Group 1 - The company reported total revenue of 3.19 billion RMB in the first half of 2025, a decrease of 23.9% compared to 4.19 billion RMB in the same period of 2024 [1] - Operating profit increased significantly by 92.7% to 876 million RMB, while net profit attributable to shareholders reached 850 million RMB, a year-on-year growth of 68.5% [1] - The company has reduced reliance on low-margin channels and focused on high-value channel businesses, which is key to profit growth in the first half of the year [1] Group 2 - Online reading business generated revenue of 1.99 billion RMB in the first half of 2025, showing a year-on-year growth of 2.3% [1] - The combined monthly active users (MAU) for the company's own platform and Tencent's self-operated channels was 141.3 million, down from 176 million in the same period of 2024, while the core self-operated platform MAU remained stable at 103 million, a slight decrease of 2.5% [1] Group 3 - Revenue from copyright operations and other businesses was 1.21 billion RMB in the first half of 2025, a decline of 46.4% year-on-year, primarily due to the natural development cycle and scheduling of film and television projects [1] - The company's IP derivative business achieved a GMV of 480 million RMB, with a nearly complete coverage of all categories, and has established an integrated online and offline channel network [1] Group 4 - The company is optimistic about its new development model of "content + platform + AI," maintaining a buy rating [2] - The online reading business is valued at 12 times PE for 2025, while the copyright operation business is valued at 9 times PS for 2025 revenue, leading to a reasonable valuation of 49.5 billion HKD [2] - The target price for the company is set at 48.5 HKD, indicating a potential upside of 29.8% [2]

Investment Rating - The report maintains a "Buy" rating for the company, with a target price of HKD 48.50, indicating a potential upside of 29.8% from the current price of HKD 37.32 [1][7]. Core Insights - The company has experienced a significant adjustment in its revenue structure, leading to a notable improvement in profitability. Despite a 23.9% year-on-year decline in total revenue to RMB 31.9 billion in the first half of 2025, operating profit surged by 92.7% to RMB 8.76 billion, and net profit attributable to shareholders increased by 68.5% to RMB 8.5 billion [4][10]. - The online reading business has shown resilience, achieving revenue of RMB 19.9 billion, a 2.3% increase year-on-year, while the user strategy has shifted from scale to quality, resulting in a stable core user base [11][4]. - The company's copyright operations faced short-term pressure, with revenue declining by 46.4% to RMB 12.1 billion due to the natural development cycle of film and television projects. However, the long-term potential of the IP economy remains promising [6][12]. Summary by Sections Financial Performance - In the first half of 2025, the company reported total revenue of RMB 31.9 billion, down from RMB 41.9 billion in the same period of 2024, while operating profit increased significantly by 92.7% to RMB 8.76 billion. The net profit attributable to shareholders reached RMB 8.5 billion, reflecting a year-on-year growth of 68.5% [4][10]. - The online reading segment contributed significantly to the revenue, with a stable performance despite a slight decline in user numbers. The average monthly active users (MAU) for the core self-owned platform remained stable at 103 million, with a minor decrease of 2.5% year-on-year [11][4]. Business Strategy - The company has strategically reduced reliance on low-margin channels, focusing on high-value channel operations, which has been key to achieving profit growth in the first half of 2025 [10][15]. - The report highlights the company's new development model of "content + platform + AI," which is expected to drive future growth. The valuation for the online reading business is set at 12 times PE for 2025, while the copyright operation business is valued at 9 times PS revenue for the same year [7][15]. Market Outlook - The report expresses optimism about the company's IP economy potential, with a robust pipeline of projects expected to contribute to revenue growth in the future. The company has a rich reserve of IP projects, which are anticipated to be released in the coming periods [12][14]. - The IP derivative business has shown promising growth, with GMV reaching RMB 4.8 billion in the first half of 2025, nearing the total for the entire year of 2024, indicating strong monetization potential [14][6].