2024-08-27 11:45Investment Rating - The investment rating for the company is "Buy" [3][28]. Core Insights - The company's Q2 2024 revenue and profit were below market expectations, but game performance met predictions. Q2 revenue was 25.5 billion RMB, a year-on-year increase of 6%, with game and value-added services growing by 7% and 10% respectively. Adjusted net profit was 7.8 billion RMB, down 13% year-on-year, primarily due to changes in non-operating income, while adjusted operating profit increased by 18% [1][2]. - The target price has been adjusted from $117 to $113, reflecting a 37.4% potential upside from the current price of $82.25. The company expects a recovery in PC games in Q3, while mobile games face short-term growth pressure due to high base effects [2][28]. Financial Summary - For Q2 2024, the company reported a net income of 25.5 billion RMB, with a gross profit margin of 63%. The adjusted operating profit margin was 32%, indicating a stable operational performance despite the revenue dip [5][15]. - The forecast for 2024 includes a revenue adjustment of 1.7% and a profit adjustment of 1.3%, with the gaming business expected to maintain stable operational potential after digesting high base impacts [2][11].