Orient Securities·2025-05-23 08:05Investment Rating - The report maintains a "Buy" rating for the company [5] Core Views - The company's net profit is expected to grow significantly due to the recovery of Blizzard games and the anticipated launch of new mobile games such as "Marvel Secret Wars" and "Destiny Stars" [3] - The profit forecast for the company from 2025 to 2027 is adjusted to 36 billion, 38.1 billion, and 41.5 billion CNY respectively, reflecting an increase in gross margin and investment income while reducing the sales expense ratio [3] Financial Summary - The company's revenue for 2023 is projected at 103.468 billion CNY, with a year-on-year growth of 7.23% [4] - Operating profit for 2023 is estimated at 27.709 billion CNY, showing a significant year-on-year increase of 41.17% [4] - The net profit attributable to the parent company for 2023 is forecasted at 29.417 billion CNY, representing a year-on-year growth of 44.64% [4] - The earnings per share (EPS) for 2023 is expected to be 9.29 CNY [4] - The gross margin is projected to be 60.95% for 2023, with a gradual increase to 64.59% by 2027 [4] - The net margin is expected to be 28.43% in 2023, with a slight increase to 31.00% by 2027 [4] Revenue Breakdown - Total revenue from games and related value-added services is expected to reach 240.5 billion CNY in Q1 2025, with a year-on-year growth of 12.1% [9] - Mobile game revenue is projected at 153.6 billion CNY in Q1 2025, showing a year-on-year decrease of 4.4% but a quarter-on-quarter increase of 14.5% [9] - PC game revenue is expected to be 80.9 billion CNY in Q1 2025, reflecting a substantial year-on-year growth of 85% [9] Valuation - The target price for the company's stock is set at 210.13 HKD, equivalent to 193.03 CNY, based on a sum-of-the-parts (SOTP) valuation method [3][11] - The company is valued at a price-to-earnings (P/E) ratio of 18 for 2025, decreasing to 13 by 2027 [4][11]