Group 1 - The mobile game "Xianxia Era" developed by Dihun Network and published by Tencent will begin a limited, non-chargeable test on November 27, 2023, for Android users, with qualification applications open until November 23, 2023 [1] - The launch of "Xianxia Era" signifies Dihun Network's entry into the competitive landscape of new games expected in Q4 2025, alongside titles like "Black Clover: Quartet Knights" and "Wasteland Dawn" [1] - "Xianxia Era" aims to differentiate itself in the Xianxia genre through its "open world + high difficulty challenges" positioning [1] Group 2 - Kuro Game's "Ningchao" has been nominated for the TGA 2025 Best Mobile Game award, prompting the company to reward players with "Star Voice *1000" as a gesture of appreciation [2] - The nomination of "Ningchao" reflects the recognition of domestic games in areas such as open world design, action mechanics, and narrative depth [2] - This marks the second consecutive year that "Ningchao" has received a TGA nomination, making it the only purely domestic mobile game to achieve this [2] Group 3 - Bilibili Games has opened recruitment for a limited test of the mobile game "Magic Craft," with applications closing on November 20, 2023 [3] - "Magic Craft" is set in a fantasy world invaded by ancient gods, where players will take on the role of a hero to defeat monsters and save the world [3] - The recruitment for "Magic Craft" indicates Bilibili Games' deeper involvement in the independent game publishing sector, enhancing its influence in the international market [3]

Core Viewpoint - The recent share reduction by the chairman and other executives of Dianhun Network indicates a potential cash-out during a low stock price period, amidst declining financial performance and product revenue [1][3]. Group 1: Share Reduction - Chairman and General Manager Hu Jianping reduced his holdings by 4.8692 million shares, accounting for 2% of the total shares, with a total value of approximately 101 million yuan [1]. - Other executives, including board member Yu Xiaoliang and financial director Wu Xiaojun, also plan to reduce their holdings, with proposed reductions of up to 391.81 thousand shares, 22.5 thousand shares, and 25 thousand shares respectively [1]. Group 2: Financial Performance - Dianhun Network's revenue from 2021 to 2024 showed a decline from 996 million yuan to 550 million yuan, with net profit dropping from 339 million yuan to 30.58 million yuan [3]. - In the first half of 2025, the company reported a revenue of 194 million yuan, a year-on-year decrease of 28.69%, and a net loss of 9.34 million yuan, marking the first loss since its listing [3]. Group 3: Product Performance - The main product, the "Dream Three Kingdoms" series, has seen a decline in revenue, with figures dropping from 508 million yuan in 2022 to 359 million yuan in 2024 [4]. - Monthly active users for "Dream Three Kingdoms" fell to 566,400 in 2024, a decrease of 3.9%, while monthly paying users dropped by 26.15% to 64,200 [4]. Group 4: Future Outlook - The company emphasizes the need to adapt to gaming trends and player preferences to avoid further revenue declines [5]. - Dianhun Network is focusing on enhancing its self-research capabilities and has several new products in the pipeline, including "Barbarian Battle 2" and "Encountering Dragon 2" [5].

