China Online Entertainment Monthly "Q2/June: resilient game growth at..."

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China Online Entertainment Monthly "Q2/June: resilient game growth at..."

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China Online Entertainment Monthly Equities

ChinaQ2/June: resilient game growth at Tencent/

NetEase; Kling upgrade a catalyst for Kuaishou Internet Services

Kenneth Fong

Analyst

kenneth-kc.fong@ubs.com

Games: Tencent Q2 mobile grossing +10% YoY; NetEase trend improved in June +852-3712 3890

According to UBS Evidence Lab (> Access Dataset), we estimate China's mobile game Jenny Yuan

revenue +6% YoY in Q226, consistent with Q1 growth. 1) We estimate Tencent's Analyst

mobile grossing +10% YoY in Q2 (June: +5%; vs Q1's +12%), underpinned by the S1460525030004

resilience in evergreen titles, YoY growth in Delta Force and incremental contributions jenny-za.yuan@ubs.com

from Valorant Mobile and Roco Kingdom: World, partially offset by the decline in DnF +86-21-3866 8912

Mobile. We expect Tencent’s Q2 domestic game revenue growth to pick up to 10% YoY, Sardonna Fong

vs. Q1's 6%. 2) NetEase Q2 mobile grossing is estimated +3% YoY, with June growth Analyst

accelerating to 8% YoY, driven by resilient trend in FWJ, a rebound in eFootball during sardonna.fong@ubs.com

the World Cup, and YoY improvement in Eggy Party. This was partially offset by declines +852-3712 3042

in Justice Mobile, Identity V and Where Winds Meet. Justice Mobile began to show signs Wei Xiong

of recovery following its June version upgrade. We expect NetEase’s Q2 game revenue Analyst

to grow 5% YoY. 3) Bilibili's San Mou continued to face YoY pressure in Q2 due to a S1460518100005

high base. Its anniversary event in June drove a meaningful sequential recovery in wei.xiong@ubs.com

grossing. Given grossing deferrals, we expect the improvement to be more reflected in +86-21-3866 8883