Summary of Key Points from the Conference Call Company Overview - The conference call focuses on **Kying Network**, a company operating in the gaming industry, particularly in the **legendary game market**. Core Insights and Arguments - The overall valuation of the gaming sector remains between **15-18 times**, with expectations for strong performance in the summer gaming season and AI applications, suggesting investors should overweight the gaming sector [2][4] - Kying Network holds over **50% market share** in the legendary game market, utilizing user platform development and ecosystem creation to extend player lifecycles and reduce marketing costs. The revenue from the "Legend Box" product has significantly increased, with daily active users steadily rising [2][5] - Since Q4 2024, Kying Network has accelerated the launch of new products, including the SLG product "Three Kingdoms: The Return of Hearts," and major IP products like "Monopoly" and "King of Fighters," with multiple launches expected in August and September [2][6] - The company is actively expanding its overseas business, having established offices in Hong Kong and South Korea, and acquired retro IPs. The overseas business is expected to continue its high growth trajectory of **220%** from 2024, with a focus on Southeast Asian markets [2][7] - In the AI sector, Kying Network is developing AI companionship and social applications, with plans to release AI game engine version 2.0 in the summer, and is exploring AI-assisted content creation [2][8] Additional Important Content - The revenue from the "Legend Box" product grew from **200 million** in 2022 to **600 million** in 2023, and is projected to reach **900 million** in 2024, indicating a high gross margin due to its advertising revenue model [5] - Daily active users increased from **400,000** at the beginning of 2024 to **450,000** by the end of the year, with a target of reaching **500,000** [5] - Kying Network's current valuation is **17 times**, with potential advantages through its IP platform and AI initiatives, allowing it to break free from traditional gaming product cycles [3][10] - The company is also exploring AI toys and collaborating with Dapeng Glasses to develop an AI glasses ecosystem [9]

Core Viewpoint - The company achieved significant revenue growth in 2024, driven by overseas expansion and new game launches, with a notable performance in Q1 2025. Group 1: Financial Performance - In 2024, the company reported revenue of 5.118 billion, a year-on-year increase of 19.16%, and a net profit attributable to shareholders of 1.628 billion, up 11.41% year-on-year [1] - Q4 2024 revenue was 1.191 billion, down 5.95% year-on-year, while net profit was 348 million, a decrease of 8.17% year-on-year [1] - In Q1 2025, the company achieved revenue of 1.353 billion, a year-on-year increase of 3.46%, and net profit of 518 million, up 21.57% year-on-year [1] Group 2: Growth Drivers - The company's overseas revenue reached 375 million in 2024, a significant increase of 221.48% year-on-year, with a revenue share of 9.7% [2] - The successful launch of new games such as "Dragon Valley World" in February 2025 contributed to steady revenue and performance growth in Q1 2025 [2] - The information services segment also showed robust growth, with revenue of 940 million in 2024, up 42% year-on-year, accounting for 18.4% of total revenue [2] Group 3: Cost Management and Profitability - Sales expenses increased by 29% to 459 million in Q1 2025 due to the launch of "Dragon Valley World," but the sales expense ratio improved to 33.9% [3] - The gross profit margin in Q1 2025 rose to 83.6%, and the net profit margin increased to 38.3% due to effective cost management and growth in high-margin businesses [3] Group 4: Future Prospects - The company is actively investing in AI and has a rich pipeline of new games, with several expected to launch in 2025, potentially driving further revenue growth [4] - The company anticipates net profits of 2.15 billion and 2.37 billion for 2025 and 2026, respectively, with corresponding PE ratios of 16.8 and 15.2 [4]

Core Viewpoint - The company achieved significant revenue growth in 2024 and continued this trend into Q1 2025, driven by both established and new game titles, as well as effective cost management [1][2]. Group 1: Financial Performance - In 2024, the company reported revenue of 5.118 billion yuan, a year-on-year increase of 19.16%, and a net profit attributable to shareholders of 1.628 billion yuan, up 11.41% [1]. - For Q1 2025, the company achieved revenue of 1.353 billion yuan, a growth of 3.46%, with a net profit of 518 million yuan, reflecting a 21.57% increase [1][2]. Group 2: Game Operations and Releases - The revenue growth in 2024 was primarily due to the long-term operation of nostalgic games like "Original Legend" and "Blood of the Hero," as well as strong overseas performance, with international revenue reaching 375 million yuan, a 221% increase [2]. - The company has a rich pipeline of games, having announced 22 new titles, including "Dragon Valley World" and "Digital Monster: Source Code," with several games already launched or in testing phases [3]. Group 3: Shareholder Returns and Management Confidence - The company plans to distribute a cash dividend of 1 yuan per 10 shares for 2024, totaling approximately 214 million yuan, with a cash dividend ratio of 26.18% [4]. - Management has committed to not reducing their holdings from 2024 to 2028 and has already completed two rounds of share buybacks, demonstrating confidence in the company's future [4]. Group 4: Future Outlook - The company expects continued revenue growth driven by stable operations of existing games and the release of new titles, projecting revenues of 5.99 billion, 6.56 billion, and 7.18 billion yuan for 2025, 2026, and 2027, respectively [5]. - Net profits are forecasted to reach 2.13 billion, 2.38 billion, and 2.64 billion yuan for the same years, indicating a robust growth trajectory [5].

