Investment Rating - The report maintains a "Buy" rating for the company, with a target price adjusted to 22 USD / 173 HKD, reflecting a potential upside of 23% from the current price [3][6]. Core Insights - The company reported a revenue of 7.0 billion RMB for Q1 2025, representing a year-on-year growth of 24%, slightly above market expectations. The adjusted net profit reached 362 million RMB, significantly exceeding market forecasts due to effective cost control, resulting in an adjusted profit margin of 5.2% [1][2]. - Monthly active users (MAU) grew by 7.8% year-on-year to 368 million, driven by promotional activities, with a focus on user retention being crucial for future growth. Daily active users (DAU) increased by 4.2% to 107 million [2]. - Advertising revenue increased by 20% year-on-year, benefiting from user growth and enhanced commercial value, with expectations of an 18% year-on-year increase in Q2 [2]. - The gaming segment saw a revenue of 1.73 billion RMB, a 76% increase year-on-year, primarily driven by the game "Three Kingdoms: Strategy of the World" [2]. Summary by Sections Financial Performance - The company’s revenue structure improved, with a gross margin of 36.3%, showing an increase of 8.0 percentage points year-on-year and 0.2 percentage points quarter-on-quarter. The gross margin is expected to improve slightly in Q2 [2]. - Financial forecasts indicate a revenue growth trajectory, with projected revenues of 30.25 billion RMB for FY25 and 32.49 billion RMB for FY26, alongside an expected adjusted net profit of 1.94 billion RMB for FY25 [5][8]. User Metrics - The report highlights the importance of user retention and engagement, noting that the MAU and DAU figures are critical indicators of the company's growth potential [2]. Market Position - The report emphasizes the company's strong performance in the gaming sector and the gradual release of advertising value, which are key drivers for future growth [3].