Soochow Securities·2025-11-16 11:46Investment Rating - The investment rating for the company is "Buy" (maintained) [1] Core Insights - The company reported better-than-expected performance in Q3 2025, with a significant increase in profit margins. The adjusted net profit for Q3 2025 was RMB 786.3 million, a year-on-year increase of 233%, and the adjusted net profit margin reached 10.2%, up from 3.2% in the same period last year [9] - The advertising revenue for Q3 2025 was RMB 2.57 billion, a 23% increase compared to the same period in 2024, driven by improved advertising product offerings and effectiveness. The company expects to continue gaining market share in the advertising business [3][10] - The company has adjusted its forecast for net profit for 2025-2027, now expecting RMB 2.602 billion, RMB 3.593 billion, and RMB 4.685 billion respectively, reflecting an optimistic outlook on advertising and gaming revenue [10] Financial Performance Summary - Total revenue for Q3 2025 was RMB 7.69 billion, a year-on-year increase of 5%. The gross profit was RMB 2.82 billion, with a gross margin of 36.7%, up from 34.9% in Q3 2024 [9] - The company’s mobile game revenue for Q3 2025 was RMB 1.51 billion, a decrease of 17% year-on-year, attributed to a high base from the previous year [3] - The value-added services revenue for Q3 2025 was RMB 3.02 billion, a 7% increase year-on-year, mainly due to growth in paid memberships and other services [3] Earnings Forecast and Valuation - The company’s earnings per share (EPS) for 2025 is projected to be RMB 6.18, with a price-to-earnings (P/E) ratio of 30.06 based on the current stock price [1][10] - The forecasted total revenue for 2025 is RMB 30.195 billion, with a year-on-year growth of 13% [1]