Investment Rating - The report maintains a "Buy" rating for the company, indicating a positive outlook on its performance in the mobile gaming sector and information services [4]. Core Views - The company's contract liabilities have significantly increased, providing a solid foundation for future growth. As of the first three quarters, contract liabilities amounted to approximately 351 million yuan, a year-on-year increase of 94.78%, primarily due to the rise in deferred revenue [2]. - The company has successfully obtained licenses for three games and launched multiple titles, including "荒野守则," "熊猫大作战," and "黑猫警长：守护," which have performed well in various markets [2]. - Progress in the company's gaming box initiative is promising, with over 25 high-quality games entering the platform, and plans to introduce over 100 more, enhancing the content ecosystem [3]. Financial Performance Summary - For the first three quarters, the company reported a revenue of 4.075 billion yuan, a year-on-year increase of 3.75%, and a net profit attributable to shareholders of 1.583 billion yuan, up 23.7% [1]. - The third quarter alone saw revenues of 1.497 billion yuan, reflecting a 9.08% year-on-year growth, with net profit reaching 633 million yuan, a 34.51% increase [1]. - The company forecasts net profits for 2025-2027 to be approximately 1.967 billion yuan, 2.362 billion yuan, and 2.725 billion yuan, respectively, with corresponding P/E ratios of 25.58, 21.30, and 18.46 [4][6].

Investment Rating - The report maintains a "Buy" rating for the company, expecting the stock price to outperform the benchmark index by more than 15% [3][11]. Core Insights - The company's performance in Q3 2025 was significantly driven by the "Legend Box," contributing approximately 5.7 billion yuan in revenue, with a notable year-on-year growth of 34.51% in net profit [2][3]. - The company has a rich product and IP reserve, with several new game releases and collaborations enhancing its market position [2]. - The financial outlook for 2025-2027 shows a steady increase in earnings per share (EPS), projected at 1.02 yuan in 2025, 1.21 yuan in 2026, and 1.44 yuan in 2027, with corresponding price-to-earnings (PE) ratios of 23x, 20x, and 17x respectively [3]. Financial Performance Summary - For the first three quarters of 2025, the company reported a revenue of 4.075 billion yuan, a year-on-year increase of 3.75%, and a net profit of 1.583 billion yuan, up 23.70% [2]. - In Q3 2025 alone, the revenue reached 1.497 billion yuan, reflecting a 9.08% increase year-on-year, while the net profit was 633 million yuan, marking a 34.51% growth [2]. - The company's expense ratios for sales, management, and R&D were 31.28%, 2.90%, and 10.70% respectively, showing improvements in sales and management expenses compared to the previous year [2]. Product and IP Development - The company continues to focus on its core gaming business, with multiple new titles launched, including the overseas version of "Super Shrimp Battle" and several mobile games [2]. - The "996 Legend Box" platform is highlighted as a key asset, with plans to introduce over 100 new games to enhance user engagement and content diversity [2]. - The company is also advancing its AI initiatives, with a game AI development platform and a 3D AI emotional companion application showing promising early feedback [2].

Core Insights - The company reported a revenue of 4.075 billion yuan for the first three quarters of 2025, representing a year-on-year increase of 3.75%, with a net profit attributable to shareholders of 1.583 billion yuan, up 23.70% year-on-year [1] - In Q3 alone, the company achieved a revenue of 1.497 billion yuan, reflecting a year-on-year growth of 9.08% and a quarter-on-quarter increase of 22.19%, with a net profit of 633 million yuan, marking a year-on-year rise of 34.51% and a quarter-on-quarter increase of 46.66% [1] - The significant profit growth in Q3 is attributed to the high-margin information service revenue driven by the "Legend Box" product, which saw a 65.3% increase in information service revenue in the first half of 2025, reaching 657 million yuan with a gross margin of 90.7% [1] Financial Performance - Key financial metrics for the first three quarters include a gross margin of 83.04% (up 0.8 percentage points year-on-year) and a net profit margin of 38.85% (up 6.3 percentage points year-on-year), with Q3 net profit margin reaching 42.35% (up 7.1 percentage points quarter-on-quarter) [1] - Expense ratios for the first three quarters show a sales expense ratio of 31.28% (down 3.8 percentage points year-on-year), a management expense ratio of 2.90% (down 0.7 percentage points year-on-year), and a research and development expense ratio of 10.70% (up 0.5 percentage points year-on-year) [1] Business Development - The "Legend Box" is increasingly demonstrating its aggregation effect, with daily active users growing and new partnerships established with game developers, contributing to a sustainable profit growth point [2] - The company launched its self-developed AI full-process development platform "SOON," which is expected to significantly shorten game development cycles and enhance production efficiency, while the AI companion application "EVE" is set to launch by the end of 2025 [2] - The company has a rich pipeline of new games, with several titles already approved for release, including "Super Shrimp Battle" and "Blood of Heroes: Return," indicating a strong focus on both existing and new markets [2] Investment Outlook - The company is expected to see the platform ecosystem value of the "Legend Box" become a new growth driver, with projected net profits of 2.122 billion yuan, 2.607 billion yuan, and 2.972 billion yuan for 2025-2027, corresponding to price-to-earnings ratios of 24, 19, and 17 times [3]

