Giant Network(002558) 东吴证券·2024-09-01 12:02Investment Rating - Buy (Maintained) [1] Core Views - The company's performance in H1 2024 met expectations, with mini-program games contributing incremental growth [1] - Revenue in H1 2024 was RMB 1.427 billion, a slight decrease of 1.13% YoY, while net profit attributable to the parent company was RMB 718 million, an increase of 8.16% YoY [3] - The mini-program game "King's Journey" performed exceptionally well, driving growth in the "Journey" IP's revenue [3] - The company continues to focus on the casual gaming sector, with AI-driven gameplay innovations showing promise [3] - Revenue and expense control were stable, with profits expected to gradually release [4] Financial Performance and Projections Revenue and Profit - H1 2024 revenue: RMB 1.427 billion, down 1.13% YoY [3] - H1 2024 net profit attributable to the parent company: RMB 718 million, up 8.16% YoY [3] - 2024E revenue: RMB 3.145 billion, up 7.55% YoY [2] - 2024E net profit attributable to the parent company: RMB 1.464 billion, up 34.72% YoY [2] EPS and Valuation - 2024E EPS: RMB 0.74, down from previous estimate of RMB 0.77 [4] - 2024E P/E ratio: 12.88x [2] Segment Performance - PC gaming revenue in H1 2024: RMB 338 million, down 22.11% YoY [3] - Mobile gaming revenue in H1 2024: RMB 1.069 billion, up 8.11% YoY [3] - "Ball Ball Fight" achieved record-high ARPU during the Spring Festival, with revenue reaching a five-year high [3] Operational Highlights - The mini-program game "King's Journey" ranked as high as 4th on the WeChat mini-program bestseller list and has shown continuous growth in revenue since its launch in February 2024 [3] - The company is testing the mini-program version of "Original Journey," with plans to increase marketing efforts in H2 2024 [3] - "Space Kill" introduced AI-driven gameplay innovations, such as the "AI Endgame Challenge," which is expected to enhance user engagement and monetization [3] Financial Health - Contract liabilities as of H1 2024: RMB 498 million, up from RMB 435 million at the end of 2023 [4] - Sales/management/R&D expense ratios in H1 2024: 30.08%, 6.26%, and 23.26%, respectively, with sales expenses down 8.52 percentage points YoY [4] Market Data - Closing price: RMB 9.55 [5] - 52-week low/high: RMB 8.06/RMB 15.26 [5] - P/B ratio: 1.53x [5] - Market capitalization: RMB 18.847 billion [5] Key Financial Ratios - 2024E ROE: 11.43% [9] - 2024E ROIC: 7.74% [9] - 2024E debt-to-asset ratio: 10.84% [9]