China Game Approvals Hit New High; Tencent, NetEase, and CMGE Each Receive a New License

The National Press and Publication Administration, or NPPA, issued 73 new game licenses on Sept. 13, marking the highest number of monthly approvals since its resumption in April. We are encouraged by the fact that all the Chinese gaming companies under our coverage (Tencent, NetEase, and CMGE) received one new license this month. We keep our fair value estimates and earnings forecasts unchanged, as we were already expecting the approval of new licenses to return this year, but sequential increases in monthly approval numbers should help improve investor sentiment. Our top pick in the online gaming sector is NetEase, for its strong portfolio of new and existing games.