Giant Network(SZ:002558) Zheng Quan Zhi Xing·2025-07-03 07:53Core Viewpoint - The recent freezing of approximately 277 million yuan in equity held by Giant Network's founder, Shi Yuzhu, has raised concerns about the company's financial stability and growth prospects amid ongoing performance pressures in its gaming business [1][2]. Group 1: Equity Freezing and Legal Issues - Shi Yuzhu's company, Giant Investment, has had its equity frozen by the Shanghai First Intermediate People's Court for a period of three years, amounting to approximately 277 million yuan [2]. - This is not the first instance; Shi Yuzhu's equity has been frozen multiple times, totaling 343 million yuan across different years due to various legal disputes and guarantees made for other companies [2][4]. - The ongoing legal issues are linked to financial obligations involving Lu Zhiqiang, a prominent figure in the financial sector, highlighting a pattern of financial entanglements for Shi Yuzhu [4]. Group 2: Company Performance and Revenue Trends - Giant Network has faced declining revenue from its core PC gaming business for eight consecutive years, with revenue dropping from 1.3 billion yuan in 2016 to 681 million yuan in 2024, representing a decrease in its contribution to total revenue from 55.97% to 23.3% [5][6]. - The company has attempted to revitalize its revenue through mobile games, particularly the "Original Journey" mobile game, which generated over 1.5 billion yuan in its first year but has since seen a decline in popularity and revenue [5][8]. - In the first quarter of 2025, the company reported a revenue of 724 million yuan, a year-on-year increase of 3.94%, but net profit decreased by 1.29% to 348 million yuan, indicating a troubling trend of increasing sales expenses [6]. Group 3: Challenges with Game IPs - The "Journey" IP, which has been a cornerstone of Giant Network's offerings, is showing signs of aging, with revenues from related mobile games declining significantly in 2024 [8][10]. - The performance of new games has been disappointing, with titles like "Space Kill" failing to maintain their initial success, and the company has struggled to launch new hits that can replace its aging IPs [11][12]. - Despite some success in overseas markets, the overall contribution of international revenue remains minimal, accounting for less than 1% of total revenue, which limits the company's ability to offset domestic declines [12].