Ge Long Hui·2025-11-14 21:28Core Viewpoint - The company reported Q3 2025 earnings with revenue of 7.685 billion yuan, a year-on-year increase of 5.2%, which is in line with the consensus forecast of 7.661 billion yuan. Adjusted operating profit reached 688 million yuan, exceeding the consensus estimate of 650 million yuan, driven by increased traffic and improvements in advertising infrastructure [1][2]. Group 1: Revenue and Profit Performance - Revenue for Q3 2025 was 7.685 billion yuan, reflecting a year-on-year growth of 5.2%, aligning with the consensus forecast [1]. - Adjusted operating profit was 688 million yuan, surpassing the expected 650 million yuan, attributed to a 23% year-on-year increase in advertising revenue, which outperformed the expected 20% growth [1][2]. - The company’s game revenue for Q3 2025 was 1.51 billion yuan, down 17% year-on-year, which was in line with the forecast of 1.54 billion yuan, primarily due to a high base effect from last year [2]. Group 2: User Engagement and Advertising Growth - Daily Active Users (DAU) reached 117 million, a year-on-year increase of 9%, with average daily usage time growing to 112 minutes, marking a 6-minute increase from the previous year [1]. - Advertising revenue accelerated to 2.57 billion yuan in Q3 2025, a year-on-year increase of 23%, with the number of advertisers growing by 16% [1][2]. Group 3: Cost Control and Profitability - The gross margin for Q3 2025 was 36.7%, up 1.8 percentage points year-on-year, driven by high growth in gaming and advertising businesses [2]. - The sales expense ratio decreased to 13.7%, down 2.8 percentage points year-on-year, which was better than the expected 14.6%, contributing to the higher operating profit [2]. Group 4: Future Outlook and Valuation - The company has slightly raised its revenue forecasts for 2025-2027 to 30.14 billion, 32.81 billion, and 35.17 billion yuan, respectively [3]. - Adjusted net profit estimates for 2025-2027 have been increased to 2.45 billion, 3.46 billion, and 4.45 billion yuan, respectively, reflecting a significant upward adjustment [3]. - The target market capitalization is set at 119.9 billion yuan, with a target price of 40.1/312.1 USD/HKD, maintaining a "buy" rating [3].