KINGNET(SZ:002517) Guotai Junan Securities·2024-05-21 05:02Investment Rating - The report maintains a "Buy" rating for the company with a target price of 26.30 yuan, down from the previous forecast of 27.73 yuan [1][14]. Core Insights - The company's "IP Empowerment" strategy is effectively implemented, and it currently has a rich product pipeline. The incremental market for mini-games is expected to open up more opportunities for growth [1][14]. - The company is projected to achieve significant revenue growth, with expected revenues of 54.2 billion yuan, 65.4 billion yuan, and 74.3 billion yuan for the years 2024 to 2026, respectively [6][7]. - The report highlights the company's strong focus on developing IP products and creative games, with a pipeline of 23 products, including both self-developed and licensed IP games [15][16]. Summary by Sections 1. Earnings Forecast and Valuation - The company is expected to see a revenue increase of 30%, 23%, and 15% for mobile games from 2024 to 2026, with gross margins of 82%, 81%, and 80% respectively. Conversely, web games are projected to decline by 30%, 25%, and 20% during the same period [6][7]. - The net profit attributable to shareholders is forecasted to be 2.02 billion yuan, 2.42 billion yuan, and 2.76 billion yuan for 2024 to 2026, with corresponding EPS of 0.94, 1.12, and 1.28 yuan [6][7]. 2. IP Strategy Advancement - The company is deepening its focus on IP products and creative tracks, with multiple products expected to launch in 2024. The product pipeline includes both external collaborations and self-developed titles [15][16]. - The report emphasizes the importance of the "Legend" IP, which continues to be a stable revenue source, and the clarity of IP licensing agreements with partners [15]. 3. Mini-Game Market Potential - The mini-game sector is identified as a potential source of growth for the company, with the market still expanding and favorable conditions for small to medium enterprises [15]. - The company is leveraging dual-end collaboration to fully explore user engagement in gaming scenarios [15]. 4. Governance and Strategic Changes - The report notes improvements in corporate governance, including the establishment of a controlling shareholder and active share buybacks, which reflect management's confidence in future growth [15]. - The company is also implementing employee incentive programs and plans for cash dividends to enhance shareholder value [15].