G-bits(SH:603444) HTSC·2025-10-29 11:17Investment Rating - The report maintains a "Buy" rating for the company, reflecting a positive long-term outlook based on its strong self-research capabilities and operational efficiency [1]. Core Insights - The company reported Q3 2025 revenue of 1.968 billion RMB, a year-over-year increase of 129.19% and a quarter-over-quarter increase of 42.37%. The net profit attributable to shareholders was 569 million RMB, up 307.70% year-over-year and 57.58% quarter-over-quarter, exceeding the forecast range [1][2]. - The significant revenue growth in Q3 was primarily driven by the successful launch of "杖剑传说" (Zhang Jian Chuan Shuo) and the mini-game "道友来挖宝" (Dao You Lai Wa Bao), which operated for a full quarter [2]. - The company’s overseas revenue reached 588 million RMB in Q3, a year-over-year increase of 59.46%, supported by the international version of "杖剑传说" [3]. Summary by Sections Financial Performance - For the first three quarters of 2025, the company achieved a total revenue of 4.486 billion RMB, representing a year-over-year growth of 59.17%. The net profit attributable to shareholders was 1.214 billion RMB, up 84.66% year-over-year [1]. - The gross margin for Q3 was 94.59%, reflecting a quarter-over-quarter increase of 1.1 percentage points and a year-over-year increase of 5.56 percentage points, attributed to a higher proportion of overseas revenue [4]. Product Performance - The Q3 revenue from "杖剑传说" (mainland version) was 742 million RMB, while the overseas version generated 478 million RMB. The mini-game "道友来挖宝" contributed 316 million RMB in revenue from Q1 to Q3 [2]. - The company anticipates continued performance from existing products, despite a natural decline in revenue from older titles [2]. Future Outlook - The company has a robust pipeline of upcoming products, including "问剑长生" (Wen Jian Chang Sheng) expected to launch in H2 2025 in regions like Hong Kong, Macau, and South Korea, which will further enhance overseas revenue [3]. - The anticipated release of the strategy game "九牧之野" (Jiu Mu Zhi Ye) is expected to validate the company's capabilities beyond the MMO genre [3]. Valuation and Forecast - The report projects net profits for 2025, 2026, and 2027 to be 1.63 billion RMB, 1.82 billion RMB, and 1.93 billion RMB, respectively. The target price is set at 565.66 RMB, based on a 25X PE for 2025 [5].