Investment Rating - The report maintains a "Buy" rating for the company, with a target price of HKD 12.24 based on a 17X PE for 2025 [1][7][5]. Core Viewpoints - The company is a leading social media player in China, focusing on overseas markets with a diverse product matrix that includes successful social products like MICO, YoHo, Blued, and high-growth products like TopTop and SUGO. The flagship gaming business has also made significant breakthroughs, and social e-commerce is rapidly growing, indicating a potential entry into a profitable cycle [1][17][19]. Summary by Sections Social Business - The company has established a robust product matrix in the social sector, with MICO and YoHo contributing to the revenue base. Newer products like SUGO have shown remarkable growth, with 2024 revenue increasing over 200% and average monthly revenue surpassing USD 10 million. TopTop also saw over 100% revenue growth in the same period [2][17][30]. Innovative Business - The innovative segment, which includes premium games and social e-commerce, achieved revenue of RMB 460 million in 2024, a year-on-year increase of 21.3%. The flagship game, "Alice's Dream: Merge Island," generated a total revenue of RMB 705 million, reflecting an 80.4% increase. The social e-commerce sector is also expanding rapidly, driven by customer demand and product diversification [3][19][32]. Market Perspective - The report highlights a divergence from market sentiment regarding the company's long-term growth potential. It argues that the company has developed effective methodologies for creating successful social products, with rapid growth in newer products like TopTop and SUGO expected to become pillar products. The company has established over 20 global operational centers, supporting its expansion strategy [4][20][21]. Financial Forecast and Valuation - The company’s revenue is projected to reach RMB 6.454 billion in 2025, with a compound annual growth rate (CAGR) of 44.89% for net profit from 2025 to 2027. The report adjusts the net profit forecast for 2025-2027 to RMB 949 million, RMB 1.225 billion, and RMB 1.461 billion, respectively, reflecting increases of 7.4%, 20%, and 23% [5][6][12].
赤子城科技：社交出海先锋，创新、多元业务助力-20250525