Guosen: Double bottoms in valuation and crowding, seize the opportunity to layout the game sector.

Guosen released a research report stating that after adequate adjustments, the valuation and trading risks of the gaming sector have been largely released, with no substantial changes in the industry's growth logic. Against the backdrop of improving risk appetite, the gaming sector is expected to show good upward elasticity and strong downside safety margin. Guosen's main points are as follows: Event Affected by factors such as the macro risk preference suppression, individual stocks and indices of the gaming sector have adjusted significantly since the beginning of the year, with overall performance lagging behind the market. Currently, the valuations of most core gaming leaders have fallen to around 15 times of 2026, at historical bottom levels, and the sector's trading congestion has also decreased to a low level. Stable and Positive Gaming Policy Environment 1) The dynamic PE valuations, historical percentiles and absolute levels of trading congestion are all at bottom levels, with listed companies' core product performance being solid and fundamentals being stable, providing a safety margin downward and worthwhile upward elasticity; 2) The policy environment is stable and positive: game licenses are being steadily issued, the "Fifteenth Five-Year Plan" and related regulatory policies are continuously releasing positive signals of support for the gaming industry; Apple's adjustment in app store revenue sharing is expected to increase game developer profits; at the same time, AI applications in gameplay innovation, R&D efficiency improvement, and operational optimization are driving industry transformation, with potential to further open up long-term performance and valuation growth space in the gaming industry. Investment Recommendation Recommend industry leaders whose product cycles, performance realization, and valuation levels are aligned, with a focus on Giant Network Group, Zhejiang Century Huatong Group, Kingnet Network, 37 Interactive Entertainment Network Technology Group, and suggest paying attention to Perfect World (performance of "Yihuan" online) and other targets. Risk Warning: Continued pressure on macro risk preferences, regulatory policies tightening beyond expectations, lower-than-expected new product performance, and slower-than-expected progress in AI empowerment implementation, among others.