Guangfa Securities 2025 A-share Game Sector Outlook: Companies Have Rich Reserves, AI Empowerment Expected to Boost Industry Valuation

According to the Zhitong Finance APP, GF Securities has released a research report stating that the attention on console and PC games is expected to increase in 2024, with the market scale likely to expand. In 2025, companies will have a rich reserve of new products, and their launch performances are highly anticipated, which is expected to drive a reversal in the sector's performance. At the same time, AI continues to empower the sector, and the implementation of new applications is expected to enhance the sector's valuation. Furthermore, as the mergers and acquisitions of gaming companies improve and new products are released, there is potential for significant positive effects for the companies. It is recommended to actively monitor the progress of mergers and acquisitions in the gaming market.

GF Securities' main viewpoints are as follows:

A-share companies are 迎来产品拐点， likely to drive a reversal in the sector's performance

Recently, the overall performance of new products in the A-share market has been excellent. In the SLG track, data from Qimai shows that Century Huatong's "Endless Winter" has consistently ranked high since its launch in May; new games in the MMO track have broken through, with Perfect World's "Zhu Xian World" announcing on its official WeChat that it had over 300,000 users waiting on its launch day. 37 Interactive Entertainment's "Time Explosion" and G-bits' "Aito" officially launched on January 2, with Qimai data showing both products ranking high on the free list on their first day, significantly enhancing the impact of new games.

At the same time, companies have rich reserves and are poised for action. According to various company websites and Wind, 37 Interactive Entertainment's heavyweight IP product "Douluo Dalu: Soul Hunter World" and Kaiying Network's "Dragon Valley World" are expected to launch in the first half of 2025, while Shenzhou Taiyue's "Code DL" and "Code LOA" are gradually advancing towards commercialization. A-share companies are performing outstandingly with their launched products and have rich reserves of new products, remaining competitive in the industry, with product cycles likely to drive a reversal in performance.

Industry mergers and acquisitions enhance company value, focus on merger and acquisition progress

Looking back at the merger and acquisition paths of Take Two and Century Huatong, mergers and acquisitions are an important way for gaming companies to grow. As a creative industry, mergers and acquisitions are beneficial for companies to absorb excellent intellectual resources, enrich product lines, continuously produce outstanding works, and drive company growth.

With the improvement of the integration of acquired companies and the release of new products, there is potential for significant positive effects for the companies. The gaming industry's business model is excellent, and leading companies usually have abundant cash flow, so it is recommended to actively monitor the progress of mergers and acquisitions in the gaming market.

AI continues to empower the sector, driving valuation increases

AI has diverse applications in gameplay and auxiliary functions. In categories like reasoning and sandbox, AI has already begun to integrate into games, and companion products have a high market acceptance, likely becoming a breakthrough direction for applications. Traditional game categories are actively introducing AI technology to enhance playability.

Overall, the ability to combine AI with gameplay is continuously improving. In addition, AI-related development tools are continuously being improved, which helps accelerate game development and test new gameplay, thereby attracting new users, increasing payments, driving the expansion of the gaming market scale, and enhancing the sector's valuation.

Investment advice: In 2025, A-share companies have rich reserves and performance elasticity, and AI empowerment is expected to boost industry valuation

Continuously recommend Kaiying Network (002517.SZ) ("Legend" has a stable base, multiple products are poised for action), Perfect World (002624.SZ) ("Zhu Xian World" has performed excellently upon launch, "Yihuan" has potential, layoffs drive cost reductions), Shenzhou Taiyue (300002.SZ) (new SLG launched, expecting operational performance), 37 Interactive Entertainment (002555.SZ) ("Douluo" IP new products are expected to launch, recent new games have performed excellently), G-bits (603444.SH), Xindong Company (02400) and others; it is recommended to pay attention to ST Huatong (002602.SZ) (ranked high on the bestseller list of "Endless Winter"), YAOJI TECHNOLOGY (002605.SZ), Dianhun Network (603258.SH), Glacier Network (300533.SZ), and Chuangmeng Tiandi (01119) among others.

Risk Warning: Risks of increased regulation in the gaming industry, risks of intensified industry competition, and risks of product launches not meeting expectations