Investment Rating - The investment rating for the company is "Buy" and is maintained [6]. Core Views - The company reported strong performance in Q3 2025, achieving revenue of 1.706 billion yuan, a year-on-year increase of 115.6%, and a net profit attributable to shareholders of 640 million yuan, up 81.2% year-on-year [3][10]. - The success of the game "Supernatural Action Group" significantly contributed to revenue growth, and the company anticipates continued profit release in Q4 2025 [10]. - The company is optimistic about the long-term potential and overseas expansion of "Supernatural Action Group," along with the ongoing development of new games [10]. Summary by Sections Financial Performance - In Q3 2025, the company achieved a revenue of 1.706 billion yuan, a 115.6% increase year-on-year, and a net profit of 640 million yuan, reflecting an 81.2% year-on-year growth [3][10]. - The deferred revenue increased significantly, with contract liabilities reaching 1.33 billion yuan as of September 30, 2025, compared to 890 million yuan on June 30, 2025, and 490 million yuan in the same period of the previous year [10]. Game Performance and Development - "Supernatural Action Group" was the main contributor to revenue growth in Q3, with strong performance noted during the traditionally slower months of September and October [10]. - The company plans to launch versions of "Supernatural Action Group" in Hong Kong, Macau, and overseas markets, which is expected to drive significant incremental revenue [10]. - New games such as "Famous Generals Kill," "Five Thousand Years," and "Pocket Fighting" are in continuous development, with recent testing phases initiated [10]. Cost and Profitability - The company's gross margin improved to 90.5% in Q3 2025, driven by the increased contribution from self-developed products [10]. - Sales expenses rose to 630 million yuan in Q3, with a slight increase in the sales expense ratio to 36.6% [10]. - Research and development expenses also saw a significant increase, although the R&D expense ratio decreased compared to previous quarters [10].

Core Insights - The company reported stable revenue and profit growth for the first three quarters of 2025, with a revenue of 3.368 billion yuan, up 51.84% year-on-year, and a net profit attributable to shareholders of 1.417 billion yuan, up 32.31% year-on-year [1] - The game "Supernatural Action Group" has shown strong performance in Q3 2025, with significant user growth and revenue increase driven by new content and collaborations [2] - The company maintains a robust product pipeline and has a positive earnings forecast for 2025-2027, with an expected EPS of 1.16, 1.84, and 2.11 yuan for the respective years [3] Financial Performance - For the first three quarters of 2025, the company achieved a revenue of 3.368 billion yuan, representing a year-on-year increase of 51.84% [1] - In Q3 2025, the company reported a revenue of 1.706 billion yuan, up 115.63% year-on-year, and a net profit of 640 million yuan, up 81.19% year-on-year [1] - The company's contract liabilities reached 1.333 billion yuan by the end of Q3 2025, an increase of 440 million yuan from Q2, primarily due to adjustments in the game revenue deferral period [1] Game Performance and Product Pipeline - "Supernatural Action Group" has rapidly gained popularity with over 1 million concurrent players in July 2025, supported by new maps and collaborations with popular IPs [2] - The company has successfully launched new products in the casual gaming sector, with "Original Journey" achieving over 20 million new users in the first half of the year [2] - The company has a strong product reserve, including the card strategy game "Famous Generals Kill," which has received a license, and the SLG product "Five Thousand Years," which is in the testing phase [2] Investment Outlook - The company is expected to maintain a strong performance in the "Journey" IP sector, with the "Supernatural Action Group" exceeding revenue expectations and a solid product pipeline [3] - The projected PE ratios for 2025-2027 are 31, 19, and 17 times, respectively, indicating a favorable investment outlook [3]

