The latest research report from GF Securities indicates that the gaming sector is currently at a valuation trough, with long-term growth potential in industry revenue. Reviewing the three cycles of bottoming and rebound in the gaming sector since 2018, the driving forces behind the rebounds primarily come from two aspects: firstly, technological advancements have driven the industry's external expansion, thereby enhancing sector valuation; secondly, the realization of performance directly affects the sustainability and strength of the rebound.
Recently, the successful release of the phenomenal product "Black Myth: Wukong" is expected to boost players' confidence in domestically produced AAA games and inspire more development teams to invest in the development of new AAA games, thereby opening up a new sub-market in the gaming industry and promoting the global dissemination of gaming culture.
A further report by Ping An Securities points out that the market size of the gaming industry is steadily growing. Among them, the actual sales of the mobile gaming market remain stable, with growth rates returning to positive territory. Although the actual sales of the web-based gaming market continue to decline, the rate of decline has narrowed.
However, despite the recovery in the growth rate of the domestic self-developed gaming market, the actual revenue from overseas markets is still declining year-on-year, indicating increased pressure on gaming exports.
Ping An Securities believes that as policies encourage entertainment consumption, the gaming industry is likely to usher in a new product cycle. Meanwhile, with the help of new technologies such as AIGC, gaming companies are expected to reduce costs and increase efficiency, particularly with the operational performance of leading companies in the industry being highly anticipated.
The main companies involved in the gaming industry chain include Tencent Holdings (00700), NetEase-S (09999), Bilibili-W (09626), XD Inc. (02400), China Literature (00136), Pop Mart (09992), and CMGE Technology Group (01119), among others.
