XD INC(HK:02400) Guoxin Securities·2026-03-30 11:15Investment Rating - The report maintains an "Outperform" rating for the company [5][22]. Core Insights - The international version of the game "Heart Town" has shown excellent performance, significantly exceeding the domestic version, contributing to the largest growth in 2026. The management emphasizes the need for continuous content updates to retain players [1][8]. - The company acquired the "Torchlight" game series IP at the end of 2025, which is expected to enhance profit margins in the future [1]. - The TapTap platform's revenue increased by 13% year-on-year, driven by improved user engagement and advertising algorithms, although growth has slowed due to limited new game launches in the second half of the year [1][8]. Revenue Summary - The company achieved a revenue of 2.68 billion yuan in the second half of the year, a decrease of 4% year-on-year. Game revenue was 1.7 billion yuan, down 11% year-on-year, primarily due to high base effects from the domestic version [1][8]. - TapTap platform revenue was 960 million yuan, reflecting a 13% increase year-on-year [1][8]. Profit Summary - The adjusted net profit attributable to shareholders was 830 million yuan, with a net profit margin of 31%, an increase of 8 percentage points compared to the previous year [2][9]. - The adjusted EBITDA was 870 million yuan, with an EBITDA margin rising from 26% to 32% [2][9]. - The gross profit margin improved to 75%, up 4 percentage points year-on-year, driven by strong overseas performance and a higher proportion of revenue from the TapTap platform [2][9]. Shareholder Returns - From January 1 to March 26, 2026, the company repurchased shares worth 210 million HKD, accounting for 0.6% of its total shares [10]. Financial Forecasts - Revenue projections for 2026 and 2027 are maintained at 7.3 billion and 8.2 billion yuan, respectively, with an additional forecast of 9.1 billion yuan for 2028 [22]. - Adjusted net profit estimates for 2026 and 2027 are 2.2 billion and 2.6 billion yuan, reflecting increases of 12% and 15% [22]. - The company is expected to have a PE ratio of approximately 13x for 2026 [22].