Giant Network(SZ:002558) Southwest Securities·2024-09-03 06:18Investment Rating - The report maintains a "Buy" rating for the company [1] Core Views - The company is expected to achieve net profits of 1.5 billion, 1.67 billion, and 1.88 billion yuan for 2024-2026, corresponding to PE ratios of 13x, 11x, and 10x respectively, indicating a solid growth outlook supported by existing game titles and AI enhancements [1] - The company reported a revenue of 1.43 billion yuan for H1 2024, a slight decrease of 1% year-on-year, while net profit increased by 8.2% to 720 million yuan [2] - The company plans to distribute a cash dividend of 1.4 yuan per 10 shares, totaling 270 million yuan [2] - The company focuses on a strategy of self-developed and high-quality products, with flagship IPs like "Journey" and "Ball Battle" showing long-term growth potential [2] - The launch of mini-program games is seen as a new growth engine, with the "King's Journey" game attracting over 8 million new users since its launch in February 2024 [2] - The company is enhancing its AI capabilities to improve efficiency and user engagement, particularly in the casual competitive gaming sector [2] Financial Summary - The company achieved a revenue of 14.3 billion yuan in H1 2024, with a year-on-year growth rate of -1% [2] - The net profit for H1 2024 was 7.2 billion yuan, reflecting an 8.2% increase year-on-year, while the non-recurring net profit rose by 27.9% to 8.8 billion yuan [2] - The projected revenues for 2024, 2025, and 2026 are 29.24 billion, 34.08 billion, and 38.54 billion yuan respectively, with corresponding net profits of 10.86 billion, 14.95 billion, and 16.74 billion yuan [3][8] - The company’s PE ratio is projected to decrease from 17 in 2023 to 10 by 2026, indicating improving valuation metrics [3][8]