Summary of Key Points from the Conference Call Company Overview - **Company**: 凯英网络 (Kaiying Network) - **Industry**: Gaming and AI Technology Core Insights and Arguments 1. **Upcoming Product Launches**: Kaiying Network is set to launch several significant IP games, including "斗罗大陆诛仙传说" (Douluo Dalu: Legend of the Gods), "三国天下归心" (Three Kingdoms: Return of the Heart), and "盗墓笔记启程" (Tomb Raider: Journey) between late 2025 and early 2026, which are expected to drive substantial revenue growth [2][3][7] 2. **User Growth Potential**: The daily active users on the Legend Box platform are currently around 400,000 to 500,000, with a market potential of 2 to 3 million players. The company aims for a 50% penetration rate, potentially exceeding 1 million users through increased licensing partnerships and live streaming promotions [2][6][7] 3. **AI Companion Product**: The AI companion product EVE, developed by Shenzhen Natural Selection, is targeted at female gamers and has received positive feedback during testing. It is scheduled for launch by the end of 2025 and is expected to be the first breakout AI companion product [2][5][10] 4. **AI Game Development Platform**: The company’s self-developed AI game development platform, Sune, has completed its first round of financing of 100 million yuan and is entering a second round. Kaiying Network holds a 40% stake in the operating company, and its commercialization is anticipated to enhance the company's valuation [2][11][14] 5. **AI Toy Series**: The "暖心布梦游记" (Warm Heart Dream Journey) AI toy series, including products like the Goodnight Sheep and Worry-Free Bird, is expected to launch in Q4 2025, priced between 200 to 400 yuan. These toys are aimed at urban young women and are projected to become bestsellers [2][12][13] Additional Important Insights 1. **International Market Expansion**: The company is actively expanding into international markets, with plans to launch products like "新信长之野望" (New Nobunaga's Ambition) and "射雕三部曲" (The Legend of the Condor Heroes Trilogy) in Southeast Asia, Japan, and Europe, contributing to incremental revenue [4][7] 2. **Focus on AI Technology**: Kaiying Network is concentrating on the application of AI technology in gaming and related fields, including AI companionship, game development engines, and AI toys, which are expected to drive performance and valuation growth [4][8][14] 3. **Market Trends in Female Gaming**: The female gaming market is rapidly growing, with successful titles like "恋与深空" (Love in Space) and "光与夜之恋" (Light and Night of Love) meeting the emotional and social needs of female users. EVE is positioned to capitalize on this trend with its high level of AI interaction [9][10] Conclusion - **Future Outlook**: Kaiying Network is well-positioned for sustained growth due to its strong R&D capabilities, diversified strategic layout, and global vision, with significant revenue potential from upcoming product launches and AI innovations [8][14]

Core Viewpoint - The company has shown significant improvement in profitability, driven by new game launches and AI initiatives, maintaining a "buy" rating for the stock [2][3]. Financial Performance - In H1 2025, the company achieved revenue of 2.578 billion yuan (up 0.89% year-on-year) and a net profit of 950 million yuan (up 17.41% year-on-year) [2]. - The Q2 2025 revenue was 1.225 billion yuan (down 1.80% year-on-year), with a net profit of 432 million yuan (up 12.79% year-on-year) [2]. - The gross margin for H1 2025 was 82.4% (up 0.4 percentage points), and the net margin was 36.8% (up 5.2 percentage points) [2]. Growth Drivers - The company is optimistic about the growth potential from new game launches, including titles like "Dragon Valley World" and "Digimon: Source," which have performed well in rankings [3]. - The company has a rich pipeline of games with over 14 titles approved and more in development, covering various genres [3]. - The overseas revenue reached 200 million yuan (up 60% year-on-year), and information service revenue was 660 million yuan (up 65% year-on-year) with a gross margin of 91% [3]. Strategic Initiatives - The company has secured exclusive operational rights for the "Legend Box," aiming to create a comprehensive community platform integrating gaming, live streaming, esports, and more [3]. - The company is exploring AI technologies, launching platforms for automated content generation and developing AI applications for emotional companionship [4]. Market Sentiment - Recent ratings from 15 institutions have all been "buy," with an average target price of 26.01 yuan [8].

Investment Rating - The investment rating for the company is "Buy" (maintained) [1][4]. Core Views - The company's revenue for H1 2025 reached 2.578 billion yuan, a year-on-year increase of 0.89%, while the net profit attributable to shareholders was 950 million yuan, up 17.41% year-on-year. The net profit margin improved to 36.8%, an increase of 5.2 percentage points year-on-year [3][4]. - The company has a rich pipeline of new games and is actively exploring AI applications, which are expected to drive future growth. The anticipated net profits for 2025-2027 are projected to be 2.167 billion, 2.401 billion, and 2.649 billion yuan, respectively [4][6]. Financial Performance - In H1 2025, the gross margin was 82.4%, reflecting a year-on-year increase of 0.4 percentage points. The company achieved a net profit of 432 million yuan in Q2 2025, representing a 12.79% increase year-on-year [3][4]. - The company’s mobile gaming revenue for the first half of the year was 1.9 billion yuan, a decrease of 10% year-on-year, but new game launches are expected to provide a boost [4][5]. - The overseas revenue for H1 2025 was 200 million yuan, showing a significant year-on-year increase of 60% [4]. Product Pipeline and Growth Drivers - The company has over 14 games approved for release and more than 4 games in development, covering various genres such as RPG and SLG. Notable upcoming titles include "Dragon Valley World" and "Digital Monster: Source" [4][5]. - The company has secured exclusive operational rights for the "Legend Box," which is expected to enhance revenue streams significantly [4][5]. AI and IP Development - The company is actively developing its IP portfolio and exploring AI technology, with initiatives such as the launch of the "SOON" platform for automated content generation and the AI emotional companion application "EVE" [5][6]. - The introduction of the "Warm Star Valley Dream Journey" toy brand indicates the company's strategy to leverage its IP in various sectors [5]. Valuation Metrics - The projected P/E ratios for 2025-2027 are 22.2, 20.1, and 18.2 times, respectively, indicating a favorable valuation outlook [4][6].