Societe Generale Securities: Focus on the distribution of games overseas, applet games and AI applications around performance realization and content reserve layout

The Zhitong Finance App learned that Societe Generale Securities released a research report stating that it focuses on game marketing, applet games, and AI applications, and focuses on performance delivery and content reserve layout. In the first half of 2026, gaming, advertising and marketing revenue and net profit to mother increased year-on-year, and the sector's internal profit performance was divided. It is recommended to focus on companies with product development, distribution, operation and commercialization capabilities, and revolve around the following three main lines: 1) The game sector. Overseas revenue from self-developed games in the first half of 2026 was US$12.372 billion, up 30.22% year on year; applet mobile game revenue was 31,657 billion yuan, up 36.01% year on year. 2) Content and IP. High-quality content reserves and extensive development space for IP movies, games, skits, and derivatives. 3) AI applications. Businesses such as AI marketing and skits are growing rapidly.

Societe Generale Securities's main views are as follows:

Performance review: In the first half of 2026, the revenue of the media sector grew steadily, and games led to the restoration of profits returned to mother

In the first half of 2026, the media sector's revenue was 26.515 billion yuan, up 1.44% year on year; net profit to mother was 24.071 billion yuan, up 10.21% year on year; net profit after deducting non-return to mother was 17.258 billion yuan, down 7.31% year on year. 2026Q2's revenue was $13.117 billion, down 0.03% year on year; net profit attributable to mother and net profit from non-return to mother was $131.20/9.135 billion respectively, up 22.18%/down 0.46% year on year. The performance of the sub-sector is divided, and gaming and advertising have achieved both revenue and profit growth. In the first half of 2026, the game sector's revenue and net profit to mother increased by 20.03% and 65.68% respectively. The profit growth rate was significantly higher than the revenue growth rate; advertising revenue and net profit to mother increased by 7.93% and 23.48% respectively. Revenue from the publishing sector and net profit to mother decreased by 10.82% and 18.43%, respectively; digital media revenue increased by 5.46%, and net profit to mother fell by 39.23%, and the increase in revenue had not been translated simultaneously into profit growth; movie and television line revenue fell by 30.84%, and net profit to mother changed from profit to loss; TV broadcast revenue fell 6.80%, and after deducting non-profit, it was still a loss. 2026Q2, game revenue and net profit to mother increased by 19.72% and 74.34% respectively, further accelerating profit growth; advertising and marketing revenue increased by 0.15%, and net profit to mother fell by 3.31%, putting pressure on overall operating performance in the second quarter compared to the first half of the year.

Market review: The index and valuation declined from the end of the year, and fund allocations were in a low state

By the close of trading on September 4, 2026, the Shenwan Media Index was 706.57 points, down 13.80% from the end of 2025; PE-TTM was 35.34 times, down 8.08 times from the end of 2025. According to the fund's heavy stock statistics, after excluding Hong Kong stocks, the 2026Q2 media sector's heavy stock market value accounted for about 0.45% of the total market value of A-shares, down about 0.53 percentage points from 0.98% in 2026Q1, and down about 0.96 percentage points from 1.41% in 2025Q2. In the same period, the market capitalization of the media sector accounted for about 1.09% of the total market value of A-shares, and the fund allocation was lower by about 0.63 percentage points. The sector's valuation and allocation levels have declined somewhat. Follow-up attention will be paid to the implementation of performance and changes in capital allocation.

Risk warning: Policy and regulatory changes, game and film skit product performance falls short of expectations, macroeconomic fluctuations.