Company and Industry Summary Company Overview - The company is focused on the SLG (Simulation Game) sector, with a critical breakthrough expected in 2026, particularly with the game code-named H, which is currently undergoing small-scale testing on Google Play. The overall data is positive, and one product is expected to be launched in the first half of 2026 [2][3]. Core Insights and Arguments - The existing business is facing natural decline pressures, with revenue from older games expected to decrease by approximately 20% year-on-year. However, the decline is anticipated to narrow in 2026, with growth primarily dependent on the success of new products [2][3]. - A new round of equity incentives will be implemented in the second half of 2025, focusing on the core game development team, which is expected to significantly enhance team motivation and management's commitment to SLG development [2][4]. - The company is adopting a "small steps, quick runs" strategy for mini-program games, with the game "Demon Lord" achieving a monthly revenue peak of 30 million yuan and profitability. Multiple products are in reserve to complement overseas SLG business [2][7]. - The company is deepening its AI and Web3 strategies, planning to promote AI engine collaboration through a sister company in 2026. As an early shareholder of Animoca with approximately 10% ownership, the company aims to leverage Web3 resources for growth [2][4]. Financial and Operational Challenges - In January 2026, the company announced a shift from profit to loss, primarily due to a write-down of 150 to 250 million yuan on its long-term equity investment in Webzen, attributed to declining operational forecasts and discrepancies between book value and realizable value [3][4]. - Excluding the write-down and other non-recurring losses, regular business profits also showed a decline, mainly due to the natural decay of older games [3][4]. Product Development and Launch Strategy - The company currently has four SLG products in reserve, with code-named H being the focus. This game combines mech warrior aesthetics with underwater survival concepts and is undergoing slow promotion testing on Google Play, with no domestic launch or official name announced yet [5][6]. - The plan is to concentrate resources on promoting one product at a time to avoid excessive pressure on distribution and funding, with a higher probability of successfully launching new products in 2026 compared to 2025 [6]. Mini-Program Games and Future Plans - Mini-program games are a significant product line for the company in the domestic market, complementing overseas SLG business. The company plans to continue investing in and launching products in this area, although specific timelines and product pipelines have not been disclosed [7]. Outlook on Existing Games and Collaboration with Webzen - The existing games are expected to continue their downward trend, with a projected revenue decline of about 20% in 2026, although the rate of decline may slow. Some older games have shown signs of revenue stabilization, potentially due to resource allocation from partners like Tencent [8][9]. - The write-down on Webzen was intended to mitigate risks associated with the accumulation of its book value not meeting expectations for fair value growth. As the second-largest shareholder with approximately 20% ownership, the company aims to strengthen collaboration with Webzen, particularly in exploring deeper cooperation in the "Miracle" IP and other areas [9].