Investment Rating - The report maintains a "Buy" rating for the company [7] Core Viewpoints - The launch of the first "Dream Level" costume "Wuling'er - Mirror Dream" for the game "Supernatural Action Group" on the 17th has led to a peak ranking in the iOS free list at Top 3 and Top 4 in the sales list, marking a new high since its launch [2][4] - The unique themes and gameplay of "Supernatural Action Group" are driving sustained interest, with strong social features potentially making it another blockbuster product with high daily active users (DAU) [2][4] - The company is actively advancing several new games, including "Five Thousand Years" and "Famous Generals Kill," alongside a comprehensive layout of game + AI strategies, supporting long-term growth [2][4] Summary by Sections Event Description - The first "Dream Level" costume "Wuling'er - Mirror Dream" was launched on the 17th, achieving significant rankings in various app store categories [4] Event Commentary - The game "Supernatural Action Group" has maintained a weekly update frequency since summer, with new costumes, characters, and maps contributing to its ranking improvements [11] - The game features innovative themes such as "supernatural, Cthulhu, and folk horror," appealing to younger players' desire for excitement and curiosity [11] - The company is integrating AI technology into gameplay, with products like "Space Kill" being among the first to utilize AI in the gaming industry [11] Financial Forecast and Investment Suggestions - The company is projected to achieve net profits of 2.26 billion and 2.86 billion for 2025 and 2026, respectively, corresponding to price-to-earnings ratios of 24.3 and 19.1 times [11]

Investment Rating - The report maintains an "Overweight" rating for the media industry [1] Core Insights - The overall performance of the media sector in Q1 2025 exceeded market expectations, driven by blockbuster films and games [5][11] - The publishing and periodicals sector is facing revenue declines due to regulatory impacts and tax policy changes, with expected revenue drops of 2% in 2024 and 4% in Q1 2025 [2] - The gaming sector showed strong performance with a revenue increase of 21% in Q1 2025, supported by successful new game launches [20][29] - The marketing sector is experiencing revenue declines due to cautious ad spending amid economic recovery challenges, but top companies are showing resilience [5][20] - The film industry is expected to have a strong start in 2025, with Q1 revenue growth of 41% driven by popular films [5][20] Summary by Sections Overall Performance - In Q4 2024, the media sector achieved a total revenue of 1,393 billion, a 2% year-on-year decline; however, in Q1 2025, revenue rose to 1,240 billion, marking a 5% year-on-year increase [11][12] Gaming Sector - The domestic gaming market's actual sales revenue reached 3,257.83 billion in 2024, with a year-on-year growth of 7.53%, and 857.04 billion in Q1 2025, growing by 17.99% [20][29] - A-share gaming companies reported total revenues of 873.7 billion and 248.2 billion for 2024 and Q1 2025, respectively, with year-on-year increases of 8% and 21% [29][37] Marketing Sector - The marketing industry faced revenue declines in Q4 2024 and Q1 2025, primarily due to cautious spending from advertisers; however, the sector showed signs of recovery with a 9% year-on-year increase in net profit in Q1 2025 [5][20] Film Industry - The film industry saw a revenue of 141.2 billion in Q1 2025, a 41% increase year-on-year, largely due to successful films like "Nezha: Birth of the Demon Child" [5][20] Digital Media - The digital media sector experienced slight revenue declines in both 2024 and Q1 2025, with major player Mango TV reporting a revenue of 140.8 billion in 2024, down 3.8% year-on-year [5][20] Publishing and Periodicals - The publishing sector is projected to see a revenue decline of 2% in 2024 and 4% in Q1 2025, influenced by regulatory changes in educational publishing [2][5]

Investment Rating - The investment rating for the company is "Buy" and is maintained [7] Core Insights - The company reported a revenue of 724 million in Q1 2025, representing a year-on-year increase of 3.94% and a quarter-on-quarter increase of 2.75%. The net profit attributable to the parent company was 348 million, showing a year-on-year decrease of 1.29% and a quarter-on-quarter decrease of 1.76%. The non-recurring net profit was 362 million, down 10.45% year-on-year but up 3.95% quarter-on-quarter [2][4] - The core product, "Original Journey," has shown significant incremental contributions, and several new games are actively being developed. The company is focusing on a comprehensive layout of games and AI, with a keen eye on the progress of new games and AI empowerment [2][11] Summary by Sections Financial Performance - In Q1 2025, the company achieved a revenue of 724 million, with a year-on-year growth of 3.94% and a quarter-on-quarter growth of 2.75%. The net profit attributable to the parent company was 348 million, reflecting a year-on-year decline of 1.29% and a quarter-on-quarter decline of 1.76%. The non-recurring net profit was 362 million, down 10.45% year-on-year but up 3.95% quarter-on-quarter [2][4] Product Development - The "Original Journey" game has been performing steadily, with its official version launched on January 10, 2025. The game features significant upgrades to its open economic system, increasing the output of high-value items and lowering access thresholds. The game also optimized its auction trading system, providing a secure and free trading environment for players. The mini-program version of "Original Journey" was launched in January 2025, contributing significantly to revenue growth in Q1 2025 [11] - The company has several new games in development, including "Supernatural Action Group" and "Five Thousand Years," which have received approval for release. The ongoing iteration of the "Journey" IP games and the active development of new games are expected to contribute to revenue growth [11] AI Integration - The company is actively integrating AI technology into its gameplay innovations. "Space Kill" is one of the first games in the industry to deeply explore AI-native gameplay, utilizing the Deepseek large model capabilities. The game has integrated Tencent's Turbo S, resulting in nearly 900,000 total matches and generating over 7 million AI players. The company's "Thousand Shadows" voice game generation model is continuously iterating, and it is deepening its AI collaboration with Alibaba Cloud [11] Profit Forecast and Investment Recommendation - The company is expected to achieve net profits attributable to the parent company of 1.62 billion and 1.82 billion in 2025 and 2026, respectively, corresponding to PE ratios of 17.3 and 15.4 times. The "Buy" rating is maintained [11]

