Flash | 12 Nov 2025 14:57:31 ET │ 11 pages Giant Network (002558.SZ) What's New from Citi 2025 China Conference: More +Ve Tone on Supernatural Action CITI'S TAKE Giant Network attended 2nd day of Citi 2025 China Conference (Nov 12). Key takeaways: 1) stronger tone on Supernatural Action monetization, next CNY promotion as potential catalyst, unique product design and overseas expansion plan; 2) update on game pipeline; 3) shareholder return strategy. With sequential grossing improvement in Oct driven by rec ...

Summary of Giant Network (002558.SZ) Conference Call Company Overview - **Company**: Giant Network - **Ticker**: 002558.SZ - **Industry**: Online Gaming, specifically MMORPG (Massively Multiplayer Online Role-Playing Games) Key Financial Highlights - **3Q25 Performance**: - Revenues increased by **116% year-over-year** to **Rmb1.71 billion** - Profit reached **Rmb640 million** in 3Q25, which would have exceeded market expectations if the same deferred recognition cycle as 2Q25 was applied [1][2][4] - **Future Revenue Estimates**: - FY25-27E revenues revised upwards by **6.3%**, **11.2%**, and **12.0%** to **Rmb5.2 billion**, **Rmb7.6 billion**, and **Rmb8.0 billion** respectively [2][17] - **Earnings Summary**: - 2025E net profit projected at **Rmb2.022 billion**, with significant growth expected in 2026E and 2027E [6][19] Core Product Insights - **Supernatural Action**: - Cumulative grossing reached approximately **Rmb1.5 billion** by 3Q25, with **Rmb500 million** in September alone [4] - Anticipated longer lifecycle and higher lifetime value due to unique female-oriented positioning and high daily engagement [1][4] - Expected to perform well during upcoming promotional periods, particularly during Chinese New Year [4] Management Changes - **CEO Transition**: - Resignation of CEO Mr. Zhang Dong, succeeded by Ms. Liu Wei, focusing on young talent development [5] Valuation and Investment Strategy - **Target Price**: - Increased to **Rmb42**, based on a **22x FY26E EPS** of **Rmb1.89**, reflecting a **10% premium** to A-share gaming peers [3][26] - **Investment Rating**: - Maintained a **Buy** rating, citing strong growth potential from Supernatural Action and future game developments [1][25] Risks and Challenges - **Downside Risks**: - Shorter-than-expected lifecycle for Supernatural Action - Challenges in overseas expansion - Failure to effectively implement AIGC technology to reduce costs and enhance content quality [27] Additional Financial Metrics - **Market Capitalization**: Approximately **Rmb68.664 billion** (US$9.673 billion) [7] - **Expected Total Return**: - Expected share price return of **18.3%** and dividend yield of **1.1%**, leading to a total expected return of **19.5%** [7] Conclusion Giant Network is positioned for significant growth driven by its flagship title, Supernatural Action, and a strategic focus on young talent and new game development. The recent management changes and positive financial revisions support a bullish outlook, although potential risks remain that could impact future performance.