G-bits(603444) HTSC·2024-08-16 10:03Investment Rating - The report maintains a "Buy" rating for the company with a target price of RMB 222.79 [1][6]. Core Insights - The company showed a significant quarter-on-quarter improvement in Q2 performance, with a revenue of RMB 10.32 billion, a year-on-year decline of 14.3% but a quarter-on-quarter increase of 11.3% [1]. - The company plans to distribute a cash dividend of RMB 3.23 billion, which accounts for 62.36% of the net profit for the first half of 2024 [1]. - The report anticipates that the company will achieve net profits of RMB 10.7 billion, RMB 11.8 billion, and RMB 13.2 billion for the years 2024 to 2026, respectively [1]. Revenue and Profit Analysis - In the first half of 2024, the company achieved a revenue of RMB 19.6 billion, down 16.57% year-on-year, with a net profit of RMB 5.18 billion, down 23.4% year-on-year [1]. - The Q2 revenue from the game "Wandao" was RMB 6.56 billion, up 16.3% year-on-year, while "Wandao Mobile" and "Yinian Xiaoyao" saw declines of 14.7% and 54.8%, respectively [2]. - The overseas revenue in Q2 increased by 113.8% to RMB 2.55 billion, driven by new game launches [3]. Product Development and R&D - The company is expected to enter a new product cycle starting in the second half of 2024, with several new games set to launch [3]. - The gross margin remained stable at 88.2%, with a slight year-on-year decrease of 0.3 percentage points [4]. - The R&D team has expanded, with 871 personnel now making up 59.5% of the total workforce, reflecting the company's commitment to increasing R&D investment [4]. Financial Metrics - The report provides financial forecasts, including expected revenues and net profits for the upcoming years, with a projected PE ratio of 15X for 2024 [1][5]. - The company’s market capitalization is reported at RMB 14.335 billion, with a closing price of RMB 198.99 as of August 15 [6]. Valuation Comparisons - The report includes a comparison of the company's valuation metrics with peers, indicating an average PE of 12.1X for comparable companies [8].