GF SEC2025A Stock Game Sector Outlook: Companies have rich reserves of AI empowerment expected to boost industry valuations

GF SEC released a research report stating that the attention on host and end games is expected to increase in 2024, and the market size is likely to expand. In 2025, various companies have abundant new product reserves, and the performance of new online games is highly anticipated, potentially driving the sector's performance turnaround. At the same time, AI continues to empower the sector, and the landing of new applications is expected to boost the sector's valuation. In addition, with the improvement of game company mergers and acquisitions and the release of new products, significant positive effects are expected for the companies. It is recommended to actively monitor the progress of mergers and acquisitions in the gaming market. GF SEC's main points are as follows: A-share companies are approaching a turning point in products, which may drive the sector's performance turnaround. Recently, the overall performance of new products in A-shares has been outstanding. In the SLG track, Century Huatong's "Endless Winter" has been ranking high since its launch in May. In the MMO track, Perfect World's "Zhuxian World" announced on its official Weibo that it had over 300,000 queues on the first day of launch. 37 Interactive Entertainment Network Technology Group's "Time Explosion" and G-bits Network Technology's "Wen Jian Chang Sheng" were officially launched on January 2, and both products ranked high on the free list on the first day, showing a significant increase in the impact of new games. Meanwhile, various companies have abundant reserves, ready to be released. According to company websites and Wind, 37 Interactive Entertainment Network Technology Group's heavyweight IP product "Douluo Dalu: Soul Hunting World", Kingnet Network's "Dragon Valley World" are expected to be launched in the first half of 2025. Beijing Ultrapower Software's "Code DL" and "Code LOA" are gradually progressing towards commercialization. A-share companies have shown outstanding performance in online products, with abundant reserves of new products, remaining competitive in the industry, and the product cycle expected to drive performance turnaround. Industry mergers and acquisitions enhance company value, focus on mergers and acquisitions progress. Looking back at the acquisition paths of Take Two and Century Huatong, mergers and acquisitions are an important way for gaming companies to grow. As a creative industry, acquisitions help companies attract excellent intellectual resources, enrich product lines, continuously produce outstanding works, and drive company growth. With the improvement of integration of acquired companies and the release of new products, significant positive effects are expected for the companies. The gaming industry has an excellent business model, with leading companies usually having ample cash. It is recommended to actively monitor the progress of mergers and acquisitions in the gaming market. AI continues to empower the sector, driving valuation uplift. AI has a variety of applications in gameplay and auxiliary functions. In categories such as reasoning and sandbox, AI has been preliminarily integrated into games. Companion products have a high market acceptance rate and are expected to become a breakthrough direction. Traditional game categories actively introduce AI technology to enhance playability. Overall, the ability to combine AI with gameplay in the gaming industry is continuously improving. In addition, AI-related development tools are continuously improving, which helps accelerate game development and testing of new gameplay, attracting new users, increasing payments, driving expansion of the gaming market, and increasing sector valuation. Investment advice: A-share companies in 2025 have abundant reserves, with performance flexibility, and AI empowerment is expected to boost industry valuation. Continued recommendations for Kingnet Network (002517.SZ) (solid fundamentals, multiple products ready to be released), Perfect World (002624.SZ) (excellent performance of "Zhuxian World" online, "Yihuan" shows potential, cost reduction driven by layoffs), Beijing Ultrapower Software (300002.SZ) (new SLG online, expected operational performance), 37 Interactive Entertainment Network Technology Group (002555.SZ) ("Douluo" IP new product expected to launch, recent new games show excellent performance), G-bits Network Technology (603444.SH), XD INC (02400), etc.; recommended to pay attention to Zhejiang Century Huatong Group (002602.SZ) ("Endless Winter" ranked high on the bestseller list), Shanghai Yaoji Technology (002605.SZ), Hangzhou Electronic Soul Network Technology (603258.SH), Shenzhen Bingchuan Network (300533.SZ), IDREAMSKY (01119), etc. Risk warning: Risks include increased regulation in the gaming industry, intensified competition, and risks of products not meeting expectations.