SANQI HUYU(SZ:002555) Xin Lang Cai Jing·2025-08-26 06:36Core Viewpoint - The company reported a decline in revenue for the first half of 2025, but showed improvement in net profit, indicating a potential for recovery and growth in the future [1][2]. Financial Performance - In H1 2025, the company achieved revenue of 8.486 billion yuan, a year-over-year decrease of 8.08%, while net profit attributable to shareholders was 1.4 billion yuan, an increase of 10.72% year-over-year [1]. - Q2 2025 revenue was 4.243 billion yuan, down 5.33% year-over-year and flat compared to Q1 2025, with net profit of 851 million yuan, up 31.24% year-over-year and 54.97% quarter-over-quarter [1]. - The company plans to distribute a cash dividend of 2.10 yuan per 10 shares, totaling 924 million yuan, which represents approximately 66% of the net profit for the period [1]. Product and Market Strategy - The mobile gaming business generated revenue of 8.239 billion yuan in H1 2025, a decline of 8.03% year-over-year, with a peak monthly revenue of approximately 2.2 billion yuan from globally released mobile games [2]. - The company has several new products set to launch in early 2025, including "Time Explosion" and "Heroes Without Flash," which are expected to perform well [2]. - The company is focusing on a strategy of "premiumization, diversification, and globalization" to enhance its core competitiveness in the market [2][3]. Product Development and Innovation - The company is set to launch its self-developed game "Douluo Dalu: Soul World" in July 2025, which is the first 3D realistic MMORPG based on the Douluo IP [3]. - The company has a rich reserve of IPs for game adaptations, including "Doupo Cangqiong" and "Guimi Zhi Zhu," and is developing various game types to diversify its product offerings [3]. - The company is upgrading its AI capabilities, building an AI empowerment ecosystem centered around its self-developed industry model "Xiao Qi" [3]. Cost Management and Profitability - The gross margin for H1 2025 was 76.71%, a decrease of 2.92 percentage points year-over-year, influenced by increased operating costs, particularly in game revenue sharing [4]. - The sales expense ratio decreased to 51.97%, down 6.09 percentage points year-over-year, as mature games required less marketing expenditure [4]. - The net profit margin increased by 2.81 percentage points year-over-year to 16.51%, indicating improved profitability despite revenue challenges [4]. Earnings Forecast and Valuation - The company forecasts net profits of 2.831 billion yuan, 3.137 billion yuan, and 3.429 billion yuan for 2025, 2026, and 2027, respectively, with corresponding EPS of 1.28, 1.42, and 1.55 yuan [5]. - Based on a relative PE valuation method, the target price has been adjusted to 23.04 yuan, reflecting an 18 times PE for 2025, up from a previous target of 19.33 yuan [5].