XD INC(HK:02400) EBSCN·2025-09-01 06:10Investment Rating - The report maintains a "Buy" rating for the company [4] Core Insights - The company achieved a revenue of 3.082 billion RMB in 25H1, representing a year-on-year increase of 38.8%, driven by both gaming and TapTap [1] - Gross profit reached 2.253 billion RMB, with a gross margin of 73.1%, primarily due to strong overseas performance of "Ragnarok M: Beginners Edition" [1] - The net profit attributable to shareholders was 755 million RMB, a significant year-on-year increase of 268.0%, resulting in a net profit margin of 24.5% [1] Revenue Breakdown - The gaming business generated 2.071 billion RMB in revenue for 25H1, up 39.4% year-on-year, with network game revenue contributing 1.982 billion RMB [2] - The average monthly active users (MAU) for network games increased by 19.7% year-on-year, while the average paying users (MPU) grew by 21.1% [2] - The top three revenue-generating games were "Muffin Adventure," "Heart Town," and "Ragnarok M," with "Muffin Adventure" having completed its global launch [2] TapTap Performance - TapTap's advertising revenue was 1.011 billion RMB in 25H1, reflecting a year-on-year growth of 37.6% [3] - The MAU for the Chinese version of TapTap was 43.6 million, showing a slight increase of 0.9% year-on-year [3] - The growth in revenue was attributed to increased advertiser spending, improved algorithms, and higher ad display frequency [3] Profit Forecast and Valuation - The net profit forecasts for 25-27 are revised to 1.69 billion, 2.07 billion, and 2.38 billion RMB, representing increases of 52.0%, 51.4%, and 69.6% respectively [4] - The report highlights the strong performance of new games and the effective long-term operation capabilities of the company [4] Financial Summary - The company is projected to achieve revenues of 3.389 billion RMB in 2023, growing to 8.429 billion RMB by 2027, with a compound annual growth rate of 10.9% [5] - The earnings per share (EPS) is expected to rise from -0.18 RMB in 2023 to 4.83 RMB in 2027 [5] - The return on equity (ROE) is forecasted to improve significantly, reaching 27.36% by 2027 [5]