After obtaining the edition number for five consecutive months, TENCENT and CLOUD MUSIC still have room for upward valuation!

Is the normalization of game approvals here to stay? Big companies are still present! Are game stocks worth buying again?

Last night, the official website of the National Press and Publication Administration announced the list of approved domestic online games for May 2023, with a total of 86 games approved, including new works from listed companies such as TENCENT's "Ace Warrior 2", CLOUD MUSIC's "Seven Days World", and Bilibili's "Light Gap Language".

Source: Weibo

After the news, although Hong Kong game stocks rose and fell this morning—Bilibili rose more than 2% at one point, TENCENT rose more than 1% at one point, and CLOUD MUSIC fell more than 2% at one point—analysts still see investment value in the game sector.

Lu Yi, an analyst at Guojin Securities, first noticed that "from January to May this year, the number of domestic game approvals was 96/87/86/86/86, which means that there have been at least 85 games approved for five consecutive months, and the number of approvals and the time interval have both returned to the level before August 2021. Moreover, TENCENT or CLOUD MUSIC games are approved every month."

Therefore, the analyst believes that:

1. From multiple perspectives, game approvals have become normalized, and the policy uncertainty of new game launches has been reduced. In 2023, the supply side of the game sector will warm up and the certainty of industry growth will increase. It is expected that the game sector will release its performance in 2023, and due to the concentration of game products on the second half of the year, the performance release is expected to continue in 2024;

2. Since the launch of ChatGPT in December 2022, AI technology and applications have continued to iterate rapidly, and the logic of reducing costs and increasing efficiency through AI in the game sector is clear. In addition, the combination with NPC and exploration of new gameplay are also being promoted, and there is room for industry valuation to rise;

3. In terms of individual stocks, it is recommended to pay attention to TENCENT, which is expected to have a comprehensive improvement in performance in 2023, and CLOUD MUSIC, which has strong research and development capabilities, rich reserves, and actively embraces AI.