KINGNET(002517) 国金证券·2024-10-29 02:15Investment Rating - The report maintains a "Buy" rating for Kingnet Network (002517 SZ) [2] Core Views - Kingnet Network's Q3 2024 revenue reached RMB 1 372 billion, a YoY increase of 30 33%, with net profit attributable to shareholders of RMB 471 million, up 31 52% YoY [2] - The company's Q3 performance exceeded expectations, driven by stable growth in its Legend games and contributions from new games launched in Q3 [3] - The company has a rich pipeline of games, including LaTale's official mobile game "Rainbow Orange" and multiple Legend games, which are expected to support future growth [3] Financial Performance Revenue and Profit - Q3 2024 revenue increased by 30 33% YoY and 10 00% QoQ, reaching a 5-year high for a single quarter [3] - Net profit attributable to shareholders in Q3 2024 was RMB 471 million, up 31 52% YoY and 22 97% QoQ [3] - Non-GAAP net profit attributable to shareholders was RMB 480 million, up 32 53% YoY and 27 43% QoQ [3] Profitability - Net profit margin and non-GAAP net profit margin were 34 31% and 35 00% respectively, with a QoQ increase of 3 62 and 4 78 percentage points [3] - Gross margin in Q3 2024 was 82 59%, slightly down by 1 07 percentage points YoY but up by 0 61 percentage points QoQ [3] - Sales expenses decreased by 7 05 percentage points QoQ, contributing to the improvement in net profit margin [3] Game Pipeline and Strategy - The company launched "Rainbow Orange" on October 20, 2024, and has a strong pipeline of Legend games and non-Legend games such as "Tomb Raider: Departure" and "Douluo Dalu: Legend of the Evil" [3] - Kingnet Network has made progress in overseas markets and mini-games, accumulating more experience for future product launches [3] Financial Forecasts - The report forecasts net profit attributable to shareholders for 2024-2026 to be RMB 1 70 billion, RMB 2 095 billion, and RMB 2 383 billion, with YoY growth rates of 16 30%, 23 21%, and 13 77% respectively [3] - The corresponding P/E ratios for 2024-2026 are 16 83X, 13 66X, and 12 00X [3] Historical Performance - In 2023, the company's revenue was RMB 4 295 billion, up 15 30% YoY, with net profit attributable to shareholders of RMB 1 462 billion, up 42 58% YoY [5] - The company's ROE (return on equity) was 27 87% in 2023, and is expected to remain above 26% in the next three years [5] Market Sentiment - The company has received a "Buy" rating from multiple analysts, with 128 "Buy" ratings in the past six months [7] - The average market rating score for Kingnet Network is 1 00, indicating a strong "Buy" consensus [7]