YAOJI TECHNOLOGY(002605) 国信证券·2024-11-04 09:00Investment Rating - The report maintains an "Outperform" rating for the company, with a target price of 25.25 yuan [5] Core Views - The company's non-GAAP net profit showed a year-on-year improvement in Q3, with a 7.55% increase to 137 million yuan, marking a significant improvement compared to Q1 and Q2 [1][7] - The company's game business remains stable, with potential for a rebound in both gaming and digital marketing sectors [2][9] - The company is strategically expanding into emerging industries such as collectible cards and trendy toys, with investments in platforms like Card Hobby and DAKA [3][11] Financial Performance - In the first three quarters of 2024, the company reported revenue of 2.789 billion yuan, a year-on-year decrease of 21.89%, and net profit of 424 million yuan, down 23.95% year-on-year [1][7] - Q3 revenue was 881 million yuan, down 28.08% year-on-year, while net profit was 140 million yuan, down 6.72% year-on-year [1][7] - The company's EPS for the first three quarters was 0.99 yuan, with a Q3 EPS of 0.33 yuan [1][7] Business Segments - The gaming segment, which is the primary revenue and profit driver, saw a decline due to high base effects and product cycles, but the competitive landscape remains stable [2][9] - The company's digital marketing business is expected to recover as macroeconomic conditions improve [2][9] - The company is advancing its "600 million decks of playing cards production base project," which is expected to boost revenue growth in the playing cards segment [2][9] Emerging Business - The company has invested in Card Hobby, a leading platform for collectible cards, and has secured the agency for Pokémon cards through its subsidiary Yaoji Trendy Products [3][11] - Card Hobby operates DAKA, the largest card IP publisher in China, and is a leading platform for secondary market trading of collectible cards [3][11] Financial Forecasts - The report forecasts net profit for 2024-2026 to be 667 million yuan, 752 million yuan, and 803 million yuan, respectively, with EPS of 1.62 yuan, 1.82 yuan, and 1.95 yuan [3][12] - The company's PE ratio is projected to be 13x, 11x, and 11x for 2024-2026, respectively [3][12] Industry Position - The company's position in the casual gaming market remains strong, with popular titles such as "Fish Blast" and "Bingo Party" maintaining stable performance [2][9] - The company's strategic investments in collectible cards and trendy toys position it well for growth in these emerging markets [3][11]