Zhongtai Securities: The game industry had high performance in 26Q2, and the overall EPS of leading companies was good at cashing out

The Zhitong Finance App learned that Zhongtai Securities released a research report saying that the game industry's 26Q2 revenue and gross profit reached another record high, and net profit to mother was the second-highest in history but declined slightly from month to month; the degree of concentration of sector profits at the head level deepened significantly, and losses at the end increased. Since overseas research and development fell from +40.5% to +18.8%, the total domestic scale was +6.9% compared to the same period in July, the lowest since 2026. The excess was due to overseas travel and concentration. Currently, the gaming sector is at the bottom of the valuation. After the interim report revealed, the overall EPS payments of leading companies are relatively good, which is expected to start a return to the valuation market due to a wave of capital return.

The main views of Zhongtai Securities are as follows:

Key points of the 2Q26 quarterly report

Revenue and gross profit reached another record high, and net profit to mother was the second-highest in history but fell slightly from month to month; the degree of concentration of sector profits at the head level deepened significantly, and losses at the end widened; valuation fell back to 3% since 2022, and the divergence between EPS and PE further increased. (Note: 14 A-share game companies were selected)

The concentration of profits increased significantly, but the concentration of revenue remained flat

Net profit CR5 for 2Q26 reached 99.2% (90.5% for 1Q26, +8.7pct); while revenue CR5 was 79.6%, a slight decrease of 1.3 pct from 80.9% of 1Q26 of the same caliber — the main reason for the jump in profit concentration was the expansion of tail losses. 5 of the 14 companies in the sample lost money in a single quarter. The companies that achieved a month-on-month increase in revenue and net profit to mother were Century Huatong, Gibbitt, and Fuchun Co., Ltd.

Industry: Growth engines are slowing down

Client-side games fell year-on-year from +56.7% in February to +3.4% in July, from +40.5% to +18.8% from overseas development, and the total domestic scale of +6.9% year-on-year in July was the lowest since 2026. However, the sample revenue of the 14 A-share companies was +21.6%, outperforming the industry by 10.7pct — showing that the excess was due to overseas travel and concentration rather than industry sentiment.

EPS and PE continue to diverge

The game sector has continued to pull back since the beginning of 2026: as of September 4, 2026, it had a cumulative decline of 13.93% in the past year, and the Shanghai and Shenzhen 300 rose 4.19% during the same period, clearly losing; the year-to-date pullback occurred while the sector's net profit to its mother reached a record high. It was a unilateral digestion of valuations rather than falsification of profitability.

Valuation aspects

As of September 4, 2026, the sector's PE-TTM was 19.98x (excluding current loss-making company caliber), which is at the 18.08% level over the past 5 years, with a median of 23.9x. Compared to the critical point: The high point in 2023 was 45.45x, and the current valuation is close to the bottom area since 2022.

Short-term catalysis

OpenAI released GPT-6 Astra on September 3, 2026. It generates 3D worlds and game assets from prompts, and can directly operate engines such as Blender/Unreal using a computer.

Risk warning: risk of delayed product launch; risk of product launch performance falling short of expectations; risk of industry policy and regulatory risk; risk related to forecasting assumptions and data statistics; risk of untimely update of research report usage information