E-Soul(SH:603258) Haitong Securities·2024-04-07 16:00Investment Rating - The investment rating for the company is "Outperform the Market" [9][12]. Core Views - The company has a rich reserve of new games, with a focus on the upcoming release of "Barbarian Battle 2," which is expected to drive revenue growth. The existing game "Dream Three Kingdoms 2" has shown stable performance and is anticipated to contribute consistent revenue and profit due to its long operational history and established fan base [11][12]. - The company reported a slight decline in revenue for Q4 2023, with total revenue of 172 million yuan, down 0.85% year-on-year, and a net profit attributable to shareholders of -57 million yuan. For the full year 2023, revenue was 677 million yuan, a decrease of 14.36%, with net profit down 71.73% to 56.83 million yuan, primarily due to asset impairment provisions [4][12]. Financial Performance Summary - In 2023, the company recorded total revenue of 677 million yuan, with a year-on-year decline of 14.36%. The net profit attributable to shareholders was 57 million yuan, down 71.73% from the previous year. The basic earnings per share (EPS) for 2023 was 0.23 yuan, a decrease of 72.29% [4][13]. - The company has disclosed a new stock incentive plan, granting 4.1258 million restricted shares to 81 executives and key technical personnel, which is expected to enhance performance and align the interests of the core team with the company's long-term goals [5][12]. - Revenue projections for 2024-2026 are estimated at 1.015 billion yuan, 1.218 billion yuan, and 1.375 billion yuan, respectively, with net profits expected to reach 297 million yuan, 383 million yuan, and 442 million yuan [12][13]. Game Development and Market Position - The company is focusing on the launch of several new games, including "Barbarian Battle 2," "Spiral Warrior," "Reincarnation Contract," and "The Jianghu is So Charming," which are expected to contribute positively to revenue in 2024 [11][14]. - The company’s existing game "Dream Three Kingdoms 2" has been a stable revenue source and is expected to continue performing well due to its established market presence [11][12]. Valuation Analysis - Based on the company's stable operations and positive outlook for new game releases, a dynamic price-to-earnings (PE) ratio of 18-20 times is applied for 2024, resulting in a fair value range of 21.78 to 24.20 yuan per share [12][13].