Giant Network(002558)2024-11-04 07:41Investment Rating - The report maintains a "Buy" rating for the company [4][6] Core Views - The company reported strong Q3 performance with revenue of 790 million, down 4% year-over-year, and a net profit of 350 million, down 16% year-over-year, which exceeded market expectations [4] - The "Wangzhe Zhengtu" game is supporting the stability of the Zhengtu IP, with revenue increasing for three consecutive quarters [4] - The company is expanding its mid-term pipeline with high certainty, focusing on AI integration in its products [5][6] Financial Performance - Q3 revenue and net profit figures indicate a better-than-expected performance, with a significant increase in contract liabilities year-over-year by 57% [5] - The company expects revenue for 2024-2026 to be 3.03 billion, 3.45 billion, and 4.18 billion respectively, with net profit projections of 1.40 billion, 1.63 billion, and 1.81 billion [6][8] - The current price-to-earnings ratio (PE) is at 17 for 2024, 14 for 2025, and 13 for 2026, indicating a relatively low valuation [6] Market Position - The Zhengtu IP has a current market size of 3 billion, significantly smaller than the 30 billion market size of the Legend IP, suggesting potential for growth [4] - The company has over 500 million registered users for the Zhengtu IP, indicating a strong user base compared to the Legend IP's 600 million [4]