Great Wall Securities·2025-09-03 10:48Investment Rating - The report maintains a "Buy" rating for the company, expecting the stock price to outperform the industry index by more than 15% over the next six months [15]. Core Views - The company has shown continuous profit release, driven by AI-enhanced advertising commercialization efficiency. The revenue for Q2 2025 reached 7.34 billion yuan, a year-on-year increase of 19.8%, and the net profit attributable to shareholders was 220 million yuan, marking a return to profitability [1][2]. - The company's daily active users (DAU) reached 109 million, a 7% year-on-year growth, with an average daily usage time of 105 minutes, which is an increase of 6 minutes compared to the same period last year [2]. - The advertising business generated 2.45 billion yuan in revenue for Q2 2025, a 20% year-on-year increase, benefiting from both quantity and quality growth in traffic, as well as the integration of AI into advertising systems [2]. - The gaming segment also performed well, with revenue of 1.61 billion yuan in Q2 2025, a 60% year-on-year increase, primarily driven by the strong performance of the game "Three Strategies" [3]. Financial Summary - The company is projected to achieve revenues of 30.26 billion yuan, 33.19 billion yuan, and 35.71 billion yuan for the years 2025, 2026, and 2027, respectively, with adjusted net profits of 2.01 billion yuan, 3.10 billion yuan, and 3.87 billion yuan for the same years [3]. - The report indicates a significant improvement in profitability, with the adjusted net profit expected to turn positive in 2025, reaching 799 million yuan, and further increasing to 1.8 billion yuan and 2.5 billion yuan in 2026 and 2027, respectively [1][3]. - The company's P/E ratio is projected to decrease from 86.2 in 2025 to 27.6 in 2027, indicating an improving valuation as profitability increases [1][3].