Summary of Xindong Company Conference Call Company Overview - **Company**: Xindong Company - **Industry**: Gaming and Information Services Key Points and Arguments 1. **Revenue Performance**: Xindong Company's gaming business revenue exceeded expectations, driven by strong performance in overseas markets for "Ragnarok" and significant contributions from "Torchlight" and "Xindong Town" [2][4] 2. **Profit Improvement**: The company saw a notable improvement in profit margins, with the gaming business gross margin increasing due to a higher proportion of overseas business, which has a better margin [2][4] 3. **Future Growth Potential**: Xindong Company has high growth certainty, with upcoming launches of "Iser" in multiple regions and the overseas version of "Xindong Town" expected by the end of 2025, which could significantly contribute to revenue [2][5] 4. **TapTap Platform**: The TapTap platform benefits from algorithmic recommendations and AI capabilities, enhancing ad targeting and improving ROI for advertisers, suggesting it should be valued as a vertical gaming community or tech platform [2][6] 5. **Revenue Forecast Adjustments**: The company raised its gaming business revenue forecast for 2025 by 32.4%, with similar adjustments for 2026 and 2027 nearing 35%, while also increasing overall gross margin by 4 percentage points [2][7] 6. **Profit Structure Changes**: The profit structure is shifting, with TapTap's profit growth potentially surpassing that of the gaming business, indicating a need for a distributed valuation approach [2][12][13] 7. **Market Valuation**: Using a distributed valuation method, the target market value is approximately 37 billion RMB, corresponding to a target price of 81 HKD, indicating further upside potential from current stock prices [3][14] 8. **Product Line Clarity**: The product line for the next two years is clear, with "Iser" contributing in Q4 2025 and "Xindong Town" expected to generate significant revenue in 2026 [10][26] 9. **Success Rate of Products**: The high success rate of Xindong's products is attributed to systematic resource investment and management optimization, leading to successful launches like "Xindong Town" and "Iser" [11] 10. **TapTap's Unique Business Model**: TapTap operates as both a game community and distribution channel, with a zero-revenue-sharing model that attracts many mid-tier companies, thus reducing their costs [19] 11. **Advertising Revenue Growth**: TapTap's advertising revenue is closely linked to its monthly active users (MAU), with a 33% increase in ad revenue despite a decline in MAU in 2023 [20] 12. **Profitability of TapTap**: In 2024, TapTap generated 1.5 billion RMB in revenue with a net profit exceeding 400 million RMB, and the net profit margin is expected to rise to around 40% in 2025 [25] 13. **Overall Performance Outlook**: The overall performance outlook for Xindong Company remains optimistic, with adjusted earnings forecasts reflecting strong growth potential driven by successful game launches and the profitability of the TapTap platform [27] Other Important Insights - **Market Discrepancies**: There are significant discrepancies in market valuation, with traditional views comparing Xindong to larger gaming companies like Tencent and NetEase, which may not accurately reflect its current growth trajectory [8][9] - **Focus on Key Projects**: Key projects to watch include "Ragnarok" and "Torchlight," with "Ragnarok" performing particularly well in Southeast Asia [15] - **User Engagement Strategies**: "Xindong Town" has maintained user engagement through frequent events, contributing to its strong performance in 2025 [16][17] - **Valuation Perspectives**: Different viewpoints exist regarding the valuation of "Xindong Town," with suggestions to evaluate it separately as a platform due to its complex profit structure [18]

游戏利润盘坚实，下半年关注《伊瑟》9/25上线、《小镇》海外及26年核心产品《RO2》首测。 1H25：游戏利润盘扎实表现，公司表示1H25增量主要系《仙境传说M：初心服》《心动小镇》《火炬 之光》推动收入增长、改善毛利率水平。 中金发布研报称，考虑TapTap盈利水平提升、游戏表现好于预期，上调心动公司(02400)25/26年归母净 利润预期66%/81%至16.5/19.5亿元，对应当前股价25/26年15/13x P/E。维持跑赢行业评级，综合考虑盈 利预测调整和新游预期逐步消化，上调目标价49%至82.5港元(25/26年22/18x P/E)，上行空间45%。 中金主要观点如下： 公司预告净利润同增超过215% 公司预计1H25收入不少于30.5亿元，同增超过37+%;净利润不少于7.90亿元，同增超过215%。公司业绩 预告好于该行及市场预期(净利润5.00亿元)，该行认为主要系：1)《仙境传说RO：初心服》流水及净利 润率水平均好于预期;2)TapTap收入及利润率表现好于预期。 TapTap收入稳健增长，下半年关注算法升级、功能迭代及PC版发展。 1H25：受广告算法改进及用户参与度提升带动 ...

Core Viewpoint - The company has raised its profit forecasts significantly for 2025 and 2026, reflecting better-than-expected performance from TapTap and game titles, leading to an upgraded target price and a maintained outperform rating [1][2]. Group 1: Profit Forecasts - The company has increased its net profit expectations for 2025 and 2026 by 66% and 81% respectively, reaching 1.65 billion and 1.95 billion yuan, corresponding to P/E ratios of 15x and 13x [1]. - The company anticipates a revenue of no less than 3.05 billion yuan for the first half of 2025, representing a year-on-year growth of over 37% [2]. - The net profit for the same period is expected to be no less than 790 million yuan, showing a year-on-year increase of over 215% [2]. Group 2: Game Performance - The solid performance in the first half of 2025 is attributed to titles such as "Ragnarok M: Beginners' Server," "Heart Town," and "Torchlight," which have driven revenue growth and improved gross margins [3]. - The second half of 2025 is expected to see profit growth from the anniversary celebration of "Heart Town" and the launch of "Iser" on September 25, with the international version performing better than market expectations [3]. Group 3: TapTap Growth - TapTap has shown steady revenue growth in the first half of 2025, driven by improvements in advertising algorithms and increased user engagement [4]. - The company plans to focus on significant updates for games and the development of a PC version of TapTap, which has already garnered a user base [4]. - Future initiatives include enhancing the TapTap mini-game platform and exploring AI-driven game development [4].