Group 1: Game Approval and Market Trends - In September 2025, a total of 145 domestic online games were approved, including 93 mobile games, 42 mobile-casual puzzle games, 7 mobile-client games, 2 client games, and 1 mobile-web game [2] - The cumulative number of game licenses issued by the National Press and Publication Administration in 2025 has reached 1275, maintaining a high issuance frequency [2] - The regular issuance of game licenses reflects the regulatory support for the development of the gaming industry [2] Group 2: Company Performance and Financing - Kunlun Wanwei achieved a revenue of 3.733 billion yuan in the first half of 2025, a year-on-year increase of 49.23%, with ongoing optimization of AI game products [6] - Sanqi Interactive Entertainment reported a revenue of 8.486 billion yuan in the first half of 2025, a year-on-year decrease of 8.08%, but a net profit of 1.4 billion yuan, up 10.72% [6] - Financing net purchases for game stocks in September exceeded 1 billion yuan for three companies: Kunlun Wanwei (760 million yuan), Sanqi Interactive Entertainment (544 million yuan), and Giant Network (153 million yuan) [3] Group 3: Profitability and Growth - The net profit rankings for the first half of 2025 show ST Huatuo, Sanqi Interactive Entertainment, Kaiying Network, Giant Network, and G-bits leading with net profits of 2.656 billion yuan, 1.4 billion yuan, 950 million yuan, 777 million yuan, and 645 million yuan respectively [6] - Significant year-on-year net profit growth was observed in companies such as Shengtian Network (1186.02%), Youzu Network (989.31%), and Zhejiang Shuju Culture (156.26%) [7] - Kaiying Network's game "Black Cat Detective: Guardian" received approval in September, contributing to its overseas revenue of approximately 202 million yuan, a year-on-year increase of 59.57% [6]

Competitive Advantages - The company focuses on the core strategy of "focusing on the gaming industry," aiming to create high-quality games that meet market demands, supported by a business system of "R&D, publishing, investment + IP" [2] - The company has established an overseas publishing strategy, leading to a continuous increase in overseas revenue over the past three years [2][4] Overseas Business Performance - In 2023, overseas revenue reached 117 million CNY, accounting for 2.71% of total revenue, with a year-on-year growth of 619.54% [4] - In 2024, overseas revenue is projected to be 375 million CNY, representing 7.32% of total revenue, with a year-on-year growth of 221.48% [4] - In the first half of 2025, overseas revenue was 202 million CNY, making up 7.82% of total revenue, with a year-on-year growth of 59.57% [4] Successful Overseas Products - The game "Monster Alliance" launched on March 25, 2025, quickly rose to Top 2 on the App Store free chart in South Korea [5] - "MU Immortal," launched on May 20, 2025, topped the iOS RPG free chart in multiple countries on its release day [5] - "Party Beast Control," launched on May 22, 2025, achieved first place in iOS downloads in Hong Kong and Taiwan on its launch day [6] Information Service Revenue - Information service revenue includes income from game resource distribution, community services, and promotional services, totaling 657 million CNY in the first half of 2025 [7] Unique Features of Legend Box - Legend Box is a vertical community platform focused on the needs of "Legend" game users, integrating game experience, community interaction, and live streaming [8] New Developments in Legend Box - In July 2025, a licensing agreement was signed for "Legend" and "Legend World," allowing for exclusive development and operation of related products [10] - Over 25 high-quality "Legend" games have been integrated into Legend Box, with plans to introduce over 100 more [10] Shareholder Information - As of September 10, 2025, the total number of shareholders is 53,848, showing a recent overall decrease [10] Arbitration and Financial Impact - The company won an arbitration case against Yumeide, but cannot confirm income from the receivable until the payment situation is clear [11] - The increase in the stock price of Century Huatong will enhance the company's net assets but will not affect current profits [12] Commitment to Shareholder Value - The major shareholder and executives have committed to using dividends for share buybacks from 2024 to 2028, with significant amounts already invested [13]

Core Viewpoint - The company reported a stable performance in H1 2025, with revenue growth driven by new game contributions and high growth in information services, alongside a share buyback plan for 2025 [1] Financial Performance - H1 2025 revenue reached 2.578 billion yuan, a year-on-year increase of 0.89%, with net profit attributable to shareholders at 950 million yuan, up 17.41% year-on-year [1] - Q2 2025 revenue was 1.225 billion yuan, down 1.80% year-on-year and 9.43% quarter-on-quarter, while net profit was 432 million yuan, up 12.79% year-on-year but down 16.64% quarter-on-quarter [1] - The company's gross margin for H1 2025 was 82.38%, with a slight increase of 0.37 percentage points year-on-year [4] Product Innovation and Market Expansion - The company launched successful new products such as "Dragon Valley World" and "Digimon: Source Code," with the self-developed mobile game "Hot Blood Jianghu: Return" performing well in both domestic and overseas markets [2] - H1 2025 overseas revenue reached 202 million yuan, a year-on-year increase of 59.6% [2] - The company is expanding its 996 Legend Box collaboration, which contributed to a 65.33% increase in information service revenue to 660 million yuan, accounting for 25.47% of total revenue [3] Cost Management - The sales expense ratio decreased by 3.85 percentage points to 33.61%, reflecting optimized user acquisition strategies, while management expenses also declined, indicating effective cost control [4] Profit Forecast and Valuation - The company slightly raised its net profit forecast for 2025-2027 to 2.19 billion, 2.55 billion, and 2.89 billion yuan, respectively, reflecting a 7.27% to 5.97% adjustment [5] - The target price was increased to 30.72 yuan based on a 30X PE valuation for 2025, considering the ongoing expansion in overseas markets and high growth in information services [5]