Giant Network(002558) 申万宏源·2024-09-18 07:38Investment Rating - Maintains a "Buy" rating for Giant Interactive Group (002558) [5][6] Core Views - The company's profit growth in the first half of 2024 outpaced revenue growth, with small games taking over as the growth driver while older products remained stable [5] - The core product "Original Journey" remained stable in Q2 2024, but revenue weakened year-over-year due to a high base in 2023 [5] - The small game "King's Journey" has seen continuous month-over-month growth in revenue since its launch in February 2024, becoming a successful benchmark for heavy MMO small games [5] - The company's expense ratio has been optimized, with contract liabilities reaching a historical high of 500 million yuan as of mid-2024, providing strong support for future performance growth [5] - The company has high expansion certainty for the next two years, with significant share repurchases in July 2024 and continued active AI deployment [5] - Adjusted revenue forecasts for 2024-2026 are 3,077/3,586/4,154 million yuan, with net profit forecasts of 1,398/1,604/1,775 million yuan [6] Financial Highlights - Revenue for 1H24 was 1,427 million yuan, a year-over-year decline of 1.1%, while net profit attributable to the parent company was 718 million yuan, a year-over-year increase of 8.2% [5] - Gross margin for 1H24 was 88.4%, slightly down from 88.9% in 2023 [7] - ROE for 1H24 was 5.8%, with expected ROE for 2024-2026 at 11.0%/11.6%/11.9% [7] - The company's P/E ratio for 2024-2026 is projected at 13/12/10x [6] Product Performance - "Original Journey" remained stable in Q2 2024, with a 5% quarter-over-quarter revenue growth [5] - "King's Journey" has shown continuous revenue growth since its launch, contributing significantly to the "Journey" IP [5] - Other games like "Ball Ball," "Night of the Full Moon," and "Space Kill" have also seen improved revenue through optimized monetization strategies [5] Future Outlook - The company is entering a new project initiation phase in 2024, with strong expansion certainty for the next two years, including projects like "Code SLG" and "Code Card" [5] - AI deployment continues to be actively pursued, with new AI features introduced in "Space Kill" in August 2024 [5] - The company's share repurchase in July 2024, accounting for more than half of the total repurchased amount, may signal a market bottom [5]