Financial Performance - In 2024, the company achieved a revenue of CNY 5.118 billion, a year-on-year increase of 19.16% [2] - The net profit attributable to shareholders was CNY 1.628 billion, up 11.41% year-on-year [2] - As of December 31, 2024, total assets reached CNY 8.026 billion, growing by 21.42% compared to the previous year [2] - For Q1 2025, revenue was CNY 1.353 billion, reflecting a 3.46% year-on-year growth [3] - The net profit attributable to shareholders for Q1 2025 was CNY 518 million, a significant increase of 21.57% [3] Business Growth Drivers - The growth in performance is attributed to the stable operation of long-term products such as "Original Legend" and "Blood of Heroes," as well as the successful launch of new products like "New Legend of the Dragon Slayer" and "Monster Alliance" [3] - The increase in net profit outpaced revenue growth due to a shift in business structure, with a higher proportion of R&D business and reduced marketing expenses [3] International Expansion - In 2024, overseas revenue reached CNY 375 million, marking a substantial year-on-year increase of 221.48% [3] - The company has established deep partnerships with various overseas channels and is actively expanding its global distribution strategy [4] Dividend Policy - In 2024, the company conducted two cash dividend distributions totaling CNY 425 million [5] - Future dividends will be balanced with business development needs and operational conditions to ensure stable returns for investors [5] Shareholder Confidence - The actual controller and executives have committed to not reducing their shareholdings for five years, reinforcing investor confidence [6] - In 2024, the chairman and executives collectively increased their holdings by approximately 979,950 shares, valued at about CNY 89.77 million [7] Product Pipeline - The company has several upcoming products, including "Tomb Raider: Journey" and "Douluo Continent: Evil Suppression Legend," which are expected to enhance its market presence [7] - A diverse range of IPs has been accumulated, including popular titles like "Gundam" and "Overlord," supporting the company's product diversification strategy [10] Strategic Investments - As of March 31, 2025, the company completed an investment in Tyrell AI Limited, acquiring over 16% of the shares, which is expected to enhance its capabilities in AI-driven gaming applications [12]

Investment Rating - The report maintains a "Buy" rating for the company [4][7]. Core Insights - The company demonstrated stable high growth with a revenue of 5.118 billion yuan in 2024, up 19.16% year-on-year, and a net profit of 1.628 billion yuan, up 11.41% year-on-year [2]. - The company has a rich reserve of products and intellectual properties (IPs), with successful game titles and a strong pipeline of 13 games in development [3]. - The company is actively exploring AI technology applications, enhancing game development efficiency through its AI model [3]. Financial Performance - In Q1 2025, the company achieved a revenue of 1.353 billion yuan, a year-on-year increase of 3.46%, and a net profit of 518 million yuan, up 21.57% year-on-year [2]. - The company plans to distribute a cash dividend of 1 yuan per 10 shares, totaling 426 million yuan, which accounts for 26.18% of the net profit [2]. - The projected earnings per share (EPS) for 2025-2027 are 1.00, 1.14, and 1.29 yuan, respectively, with corresponding price-to-earnings (P/E) ratios of 16, 14, and 13 times [4]. Product and IP Development - The company has established a competitive barrier in retro-themed games and has diversified its portfolio with innovative titles [3]. - The overseas game revenue reached 375 million yuan in 2024, marking a significant growth of 221.48% year-on-year [3]. - The company holds several well-known IPs, which support its product development and commercialization efforts [3]. Strategic Focus - The company is focusing on three main business areas: research and development, publishing, and investment in the gaming industry [4]. - It is strategically investing in five companies, including a lead investment in an AI companionship application, which has garnered significant industry attention [3].

Investment Rating - The report maintains a "Buy" rating for the company [4][7]. Core Views - The company demonstrated stable high growth with a revenue of 5.118 billion yuan in 2024, up 19.16% year-on-year, and a net profit of 1.628 billion yuan, up 11.41% year-on-year [2]. - The company has a rich reserve of products and intellectual properties (IPs), with significant performance in retro-themed games and innovative titles, alongside a strong focus on AI technology applications [3]. Financial Performance - In 2024, the company achieved a revenue of 51.18 billion yuan, with a year-on-year increase of 19.16%, and a net profit of 16.28 billion yuan, reflecting an 11.41% increase [2]. - For Q1 2025, the revenue was 1.353 billion yuan, up 3.46% year-on-year, and the net profit was 518 million yuan, up 21.57% year-on-year [2]. - The company plans to distribute a cash dividend of 1 yuan per 10 shares, totaling 426 million yuan, which is 26.18% of the net profit [2]. Product and IP Development - The company has established a competitive barrier in the retro game category with successful titles like "Original Legend" and "Dragon Valley World" [3]. - It has a diverse portfolio of games, including new releases and 13 games currently in development, showcasing a strong IP acquisition and commercialization capability [3]. - The overseas game revenue reached 375 million yuan, a significant increase of 221.48% year-on-year, indicating successful international expansion [3]. Investment Strategy and Forecast - The company focuses on three main business areas: research and development, publishing, and investment in IPs, aiming for stable growth in its core gaming business while expanding into innovative categories and international markets [4]. - The earnings per share (EPS) forecast for 2025-2027 is projected at 1.00, 1.14, and 1.29 yuan, with corresponding price-to-earnings (P/E) ratios of 16, 14, and 13 times [4].