Ge Long Hui·2025-11-14 21:28Core Insights - The company reported better-than-expected profits for Q3 2025, with revenues of RMB 7.7 billion, a year-on-year increase of 5.2%, aligning with market expectations [1] - The gross margin improved to 36.7% quarter-on-quarter, while adjusted net profit reached RMB 790 million, exceeding market expectations of RMB 640 million [1] - User traffic growth accelerated, with daily active users (DAU) increasing by 9.3% to 117 million and monthly active users (MAU) rising by 8.0% to 376 million, achieving record highs [1] Advertising Business Performance - The company experienced a 23% year-on-year growth in advertising revenue in Q3 2025, driven by improved ad supply and effectiveness [1] - The outlook for the advertising business remains positive, with expectations of over 20% growth in Q4 2025, supported by continuous traffic growth and enhanced ad value [1] Gaming Segment Developments - Game revenue decreased by 17% year-on-year in Q3 2025 due to high base effects, but the performance of "Three Kingdoms: Strategizing the World" met expectations [2] - The company plans to launch a traditional Chinese version of the game in overseas markets in Q1 2026 and expand to more international regions in the second half of 2026 [2] - The self-developed game "Escape from Duckkov" achieved over 3 million global sales and a peak online player count of over 300,000, with potential to become the second highest-selling domestic single-player game [2] Future Projections and Ratings - The company has slightly raised its revenue growth forecast for Q4 2025 to 4.9% year-on-year, maintaining an adjusted operating profit margin forecast of 10% [2] - The target price has been adjusted to $32/247 HKD, corresponding to FY26E/FY27E price-to-earnings ratios of 34x/25x, with a "Buy" rating maintained [2]