We believe China’s live-streaming sector (listed operators with exposure to livestreaming revenue) will remain under pressure in 2022 due to: 1) new regulations and consumption weakness, and 2) competition risk from Douyin. Therefore, we  remain cautious on the outlook for share price performance, except for Kuaishou,  despite low valuations. We prefer online games to live streaming within the digital  entertainment sector due to the former’s better regulatory environment. Within the  live-streaming sector, our pecking order is: Kuaishou > BILI > MOMO > YY >  TME > HUYA = DOYU. Kuaishou is our only OW in the sector. While we see downside risk to its live streaming revenue (JPMe 4-6% total revenue impact), we  like its profitability improvement outlook and share gain in China ads/eCommerce  market. We stay N on BILI for the lingering COVID impact in 1H22, TME for  ads/live streaming monetization pressure in 2022, and MOMO for regulatory  impact. We upgrade YY from UW to N to reflect improving profitability in  overseas markets while we acknowledge competition risk from Tiktok/Kwai. We  are UW on HUYA/DOYU, as we believe their loss-making status will make  them vulnerable in current market conditions and we are cautious on their  earnings impact from new regulations and competition.