Ge Long Hui·2026-01-27 05:30Core Viewpoint - The company is expected to see a quarter-on-quarter improvement in performance for Q4 2025, with revenue projected to decline year-on-year but increase sequentially, driven by stable gaming and robust office segments [1][2] Gaming Segment - Revenue for gaming in Q4 2025 is forecasted to decline by 32% year-on-year and by 2% quarter-on-quarter, with the rate of decline narrowing for both comparisons [1] - The new game "Goose Duck" has exceeded expectations, with over 10 million new players within six days of its launch, ranking in the top 2 for iOS game downloads and around 60th in the revenue rankings [1] - The company will continue to monitor the game's popularity and subsequent commercialization process, alongside other IP games like "Angry Birds" [1] Office Segment - The office segment is projected to see a 19% year-on-year revenue increase in Q4 2025, continuing its recovery trend [1] - Growth in the software business is primarily driven by accelerated bidding and acceptance of government and enterprise projects, with WPS 365 benefiting from enhanced collaboration and AI product lines [1] - WPS 365 has been upgraded to a global all-in-one AI collaborative office platform, integrating various functionalities to support enterprise operations [1] Cloud Segment - For the cloud segment, revenue is expected to grow by 20% year-on-year in Q4 2025, with adjusted operating profit slightly in the negative [2] - High capital expenditures are anticipated to continue into 2026, exceeding levels seen in 2025 [2] Financial Forecast and Investment Recommendation - The company has slightly raised its revenue forecast for gaming in 2025 and anticipates around 10% growth for 2026-2027, while maintaining previous predictions for the office segment and reducing losses in the cloud segment [2] - Revenue projections for 2025 and 2026 are -5.7% and +19% year-on-year, respectively, with net profits estimated at 1.74 billion yuan and 1.6 billion yuan [2] - Based on comparable company valuations, the company is assigned a price-to-earnings ratio of 13 for gaming, 35 for office, and 3 for cloud, leading to a target value of 50.25 HKD per share, maintaining a "buy" rating [2]