Ge Long Hui·2025-08-16 10:46Core Viewpoint - The company's 2Q25 performance met expectations but slightly fell short of market forecasts, with revenue growth of 9% year-on-year to 27.9 billion yuan and Non-GAAP net profit increasing by 22% to 9.5 billion yuan [1][2] Revenue and Growth - 2Q25 revenue reached 27.9 billion yuan, aligning with the company's expectations (27.6 billion yuan) but below Bloomberg's consensus (28.4 billion yuan) [1] - Online gaming revenue grew by 15% year-on-year, driven by titles such as "Identity V," "Yanyun," and "Marvel Showdown," along with some licensed games [1] - The flagship product "Fantasy Westward Journey" mobile game achieved a new quarterly revenue high in 2Q25 [1] Cost and Profitability - Gross margin for 2Q25 was 65%, showing slight improvements from 1Q25 (64%) and 2Q24 (63%), primarily due to increased margins in gaming and VAS businesses [2] - Sales expense ratio in 2Q25 recovered to 13%, up from 9% in 1Q25, indicating a faster recovery than market expectations [2] Future Outlook - The company plans to launch key new mobile games, including "Destiny: Stars" on August 28, with a strong pipeline of diverse products for the coming years [2] - The flagship products continue to perform well, with "Identity V" and "Fantasy Westward Journey" maintaining strong positions in the iOS sales charts [2] Valuation and Forecast - The company maintains its profit forecast, with current stock prices reflecting a valuation of 16x for Hong Kong and 15x for US stocks for 25/26 years Non-GAAP EPS [3] - The target price is set at 263 HKD and 169 USD, indicating an upside potential of 27% for Hong Kong stocks and 25% for US stocks [3]