SANQI HUYU(002555) Orient Securities·2024-09-01 10:40Investment Rating - The report maintains a "Buy" rating for the company, with a target price of 16.32 CNY [5][3]. Core Views - The company reported Q2 revenue of 4.481 billion CNY, a year-over-year increase of 12.16%, driven by strong performance in mobile games such as "Seeking the Great Thousand" and "Soul Sequence" [2]. - The gross margin for Q2 was 77.4%, showing a slight decline from the previous year [2]. - The company expects to enhance its revenue diversification with the upcoming launch of self-developed games, particularly "Douluo Dalu: Hunting Soul World," anticipated to contribute to revenue growth by the end of 2024 or early 2025 [3][2]. - Domestic revenue for the first half of 2024 reached 6.33 billion CNY, a year-over-year increase of 33.81%, primarily due to the growth of mini-games [2]. - The overseas revenue for the first half of 2024 was 2.9 billion CNY, a year-over-year decrease of 4.27%, but the company continues to explore opportunities in the casual gaming market [2]. Financial Summary - The company's projected net profit for 2024-2026 is 2.503 billion CNY, 3.012 billion CNY, and 3.539 billion CNY respectively [3]. - The gross margin is expected to improve to 80.2% in 2024, 82.9% in 2025, and 85.9% in 2026 [4]. - The company’s earnings per share are projected to be 1.13 CNY in 2024, 1.36 CNY in 2025, and 1.60 CNY in 2026 [4]. - The company’s total revenue is forecasted to be 17.684 billion CNY in 2024, with a slight decline expected in 2025 [4].