三七互娱：经营稳健，业绩符合预期

Investment Rating - The report maintains a "Buy" rating for the company [1] Core Views - The company's Q3 revenue was 4.1 billion RMB, a year-on-year decrease of 4.09%, and the net profit attributable to the parent company was 630 million RMB, down 34.51% year-on-year [1] - The decline in revenue is attributed to the lifecycle impact of older products, while new games like "Time Grocery Store" contributed positively [1] - The company has a strong pipeline of games across various genres, which is expected to support future growth [1] Revenue Analysis - Q3 revenue showed a slight decline of 4.09% year-on-year and 8.35% quarter-on-quarter, primarily due to older products [1] - New releases such as "Time Grocery Store" helped mitigate some of the declines from older titles [1] - Mini-games like "Seeking the Great Thousand" and "Soul Sequence" continue to perform well [1] Profitability Analysis - Q3 net profit margin remained stable quarter-on-quarter, but decreased year-on-year due to increased marketing expenses [1] - The net profit attributable to the parent company and the non-recurring net profit both saw slight quarter-on-quarter declines of 2.41% and 8.56%, respectively [1] - The company’s net profit margin and non-recurring net profit margin were 15.41% and 14.66%, respectively, with year-on-year declines of 7.15% and 7.81% [1] Future Outlook - The company is expected to continue benefiting from mini-games and has a rich product pipeline to ensure future growth [1] - Successful titles in the mini-game sector provide a competitive advantage, and ongoing operations of existing games are expected to contribute steadily [1] - The company has a diverse range of upcoming products across various genres, including MMORPGs and SLGs, which are in the pipeline for release [1] Profit Forecast and Valuation - The company’s projected net profits for 2024-2026 are 2.54 billion RMB, 3.02 billion RMB, and 3.25 billion RMB, respectively, with corresponding P/E ratios of 14.4, 12.1, and 11.3 [1]