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<Research>Jefferies Expects App Store Commission Reduction to Have Low-Single-Digit Positive Impact on CN Entertainment Firms' Earnings
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Apple (AAPL.US) reduced the commission rate for the China App Store, including lowering the commission rate for in-app purchases and paid app transactions from 30% to 25%, Jefferies issued a research report saying. The broker believed that this measure is a positive factor for the overall entertainment sector, and expected a low single-digit impact on major companies' earnings this year. For example, TENCENT (00700.HK) is expected by the market to see its smartphone game revenue grow by 11.7% YoY to RMB256 billion, accounting for 31% of total revenue. The broker estimated that 70% of this comes from the domestic market, involving about RMB180 billion. Assuming 30% of revenue comes from iOS, with the commission rate reduced from 30% to 25%, the positive impact on earnings in 2026 is expected to be low single-digit. Regarding NTES-S (09999.HK), the market predicted 2026 game revenue to hike by approx. 8.5% YoY to RMB97 billion, accounting for 80% of total revenue. The broker estimated that 90% comes from the domestic market, with 40% of game revenue from iOS. Considering the new measure takes effect in mid-March, the commission rate reduction is forecasted to have less than a 3% impact on earnings this year. As for KUAISHOU-W (01024.HK), the market projected live streaming revenue to be flat at RMB39.4 billion, accounting for 25% of total revenue. Assuming 25% comes from iOS, the commission rate reduction is expected to have a positive impact of less than 2% on earnings this year. Regarding online music platforms, the broker anticipated the adjustment to have a positive impact on the 2026 earnings of TME-SW (01698.HK)/ NETEASE MUSIC (09899.HK) by approx. 1%/ 2% respectively. AASTOCKS Financial News Website: www.aastocks.com |
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