Hong Kong Stock Concept Tracking | Tencent's core gaming business shows signs of recovery, profitable overseas expansion (with concept stocks)

Tencent's financial report shows that its core gaming business is showing signs of recovery. Domestic market gaming revenue has reversed the decline of the previous two quarters, growing by 9% to 34.6 billion RMB, while international market gaming revenue reached 13.9 billion RMB, achieving a 9% increase.

Tencent attributed the growth in the domestic market to the revenue growth of "Honor of Kings" and the successful release of "Dungeon & Fighter: Origin". Meanwhile, flagship games such as "Arena of Valor" and "Peacekeeper Elite" also saw a year-on-year increase in revenue.

During the performance meeting, Tencent's management mentioned that the gaming business performed strongly in the second quarter, but the challenging business environment faced by the gaming industry in recent years cannot be ignored. Firstly, it is becoming increasingly difficult to launch very successful new games, as they must have high quality or differentiated gameplay to meet player expectations. Secondly, it is important to ensure the sustainable development of existing intellectual property rights and continuously provide innovation to users.

The management emphasized that the gaming industry still has great potential but is cyclical, and may experience downturns when there is a lack of innovation or new supply.

Huajin Securities released a research report stating that the continuous preheating of heavyweight new games, the entry of traditional mobile game community platforms into the PC market, and the synergistic efforts of multiple platforms will help boost the industry and empower the development of the gaming industry. Steam's pre-sale data is impressive, and the performance forecast for "Black Myth: Wukong" has started to generate heat, which is expected to empower related upstream and downstream technologies and promotion, helping to improve the reputation of summer games. TapTap's entry into the PC market, along with well-known game IPs, is expanding the ecosystem. TapTap platform, which previously focused on mobile games, recently announced the launch of the 4070 cloud computer that can be used on both mobile and PC platforms to better expand its PC ecosystem layout, providing more convenience to players and empowering the development of the gaming industry.

Guolian Securities released a research report stating that starting from May 2024, the domestic gaming market will enter a product cycle, with the number and scale of top new games higher than the same period in 2023. With the release of supply-side factors in the middle of the year and the rapid growth of small game channels, the prosperity of the gaming industry is expected to continue to rise in the second half of the year.

Companies in the gaming industry chain include:

Tencent Holdings Limited (00700), NetEase Inc.-S (09999), Bilibili Inc.-W (09626), XD Inc. (02400), China Literature Limited (00136), Pop Mart International Group Limited (09992), CMGE Technology Group Limited (01119), etc