Core Viewpoint - The capitalized process of the card game industry is accelerating, with companies like Suplay leading the charge towards public listings, despite challenges faced by top enterprises in the sector [1][4]. Group 1: Suplay's Market Position - Suplay submitted its IPO application to the Hong Kong Stock Exchange on January 1, 2026, ranking first in China's collectible non-combat card market and being the only Chinese brand among the top five globally [2]. - Suplay initially focused on trendy toys before transitioning to card production, securing significant investments and partnerships with major IPs like miHoYo and G-bits [7][9]. - The company emphasizes a strong collection logic, with single card prices exceeding 10 yuan and packs priced between 59.9 yuan and 89.9 yuan, targeting adult consumers, particularly women [9]. Group 2: Financial Performance and Growth - Suplay's revenue is projected to reach 1.4 billion yuan in 2023, 2.8 billion yuan in 2024, and 2.83 billion yuan in the first nine months of 2025, with a gross margin of 54.5% driven primarily by card sales [11]. - The company has established a brand barrier by focusing on collectible cards, avoiding direct competition with card games, and maintaining a unique market position [11]. Group 3: Challenges and Strategic Focus - Suplay faces challenges in scaling its operations while maintaining the value of its collectibles, as its revenue is significantly lower than that of card games, which are projected to grow by 270% in 2024 [13]. - The company relies heavily on external IP licensing, with the top five IPs contributing 47.8% to 77.7% of its revenue over the years, raising concerns about sustainability if key licenses expire [14]. - Suplay plans to use IPO proceeds to expand its core business and strengthen its collectible card capabilities while reducing reliance on its own IPs [14]. Group 4: Industry Trends and Competitor Landscape - Other companies in the card industry, such as Hitcard and Jason Entertainment, are also pursuing IPOs and have secured significant funding, indicating a competitive landscape [16][18]. - The industry is witnessing a diversification in business models, with some companies focusing on expanding their ecosystems and others enhancing their brand value through high-end product lines [19][20]. - Global experiences suggest that pure card companies face challenges in the public market, emphasizing the need for broader narratives that incorporate IP and entertainment development [22][23].

Investment Rating - The report maintains a "Strong Buy" investment rating for the company [3][7]. Core Views - The company's revenue has been under pressure due to adjustments in the digital marketing segment, with a significant year-on-year decline of 24.64% in the first half of 2025 [7]. - The gaming business remains resilient, with a slight revenue decline of 6% year-on-year, indicating strong player engagement [7]. - The company is strategically investing in the collectible card market, particularly focusing on sports cards, to diversify its entertainment offerings [7]. - Future revenue projections for 2025-2027 are estimated at 33.86 billion, 36.40 billion, and 38.47 billion respectively, with corresponding net profits of 5.54 billion, 6.35 billion, and 6.97 billion [7]. Financial Data Summary - The company reported total revenue of 14.38 billion in the first half of 2025, with a net profit of 2.56 billion [1][7]. - The digital marketing segment's revenue fell to 5.2 billion, accounting for 36% of total revenue, down from 46% in the previous year [7]. - The gaming segment's revenue increased its share to 33% of total revenue, while the card business accounted for 30% [7]. - The projected earnings per share (EPS) for 2025 is 1.33, with a price-to-earnings (PE) ratio of 21.4 [2][10]. Valuation Metrics - The current stock price is 28.41 yuan, with a market capitalization of 11.9 billion [3]. - The company has a return on equity (ROE) of 14.2% and a debt-to-asset ratio of 28.2% [3][10]. - The estimated price-to-book (PB) ratio for 2025 is 2.9, indicating a favorable valuation compared to historical levels [2][10].