Core Viewpoint - The gaming industry is experiencing a surge in game approvals and a faster review process, leading to a positive market response, particularly for companies like Icefire Network and Deyun Network, which have seen significant stock price increases following the approval of new game licenses [3][4]. Group 1: Company Performance - Deyun Network's peak performance was in 2020, with total revenue of 1.02 billion yuan, a year-on-year increase of 47%, and a net profit of 330 million yuan, up 79% [10]. - Since 2021, Deyun Network has faced a continuous decline in revenue and profit for over four years, contrasting with the overall growth of the Chinese gaming market [12][10]. - In 2024, Deyun Network's revenue dropped to 359.26 million yuan, a decrease of 18.46% from 2023, with total revenue of 308.06 million yuan, down 38.47% [16]. Group 2: Product Lifecycle and Market Dynamics - The reliance on a single IP, "Dream of Three Kingdoms," has led to a decline in player engagement and revenue, with the game entering a phase of decline after over 15 years of operation [13][15]. - The company's other products, such as "Barbarian Battle" and "My Hero," have not achieved significant success, contributing to a shrinking revenue base [18]. - The gaming market is increasingly competitive, with major players like Tencent and NetEase dominating, leading to rising customer acquisition costs and pressure on profit margins [68][69]. Group 3: Financial Health and Investment Issues - Deyun Network has seen a significant drop in net profit, with a compound annual growth rate (CAGR) of -64.4% from 2020 to 2024, and a projected loss of 12 to 18 million yuan for the first half of 2025 [20][22]. - The company has faced increasing asset impairment losses, reaching 67 million yuan in 2024, accounting for 12.1% of total revenue [27]. - The company's investment strategy has led to a high number of underperforming investments, with six out of ten major investments facing operational crises [58][61]. Group 4: Management and Shareholder Actions - The company's founders have collectively cashed out 850 million yuan, raising concerns about their commitment to the company's future [73]. - The controlling shareholder plans to reduce their stake by 2%, indicating a lack of confidence in the company's long-term prospects [81][83]. - The company has faced regulatory scrutiny due to questionable financial practices related to its acquisition of Youdong Network, raising doubts about the integrity of its financial reporting [41][45][75].

Investment Rating - The report maintains a "Recommended" rating for the company, indicating an expectation to outperform the benchmark index by 10%-20% over the next six months [16]. Core Insights - The company experienced short-term pressure on performance, with Q4 2024 revenue at 138 million yuan, down 19.8% year-over-year and 2.0% quarter-over-quarter. The net profit attributable to shareholders was -44 million yuan, and the net profit after deducting non-recurring items was -46 million yuan. For Q1 2025, revenue was 102 million yuan, down 25.6% year-over-year and 25.8% quarter-over-quarter, with a net profit of 2 million yuan [1]. - The overall revenue for 2024 is projected at 550 million yuan, a decrease of 19% year-over-year, with a net profit of 30.58 million yuan and a net profit after deducting non-recurring items of 5.3 million yuan [1]. Financial Performance Summary - **Revenue and Profit Forecasts**: - 2024A: Revenue of 550 million yuan, net profit of 31 million yuan - 2025E: Revenue of 1,025 million yuan, net profit of 311 million yuan - 2026E: Revenue of 1,278 million yuan, net profit of 401 million yuan - 2027E: Revenue of 1,433 million yuan, net profit of 454 million yuan - **Growth Rates**: - Revenue growth rates are projected at -18.7% for 2024, 86.1% for 2025, 24.8% for 2026, and 12.1% for 2027 [3]. - Net profit growth rates are projected at -46.2% for 2024, 918.6% for 2025, 28.7% for 2026, and 13.3% for 2027 [3]. Business Segmentation - The company's PC game segment generated 370 million yuan in revenue for 2024, down 15.9% year-over-year, with a gross margin of 83.26%. The mobile game segment generated 160 million yuan, down 20.69% year-over-year, with a gross margin of 45.89% [7]. - Core products are performing steadily, with the flagship product "Dream Three Kingdoms 2" operating for over 10 years and having over 100 million registered users. The company is also launching new games like "Spiral Warrior" and "Jianghu Like Dream" in 2024 [7]. Future Outlook - The company has a rich pipeline of upcoming products, with a focus on the open-world game "Xiu Xian Era," which is expected to bring significant revenue and profit elasticity. The game will be published by Tencent and is set to be showcased at the 2025 Tencent Game Conference [7]. - Revenue forecasts for 2025-2027 are optimistic, with expected revenues of 1.03 billion yuan in 2025, 1.28 billion yuan in 2026, and 1.43 billion yuan in 2027, alongside substantial growth in net profits [7].