Core Viewpoint - The report from CICC maintains the forecast for Xindong Company (02400) with a net profit of 1.65 billion and 1.95 billion yuan for 2025 and 2026 respectively, with a target price increase of 14% to 93.7 HKD, indicating an upside potential of 16% based on the company's monetization capabilities and future layout [1]. Group 1: Financial Performance - The company's 1H25 revenue increased by 39% to 3.08 billion yuan, with profit rising by 223.5% to 811 million yuan, and net profit up by 268% to 755 million yuan, aligning with CICC's expectations [2]. - Game revenue for 1H25 also grew by 39% to 2.07 billion yuan, driven by strong performances from titles such as "Ragnarok M: Beginner's Server" and "Xindong Town" [2]. Group 2: Game Development and Future Prospects - The company is focusing on existing games with anticipated commercialization acceleration for "Xindong Town" and the overseas launch of "Ragnarok M: Beginner's Server" in the second half of 2025 [2]. - New game launches to watch include "Yise" on September 25 and "Ragnarok RO: Guardian of Eternal Love" testing at the end of the year with plans for 2026 [2]. Group 3: TapTap Platform Insights - The scarcity of the TapTap platform is highlighted, with ongoing efforts to enhance monetization potential through the PC version and mini-games, which are expected to contribute to future growth [3][5]. - The company reported a 38% increase in Tap revenue to 1.01 billion yuan, driven by an upgraded advertising system that improves ad effectiveness [4]. Group 4: Strategic Developments - The launch of TapTap PC version and mini-games in April and July respectively is expected to enhance multi-platform collaboration and attract more advertising budget increments [5]. - The TapADN platform, aimed at game developers for monetization and user growth solutions, is in its early development stage with a potential market size in the tens of billions [5].

Core Insights - The company's 1H25 performance aligns with expectations, showing significant revenue and profit growth, with a 39% increase in revenue to 3.08 billion yuan and a 223.5% increase in profit to 811 million yuan [1] Group 1: Financial Performance - The company's revenue for 1H25 increased by 39% to 3.08 billion yuan, meeting the forecast of at least 3.05 billion yuan [1] - Net profit attributable to shareholders rose by 268% to 755 million yuan, with adjusted net profit increasing by 235% to 796 million yuan [1] - The overall performance is consistent with the company's profit warning and analyst expectations [1] Group 2: Game Development and Trends - Game revenue for 1H25 increased by 39% to 2.07 billion yuan, driven by strong performances from titles like "Ragnarok M: Origin" and "Heart Town" [1] - Future growth is anticipated from existing games, particularly with the commercialization acceleration of "Heart Town" and the overseas launch of "Ragnarok M: Origin" [1] - New game launches to watch include "Iser," set to launch on September 25, and "Ragnarok RO: Guardians of Eternal Love," which is scheduled for testing by the end of the year [1] Group 3: TapTap Platform and User Engagement - The TapTap platform has shown a stable monthly active user count of 43.625 million, with a 1% year-on-year increase, while daily active users have increased by 11% over the past year [2] - The company is enhancing its community ecosystem by integrating more games with TapSDK, which allows for data sharing and the creation of differentiated content [2] - Revenue from Tap increased by 38% to 1.01 billion yuan, attributed to improvements in the advertising system and market positioning as a unique player in the game acquisition platform [2] Group 4: Future Outlook and Valuation - The company maintains net profit forecasts of 1.65 billion yuan and 1.95 billion yuan for 2025 and 2026, respectively [3] - The current stock price corresponds to 21 and 18 times the P/E ratio for 2025 and 2026, with a target price increase of 14% to 93.7 HKD, indicating a potential upside of 16% [3]