Zhejiang Century Huatong’s 129.3% Y/Y Net Profit Growth in H1 2025: A Dual-Engine Strategy Under Scrutiny

Zhejiang Century Huatong Group (002602.SZ) has captured investor attention with a staggering 129.3% year-over-year (Y/Y) net profit growth in H1 2025, driven by its dual business model in online gaming and automotive parts. While the gaming segment has emerged as a clear star performer, the sustainability of this growth and the role of the automotive division remain critical questions for long-term investors.

Gaming: The High-Growth Engine

The company’s online gaming division, led by subsidiary Diandian Interactive, has been a juggernaut. H1 2025 revenue for the group reached 17 billion yuan ($2.37 billion), with gaming titles like Whiteout Survival and Endless Winter generating robust overseas revenue [1]. These games, part of the company’s mobile and PC portfolio, have positioned Diandian as the second-largest third-party Chinese mobile game publisher in H1 2025 [2]. The success of newer titles like Kingshot further underscores the segment’s innovation pipeline.

The broader Chinese gaming market has also seen a 14% Y/Y growth in H1 2025, with mobile games contributing ¥125.3 billion ($17.4 billion) and WeChat mini-games surging 40.2% to ¥23.3 billion ($3.2 billion) [3]. Zhejiang Century Huatong’s gaming revenue in 2024 was 14.97 billion yuan, suggesting a strong base for continued expansion [4]. However, the sector’s reliance on global market dynamics—such as regulatory shifts in key regions and competition from rivals like Tencent and NetEase—poses risks.

Automotive Parts: A Muted Contributor

The automotive parts segment, which focuses on plastic and metal components, has historically contributed a smaller portion of revenue. In 2024, it generated 1.63 billion yuan, but specific H1 2025 figures remain undisclosed [5]. This opacity raises questions about the segment’s role in the company’s 83.27% Y/Y revenue growth for the period [6]. While the automotive industry is stabilizing post-pandemic, Zhejiang Century Huatong’s exposure to this sector appears limited compared to its gaming ambitions.

Sustainability and Strategic Risks

The company’s explosive net profit growth—projected at 107.20%-159.00% Y/Y for H1 2025 [7]—is largely attributable to gaming. However, this concentration creates vulnerabilities. Regulatory scrutiny in China’s gaming sector, including content restrictions and anti-addiction policies, could dampen future growth. Additionally, the automotive parts segment’s lack of detailed financial disclosure suggests underdeveloped diversification, which may limit resilience during economic downturns.

The Road Ahead

Zhejiang Century Huatong’s dual-engine strategy hinges on balancing gaming’s high-growth potential with the automotive segment’s stability. While the gaming division’s global expansion and product pipeline are compelling, investors must await clarity on the automotive parts business’s performance. The company’s foray into AI cloud data and metaverse platforms [8] adds speculative upside but also complexity.

For now, the stock’s “Strong Buy” analyst rating and 57.72 P/E ratio [9] reflect optimism about its gaming-driven trajectory. Yet, without a clearer picture of the automotive segment’s health, the long-term sustainability of this growth remains an open question.

Source:
[1] Zhejiang Century Huatong Group: The net income for the first half of 2025 is expected to be between 2.4 billion and -3 billion yuan [https://news.futunn.com/en/post/59148501/zhejiang-century-huatong-group-the-net-income-for-the-first]
[2] Zhejiang Century Huatong Group Co.,Ltd (002602.SZ) [https://finance.yahoo.com/quote/002602.SZ/profile/]
[3] China Daily: Revenue of the Chinese gaming market grew by ... [https://gamedevreports.substack.com/p/china-daily-revenue-of-the-chinese]
[4] Zhejiang Century Huatong Group Company 2025 Profile [https://pitchbook.com/profiles/company/164586-52]
[5] Zhejiang Century Huatong Group Co.,Ltd Stock (002602) [https://www.marketscreener.com/quote/stock/ZHEJIANG-CENTURY-HUATONG--11367294/]
[6] Zhejiang Century Huatong (002602.SZ) - Revenue [https://companiesmarketcap.com/zhejiang-century-huatong/revenue/]
[7] Zhejiang Century Huatong Group: The net income for the first half of 2025 is expected to be between 2.4 billion and -3 billion yuan [https://news.futunn.com/en/post/59148501/zhejiang-century-huatong-group-the-net-income-for-the-first]
[8] Zhejiang Century Huatong Group Co.,Ltd (002602.SZ) [https://finance.yahoo.com/quote/002602.SZ/]
[9] Zhejiang Century Huatong Group . (002602) Earnings Report [https://stockinvest.us/earnings-report/002602.SZ]