Tencent's floating profit exceeds 9.5 billion! The most expensive ST company in A-shares, with a major earnings breakout

Against the backdrop of the AI boom, the gaming industry has become one of the biggest beneficiaries.

As a frontier for AI implementation, the gaming industry has seen the most significant valuation increases and the fastest earnings growth. Leading Hong Kong-listed gaming companies like Tencent and NetEase have regained their peak positions following a cycle, with their unparalleled profitability being the key to weathering market fluctuations.

Unlike their Hong Kong-listed counterparts, A-share gaming companies have always had some inherent weaknesses. Since most A-share gaming firms lack control over traffic channels, "buying traffic" has become their largest expense.

Under these circumstances, the gaming sector has become a hotspot for financial fraud.

However, compared to other sectors, leading gaming companies can easily shake off the impact of financial fraud, as strong performance often overshadows such scandals.

In November last year, Century Huatong, the largest A-share gaming company, was penalized by the CSRC for financial fraud. The penalty notice revealed that Century Huatong had falsified its annual reports from 2018 to 2022. Based on the facts, nature, and severity of the violations, the CSRC imposed a total fine of RMB 140 million on Century Huatong, its then-chairman Wang Miaotong, and other related individuals.

As a result, Century Huatong was placed under special risk warning, and its stock abbreviation was changed to "ST Huatong."

After a brief downturn, Century Huatong's stock price quickly stabilized. Driven by the AI rally, the company fully recovered from its "quagmire" by 2025. Statistics show that Century Huatong's stock surged over 307% year-to-date, with its market cap exceeding RMB 155 billion—a staggering increase of over RMB 117 billion—making it the highest-valued gaming company on the A-share market, RMB 68 billion ahead of its closest competitor, Giant Network.

The massive stock price surge has also brought windfall gains to some investors, such as the well-known retail investor Wei Wei. In late July, Wei spent RMB 279 million to acquire 22.6173 million shares of Century Huatong at an average price of RMB 12.35. At current prices, Wei has already realized paper profits of over RMB 194 million.

Naturally, the biggest beneficiaries of the stock surge are Century Huatong's core shareholders. According to financial reports, as a company with no controlling shareholder, Chairman Wang Ji directly holds 764 million shares, accounting for 10.25% of the total. Tencent, the second-largest shareholder, holds 745 million shares (10.00%), valued at over RMB 15 billion based on the latest market cap.

The "Miracle" of M&A

Mergers and acquisitions are common in the gaming sector.

Century Huatong itself wasn’t originally a gaming company. Back in 2005, founder Wang Miaotong borrowed RMB 50,000 to establish Shangyu Huatong Auto Parts, supplying components to major automakers like GM and Volkswagen.

The company went public on the Shenzhen SME Board in 2011 but soon faced growth stagnation. To break the deadlock, Wang decisively pivoted into gaming. Even today, about 4.4% of Century Huatong's revenue still comes from auto parts.

Starting in 2014, Century Huatong began acquiring gaming firms like Sevencool Network, Tianyou Software, and DianDian Interactive.

In 2018, it pulled off a "snake swallowing an elephant" move by acquiring Shanda Games for RMB 29.8 billion, instantly becoming a top A-share gaming company.

However, the massive goodwill from these acquisitions also became its biggest liability. From 2018 to 2020, goodwill accounted for about 50% of its total assets—a common industry issue that later fueled its financial fraud.

Fortunately, Century Huatong's fraud involved underreporting rather than inflating revenue, so it didn’t derail its subsequent stock surge. Market confidence in the company is primarily backed by its performance.

After acquiring Shanda Games, Century Huatong gained key IPs like The Legend of Mir, Dragon Nest, and MapleStory. But its real turnaround came from DianDian Interactive, acquired in 2018.

In 2023, DianDian Interactive's mobile game Whiteout Survival went viral overseas, driving Century Huatong's 2024 revenue to RMB 22.62 billion (up 70.27% YoY) and net profit to RMB 1.213 billion (up 131.51% YoY).

In 2025, Century Huatong's growth continued. H1 revenue hit RMB 17.207 billion (up 85.50% YoY), while net profit reached RMB 2.656 billion (up 129.33% YoY), a record high.

The stock soared over 260% year-to-date, briefly pushing its market cap past RMB 150 billion—making it the most expensive "ST" stock on the A-share market.

Analysts note that nine consecutive quarters of growth, from "steady strides" to "high-speed breakthroughs," validate its "globalization + core IP" dual-engine strategy and the synergies among Century Games, DianDian Interactive, and Shengqu Games.

Massive "Rewards"

Top internet companies are never stingy with employee rewards.

Meta, Google, Tencent, and Alibaba are no exception—and neither is Century Huatong. On September 11, it announced the unlocking of its 2022 employee stock ownership plan (ESOP).

The second lock-up period ended on September 14, with 27 participants eligible to unlock 32.207 million shares (0.43% of total shares).

At current prices, the average payout per person is about RMB 25 million.

The rewards reflect explosive growth. Unlocking required 2024 revenue or adjusted net profit to grow by at least 20% or 900%, respectively, from 2021 levels.

Data from Securities Times' DataBaobei shows the gaming market generated RMB 197.084 billion in revenue in the first seven months of this year (up 12.58% YoY). From 2022 to 2024, revenue grew from RMB 265.884 billion to RMB 325.783 billion, highlighting the sector's resilience.

Overseas gaming revenue for 20 A-share firms totaled RMB 21.823 billion in H1 2025 (up 30.43% YoY). Century Huatong alone contributed RMB 8.958 billion (52.06% of its revenue), with Century Games' titles like Whiteout Survival and Kingshot now available in the U.S., Europe, the Middle East, and Asia.

Notably, founder Wang Miaotong didn’t last. In 2021, Huatong Holdings and Wang sold a 5% stake to CEO Wang Ji, making him the largest shareholder. Tencent acquired another 5% in 2021 for RMB 2.795 billion, bringing its total stake to 10%—now worth over RMB 9.5 billion in paper gains.

Kan Jian Finance believes Century Huatong's overseas success in 2023 will fuel further growth. Guohai Securities notes its H1 2025 revenue, profit, and cash flow far outpace peers, with Whiteout Survival and Kingshot helping it rank second in China's top 80 mobile game publishers by revenue.

Shengqu Games remains its "ballast," with high user engagement and steady income from polished titles. Overall, Century Huatong could hit RMB 30 billion in revenue and RMB 5 billion in net profit for 2025, with a potential market cap of RMB 200 billion. Its new game, BenBen Kingdom, launched on September 8, could further boost performance if successful.$Tencent Music(TME.US)