Investment Rating - The report maintains a "Buy" rating for the company, with an adjusted target price of 32 USD / 247 HKD [3][26]. Core Insights - The company reported a revenue of 7.7 billion RMB for Q3 2025, a year-on-year increase of 5.2%, aligning with market expectations. The adjusted net profit was 790 million RMB, exceeding the market forecast of 640 million RMB, with an adjusted profit margin of 10.2% [1][3]. - User traffic has accelerated, with Daily Active Users (DAU) growing by 9.3% year-on-year to 117 million and Monthly Active Users (MAU) increasing by 8.0% to 376 million. The average daily user engagement reached a record high of 112 minutes [1]. - Advertising revenue saw a robust growth of 23% year-on-year, driven by improved ad supply and effectiveness. The company anticipates maintaining over 20% growth in advertising revenue for Q4 2025 [1][3]. Financial Performance Summary - For FY23, the company is projected to generate revenue of 22.5 billion RMB, increasing to 35.8 billion RMB by FY27. The adjusted net profit is expected to turn positive in FY25, reaching 2.5 billion RMB [4][11]. - The operating profit is forecasted to improve from a loss of 5.1 billion RMB in FY23 to a profit of 1.1 billion RMB in FY25 [4][11]. - The report highlights a significant improvement in gross margin, which is expected to rise from 24.2% in FY23 to 38.5% by FY27 [11].

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].