. This and the fact that a large number of casual puzzle games received versions in January can confirm each other.
According to the news, on February 26, Gamma Data released the monthly report on China's game industry for January 2024. According to the data, in January 2024, the revenue of the Chinese game market fell 2.10% month-on-month and increased 1.22% year-on-year. Among them, the actual sales revenue of the Chinese mobile game market increased 0.39% year on year. Actual sales revenue in the Chinese client-side game market increased 1.95% month-on-month. Actual sales revenue for games developed independently in China in the domestic market fell 4.20% month-on-month. Actual sales revenue for games developed independently by China in overseas markets decreased by 3.24% month-on-month. The actual sales revenue of the Chinese e-sports game market increased 11.47% month-on-month.
Cinda Securities believes that the game industry's product cycle and prosperity are expected to continue to improve in 2024. All major companies have key product reserves in 2024. As new games are launched one after another, players' willingness to spend is expected to be further released, driving up the industry's ARPU (average revenue per user) value. In the medium term, mini-games are expected to contribute significantly to market growth, and are of great significance to second-tier companies. In the long run, AI technology is expected to enter a new stage of development, which is expected to help the industry speed up cost reduction and efficiency and reshape production methods in the game industry in the long term.
According to Wanlian Securities, the performance of the Chinese game market in 2023 is in line with expectations. As versions are normalized and the pace of new product launches resumes, many games are poised to attract attention. Overseas revenue from games developed by China remains at a high level. It is optimistic that the game boom will recover, which is expected to drive the market to achieve steady growth in 2024.
Related concept stocks:
Bilibili-W (09626): Jefferies maintains the company's “buy” rating. The company's total net turnover in 2023 is expected to be at the low end of the 22.5 billion to 23.5 billion yuan range, in line with expectations. The balance of payments target schedule has not changed, and the target price is HK$172. The bank estimates that Bilibili's revenue for the fourth quarter of 2023 will increase 3% year over year to 6.3 billion yuan. According to market segment, online game revenue is expected to increase by about 10% to 1.1 billion yuan quarterly. It is expected that VAS will increase 18% year over year, online advertising revenue will increase 25%, and gross margin can be improved.
NetEase - S (09999): BOC International expects NetEase's fourth quarter revenue to increase 12% year-on-year to 28.4 billion yuan, and the market forecast is 28.3 billion yuan. The adjusted net profit is estimated to be 7.9 billion yuan, in line with market expectations, with a year-on-year increase of 65%. Revenue from games and value-added services is expected to rise 17% year over year; game growth is driven by new mobile games; Youdao has the primary goal of turning losses into profit, and the impact of low-return hardware channel business adjustments is expected to end in the fourth quarter of 2023; it is expected that the improved gross margin of the music business and the narrowing share of live streaming will drive the adjusted operating profit to maintain quarterly expansion.
China Mobile Game (00302): “Doulo Continent: Shrek Academy”, developed by Shanghai Spirit Blade and distributed jointly with China Mobile Games, premiered on all platforms on January 31. On the day of launch, it directly topped the iOS Free List and TapTap Hot List. According to reports, this game is a Doulo Open World Team Battle MMO mobile game adapted with a dual license to read the “Doulo Continent” novel and the Tencent video “Doulo Continent” animation. Previously, the number of omni-channel reservations exceeded 6 million.
Zen Tour Technology (02660): The company is a leading domestic chess and card mobile game developer and operator. The main flagship games include “Sichuan Mahjong at Your Fingertips” and “Tiantian Dou Dou Live-Action Edition”. According to the interim results of Zen Travel Technology, the company's revenue for the first half of the year was about RMB 1,018 million (same unit), up 64.2% year on year; adjusted net profit was about RMB 413 million, up 73.3% year on year. Among them, board game revenue was about 923 million yuan, an increase of 104.3% over the previous year.