BOCOM International·2025-05-29 10:45Investment Rating - The report maintains a "Buy" rating for the company, with a target price adjusted from HKD 50.00 to HKD 46.00, indicating a potential upside of 27.6% from the current price of HKD 36.05 [4][2]. Core Insights - The company's Q1 performance was impacted by seasonal factors and increased R&D expenditures, particularly in AI and new game categories. Game revenue saw a quarter-on-quarter decline primarily due to seasonal decreases in monetization updates for "Jian Wang 3," while WPS revenue also fell due to procurement process impacts [2][8]. - New game launches are anticipated to stabilize revenue in the second half of the year, with titles like "Jie Xian Ji" expected to launch in summer and "Jian Xia Qian Yuan: Zero" by the end of May [2][8]. - Adjustments to profit forecasts for 2025-2027 were made, reflecting changes in the valuation contribution from Kingsoft Cloud due to its declining market value [2][3]. Financial Performance Summary - Revenue Projections: - 2025E: RMB 11,184 million (down 4% from previous forecast) - 2026E: RMB 12,189 million (down 5%) - 2027E: RMB 13,486 million (down 5%) [3][12] - Game and Other Revenue: - 2025E: RMB 5,327 million (down 4%) - 2026E: RMB 5,354 million (down 8%) - 2027E: RMB 5,484 million (down 8%) [3][12] - WPS Revenue: - 2025E: RMB 5,857 million (down 3%) - 2026E: RMB 6,836 million (down 3%) - 2027E: RMB 8,002 million (down 3%) [3][12] - Gross Profit: - 2025E: RMB 9,281 million (up 6%) - 2026E: RMB 10,098 million (up 3%) - 2027E: RMB 11,204 million (up 14%) [3][12] - Adjusted Net Profit: - 2025E: RMB 2,724 million (down 1%) - 2026E: RMB 2,957 million (down 4%) - 2027E: RMB 3,461 million (down 3%) [3][12] Market Data - The company's market capitalization is approximately HKD 50,233.87 million, with a 52-week high of HKD 46.90 and a low of HKD 20.10. The average daily trading volume is 13.72 million shares, and the year-to-date change is 7.13% [6][12].