Jiangyin International: In August, Tencent Holdings' mobile game "Fearless Covenant" met expectations, while NetEase-S's new overseas game will release incremental growth

According to Zhitong Finance APP, Jiangyin International released a research report stating that Tencent Holdings (00700/Buy) has a stable performance in its evergreen games, with the launch of key new games compensating for the decline in revenue from older games. The subsequent new game reserves are abundant, and the bank maintains its annual game revenue growth expectation (+16%, compared to VA's expectation of 19%). The performance shows strong certainty in steady growth, and efficiency optimization driven by AI promotes profit release, indicating potential for long-term valuation enhancement. NetEase (09999/NTES.US/Buy) maintains positive year-on-year growth in mobile game revenue, with "Destiny: Stars" expected to drive accelerated growth in overseas revenue. Attention is focused on the domestic server version and the schedule of other new mobile games in local markets, with a positive outlook on the continuation of strong growth in PC games and limited downside space in valuation.

Regarding Tencent, the launch of key new games alleviates the impact of high revenue baselines in domestic mobile games. Domestic revenue decreased by 2.2 billion yuan/10% year-on-year, mainly due to the high baseline of "MDnF," partially offset by the incremental revenue from new games. The revenue from "Delta Action" saw a month-on-month decline in August but still exceeded 700 million yuan. Overseas revenue increased by 470 million yuan/9% year-on-year, mainly due to the incremental revenue from games like "Clash Royale" offsetting the high baseline impact of "Brawl Stars." "Clash Royale" generated over 700 million yuan in August, with a year-on-year/month-on-month increase of 360%/20%, continuously benefiting from top KOL live streaming, optimized matchmaking mechanisms, gameplay innovations, and popular IP collaborations. From September 2, it topped the U.S. iOS game sales chart for four consecutive days, likely maintaining strong revenue performance.

For NetEase, "Party of Eggs" maintains an impressive performance, with new overseas games releasing incremental revenue. Domestic revenue increased by 200 million yuan/3% year-on-year, with contributions from new games and "Party of Eggs" offsetting the high baseline impact of "Nishuihan" and others. "Yanyun Sixteen Sounds" maintains a monthly revenue level of 200-300 million yuan, while "Party of Eggs," driven by the anniversary new version and summer operations, maintained a monthly revenue exceeding 1 billion yuan in August. Overseas revenue increased by 50 million yuan/8% year-on-year, still benefiting from the incremental revenue contribution of new games.

New game focus: 1) Tencent's "Valorant: Source Energy Action" entered public testing on August 19, reaching a peak of 4th place on the domestic iOS game sales chart, with the bank estimating first-month revenue of 500-700 million yuan, basically in line with its previous expectations. 2) NetEase's shooting mobile game "Destiny: Stars" launched its international version on August 28, peaking at 21st place on the U.S. iOS game sales chart, with a total revenue of about 40 million yuan in the first 10 days before launch, and the bank estimates first-month revenue may exceed 100 million yuan