• Bloomberg


ong Kong

The absence of “Pokemon Go” in China is not deterring analysts from speculating on which local companies stand to benefit from the hit mobile game and the augmented-reality experience it has helped make popular.

The base case for Chinese investors is perhaps Hong Kong-listed Lenovo. On July 18, the computer maker’s shares rose the most in more than three months on what analysts said was improving sentiment from “Pokemon Go.” Lenovo even plans to release a similar game, Jiemian reported the next day.

Here are a few companies analysts expect to be buoyed by the frenzy:

Ningbo GQY Video, which builds wall-size display systems, is recommended by CICC, Orient Securities and Zheshang Securities. GQY’s shares have gained 46 percent since “Pokemon Go” was introduced on July 6. Its shares were halted on July 15 after rising by the daily limit for four consecutive days.

Thesis: GQY bought a stake of about 3.6 percent in Meta, an augmented-reality startup, for $10 million (66.7 million yuan) in February. That’s a big investment for a company that recorded a 4.9 million yuan profit in fiscal 2015.

Meisheng Cultural, a maker of anime costumes, is also recommended by CICC, Orient and Zheshang Securities. The stock has climbed 9.6 percent since July 6.

Thesis: The company paid 20 million yuan for a 35 percent stake in an augmented-reality mobile game developer in November. Meisheng’s profit last year was 126.4 million yuan.

Toread, a maker of camping gear, is also among stocks “closely related with AR technology,” CICC’s Wei Meng and Pei Yin say.

Thesis: Toread is an investor in a company that makes exercise bikes that use virtual reality technology.

Other CICC picks include Lingnan Landscape and Palm Eco-Town Development, an urban construction and engineering company. Huawen Media and Xiamen Anne, an internet marketer, are also among possible beneficiaries, CICC says.

Some investors may already be trading the theme on mainland. Thirteen of the 16 stocks recommended by CICC have climbed an average 9 percent since July 6, while the Shanghai Shenzhen CSI 300 Index rose 0.6 percent.

Those gains may not last, ICBC International analyst Jianpeng Yu said in a phone interview.

“Augmented reality cannot guarantee success,” Yu says “It could be risky if their products or services were not well received after large investment.”

Meanwhile, “Pokemon Go” was released in Japan on Friday, and Nintendo shares rose again.

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