Investment Rating - The report maintains a "Buy" rating for the company, with expected EPS for 2025-2027 at 1.16, 1.84, and 2.11 CNY respectively, and corresponding PE ratios of 31, 19, and 17x [3] Core Insights - The company reported a stable growth in revenue and profit, with a significant year-on-year increase in revenue of 51.84% to 3.368 billion CNY and a net profit increase of 32.31% to 1.417 billion CNY for the first three quarters of 2025 [1] - The game "Supernatural Action Team" has shown strong performance, with a peak of over 1 million concurrent users and significant revenue growth driven by new content and collaborations with popular IPs [2] - The company has adjusted its game revenue deferral cycle, leading to an increase in contract liabilities to 1.333 billion CNY by the end of Q3 2025, reflecting a strategic shift in revenue recognition [1] Financial Performance Summary - For Q3 2025, the company achieved a revenue of 1.706 billion CNY, representing a year-on-year increase of 115.63%, and a net profit of 640 million CNY, up 81.19% [1] - The expense ratios for sales, management, and R&D for the first three quarters of 2025 were 36.23%, 4.78%, and 21.27% respectively, with sales expenses increasing due to higher advertising and channel costs [1] - The company’s financial forecasts indicate a revenue of 5.211 billion CNY for 2025, with a year-on-year growth of 78.30% [5]

Summary of Conference Call Records Industry Overview - The conference call discusses the **media and internet industry** in 2025, highlighting ongoing recovery and accelerated differentiation within the sector [1][2]. Key Points and Arguments Game Sector Performance - The **game sector** showed remarkable performance in the first half of 2025, with mobile game revenue growth nearing **20%**, driven by increased game license approvals and a new game cycle [1][2][3]. - **Huatuo** reported a **26%** year-on-year growth for its product **Kingsoft**, achieving nearly **$100 million** in revenue. Despite initial performance drag from the domestic version "Dream Kingdom," the company expects a profit of **27 billion RMB** in 2025 and **80-100 billion RMB** in 2026, indicating a two-year compound growth rate of **100%** [1][5]. - **Giant Network** plans to launch new games "Famous General Kill" and "Five Thousand Years" in Q4, with existing product "Supernatural" expected to generate **22-23 billion RMB** in revenue for the year, potentially reaching **35-40 billion RMB** next year [1][5]. Revenue and Orders - The company signed three orders in July and August totaling **4.5 billion RMB**, surpassing half of last year's total revenue, indicating significant progress in integrating **Legend Box** [1][7]. - The **open-world game** from **Perfect World** is anticipated to launch in Q1 2026, with a potential annual revenue of **50 billion RMB**, which could significantly boost next year's performance [1][9][10]. Policy and Market Dynamics - The increase in game license approvals has synchronized market demand and supply growth. The new game cycle began in late May or June, with expectations for acceleration in Q3 [4]. - The **21 policies** from the broadcasting authority are beneficial for platform and production sides, with **Mango Super Media** being a key beneficiary due to improved advertising performance [12]. Other Notable Companies - **Kain** and **Perfect World** are also recommended for long-term investment, with Kain's IP games "Tomb Raider" and "Douluo" expected to launch next year [6]. - **Xindong**'s upcoming domestic version of "Ys" is seen as a significant growth factor, with the company achieving unexpected growth due to increased game licenses and AI integration [11]. Advertising and AI Integration - **Kuaishou** is rapidly developing in the AI video sector, enhancing marketing efficiency and reducing costs, making it a recommended company [13]. - **Dianzi Media** achieved an **18%** growth in Q2, driven by effective integration and new initiatives, with future revenue expectations significantly raised [14]. - **Yidian Tianxia** reported over **30%** revenue growth in Q2, with programmatic advertising growing by **60%** and operating profit increasing by **95%** [15]. Film and Publishing Sectors - The **film industry** is performing well, with box office revenues exceeding **400 billion RMB** this year, indicating a strong recovery [16]. - The **publishing sector** is seeing stable growth, particularly in IP-based publications, with companies like **Guomai Culture** and **Rongxin Culture** showing significant potential [17]. Conclusion - The media and internet industry is experiencing a robust recovery, particularly in the gaming sector, with several companies poised for significant growth driven by new product launches and favorable policies. Investors are encouraged to monitor key players and emerging opportunities within this dynamic landscape.