BOCOM International released a research report stating that Tencent Holdings (00700/Buy) maintains stable evergreen games, with key new game launches offsetting declining revenues from older titles. With rich upcoming game reserves, the firm maintains its full-year gaming revenue growth expectation (+16%, compared to VA's 19% forecast). The company shows strong certainty in steady earnings growth, with AI-enhanced efficiency optimization promoting profit release, and the firm is optimistic about long-term valuation improvement potential. NetEase (09999/NTES.US/Buy) mobile game revenues maintain positive year-over-year growth, with "Destiny: Rising" expected to accelerate overseas revenue growth. The firm is monitoring the domestic server version and scheduling of other local market new mobile games, while remaining optimistic about PC games continuing strong momentum with limited downside valuation risk.

For Tencent, key new game launches mitigate the impact of high base comparisons in domestic mobile games. Domestic revenues decreased by RMB 2.2 billion/10% year-over-year, mainly due to high base comparison of "Dungeon & Fighter Mobile," partially offset by incremental contributions from new games. "Delta Force" saw month-over-month revenue decline in August but remained above RMB 700 million. Overseas revenues increased by RMB 470 million/9% year-over-year, mainly due to incremental contributions from games like "Clash Royale" offsetting the high base impact of "Brawl Stars." "Clash Royale" generated over RMB 700 million in August revenues, up 360%/20% year-over-year/month-over-month, continuing to benefit from top KOL livestreams, matchmaking mechanism optimization, gameplay innovation, and popular IP collaborations. Starting September 2, it topped the US iOS game revenue charts for four consecutive days and is expected to maintain strong revenue performance.

For NetEase, "Eggy Party" maintains outstanding performance while overseas new games contribute incremental revenue growth. Domestic revenues increased by RMB 200 million/3% year-over-year, with incremental contributions from new games and "Eggy Party" offsetting high base impacts from games like "Justice." "Where Winds Meet" maintains monthly revenues of RMB 200-300 million, while "Eggy Party" sustained over RMB 1 billion in monthly revenues in August, driven by anniversary updates and summer operations. Overseas revenues increased by RMB 50 million/8% year-over-year, still benefiting from incremental contributions from new games.

New Game Highlights: 1) Tencent's "Valorant Mobile" entered open beta on August 19, reaching 4th place on domestic iOS game revenue charts at its peak. The firm estimates first-month revenues of RMB 500-700 million, basically meeting prior expectations. 2) NetEase's shooting mobile game "Destiny: Rising" launched internationally on August 28, reaching 21st place on US iOS game revenue charts at its peak, with approximately RMB 40 million in combined revenues for the first 10 days post-launch. The firm estimates first-month revenues may exceed RMB 100 million.