Investment Rating - The report upgrades the investment rating of the company to "Buy" with a target price of HKD 39.00, indicating a potential upside of 25.0% from the current price of HKD 31.20 [1][15]. Core Insights - The report highlights that the company's derivative business is accelerating, which is a key driver for the upgraded rating. The company maintains a leading position in high-quality IP reserves and is expected to benefit from the expansion of IP derivative products [1][5]. - The financial outlook for the company shows a mixed performance, with expected revenue growth stabilizing in the online business for 2025, despite a projected decline in copyright operations revenue [5][10]. Financial Overview - Revenue projections for the company are as follows: - 2023: RMB 7,012 million - 2024: RMB 8,121 million - 2025E: RMB 7,439 million - 2026E: RMB 8,067 million - 2027E: RMB 8,403 million - The year-on-year growth rates show a decline of 8.0% in 2023, followed by a recovery of 15.8% in 2024, and further fluctuations in subsequent years [2][10][16]. - Net profit estimates are: - 2023: RMB 1,130 million - 2024: RMB 1,142 million - 2025E: RMB 1,348 million - 2026E: RMB 1,486 million - 2027E: RMB 1,659 million - The net profit growth rate is expected to be 24.8% in 2025, following a slight increase in 2024 [2][10][16]. Business Segment Performance - The online business revenue showed a slight increase of 2% year-on-year, with a stable monthly active user (MAU) count of 10.3 million and a 5% increase in paying users to 9.2 million [5][9]. - The report notes a significant decline in revenue from copyright operations, down 46% year-on-year, primarily due to delays in new content releases [5][9]. Valuation and Market Position - The report maintains the non-IFRS net profit expectations for 2025/26 and adjusts the valuation to 2026, referencing an average price-to-earnings (P/E) ratio of 25 times for comparable companies [5][10]. - The company is positioned to leverage its IP reserves and the integration of AI-generated content (AIGC) to enhance efficiency and accelerate the adaptation of mid-tier IP into visual formats [5][10].