PWRD(SZ:002624) CSC SECURITIES (HK) LTD·2025-06-26 09:08Investment Rating - The report assigns a "Buy" rating to the company, indicating a potential upside of 15% to 35% [6]. Core Insights - The key new game "Yihuan" is expected to launch this year, significantly boosting game revenue [6]. - The company reported a strong Q1 performance with revenues of 2.02 billion RMB, a year-over-year increase of 52% [6]. - The company is focusing on cost reduction and efficiency improvements, which have started to show positive results [6]. Company Overview - The company operates in the media industry, with a current A-share price of 14.93 RMB and a target price of 18 RMB [1]. - Major shareholders include Perfect World Holdings Group Limited, holding 22.32% [1]. - The company has a total market capitalization of 27.29 billion RMB [1]. Financial Performance - In Q1 2025, the company achieved a net profit of 300 million RMB, marking a turnaround from previous losses [6]. - The projected net profits for 2025, 2026, and 2027 are 681 million RMB, 1.25 billion RMB, and 1.41 billion RMB, respectively, with year-over-year growth rates of 152.9%, 84.12%, and 12.38% [8]. - The earnings per share (EPS) for the same years are expected to be 0.35 RMB, 0.65 RMB, and 0.73 RMB [8]. Game Development - "Yihuan" is a supernatural urban open-world RPG developed using Unreal Engine 5, expected to become a flagship IP for the company [6]. - The game has received multi-platform approval, indicating a steady progress towards its launch [6]. - The first-year revenue from "Yihuan" is projected to exceed 5 billion RMB, contributing significantly to the company's game segment performance [6]. Cost Management - The company has streamlined its R&D team, reducing the number of personnel from 3,993 to 2,575, which is expected to enhance R&D efficiency [6]. - The reduction in sales, management, and R&D expense ratios has been significant, contributing to the company's return to profitability [6].