Investment Rating - The report maintains a "Buy" rating for the company [4][7]. Core Views - The company reported a revenue of 724 million yuan in Q1 2025, showing a year-over-year increase of 3.94% and a quarter-over-quarter increase of 2.75%. The net profit attributable to shareholders was 348 million yuan, reflecting a year-over-year decrease of 1.29% and a quarter-over-quarter decrease of 1.76% [1]. - The "Journey" IP is seeing multiple products launch simultaneously, aiming to create a sustainable gaming ecosystem. The new gameplay and promotional activities are designed to enhance player engagement and expand the user base [1]. - The company is actively integrating AI into its gaming experiences, with the "DeepSeek-R1" model enhancing gameplay and user interaction. This integration is expected to drive innovation and improve operational efficiency [4]. Financial Summary - The company forecasts net profits of 1.665 billion yuan, 1.871 billion yuan, and 2.090 billion yuan for 2025, 2026, and 2027 respectively, with corresponding P/E ratios of 16.8, 15.0, and 13.4 [4][5]. - Revenue projections for the upcoming years are 3.215 billion yuan for 2025, 3.569 billion yuan for 2026, and 3.890 billion yuan for 2027, indicating a growth rate of 10.0%, 11.0%, and 9.0% respectively [5][12]. - The company's net profit margin is projected to improve, with net profit growth rates of 16.9%, 12.4%, and 11.7% for the years 2025, 2026, and 2027 respectively [5][12].

Group 1: Financial Performance - In Q1 2025, the company achieved revenue of 724 million yuan, representing a year-over-year increase of 3.94% and a quarter-over-quarter increase of 2.75% [1] - The net profit attributable to shareholders was 348 million yuan, showing a year-over-year decrease of 1.29% and a quarter-over-quarter decrease of 1.76% [1] - The non-recurring net profit attributable to shareholders was 349 million yuan, reflecting a year-over-year decline of 10.45% but a quarter-over-quarter increase of 3.95% [1] Group 2: Contract Liabilities and Revenue Recognition - Contract liabilities continued to grow, reaching 761 million yuan by the end of Q1 2025, an increase of 290 million yuan year-over-year and 128 million yuan quarter-over-quarter [1] - The increase in contract liabilities is primarily due to user recharge flows that need to be amortized based on item consumption and player lifecycle [1] - The sales expense ratio for Q1 2025 was 38.41%, up 9.40 percentage points year-over-year but down 3.76 percentage points quarter-over-quarter, indicating a mismatch between revenue recognition and expense recognition [1] Group 3: New Game Development - The company is actively developing new games to expand its product matrix and create new growth points [2] - The multiplayer game "Supernatural Action Team" began a paid test in early 2025 and reached a peak ranking of 16 in the iOS free game chart and 18 in the iOS adventure game sales chart [2] - The strategy card game "Code Kill" started a limited test on March 27, 2025, while historical SLG "Five Thousand Years" and casual competitive game "Pocket Fight" have obtained approval for launch [2] Group 4: AI Integration - The company has built comprehensive AI capabilities centered around self-developed large models, aiming to industrialize AI applications across various modalities [3] - AI tools have been developed for image, video, voice, code, text, and strategy, which help reduce research and operational costs [3] - The company announced a deepened AI collaboration with Alibaba Cloud in February 2025, focusing on AI applications in gaming scenarios and computational power ecosystem development [3] Group 5: Earnings Forecast and Investment Rating - The company maintains its previous earnings forecast, expecting EPS of 0.85, 0.92, and 0.99 yuan for 2025-2027, corresponding to current PE ratios of 17, 16, and 15 times [3] - The company is optimistic about the steady release of existing game performance and the incremental contributions from new game launches, while also looking forward to the exploration of AI in gaming [3]