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]

Core Viewpoint - The gaming industry in China is experiencing a significant recovery, driven by strong market demand, policy support, and technological upgrades, with AI integration becoming a new competitive point for companies [1][6][11]. Group 1: Market Performance - The Shenwan Gaming Industry Index closed at 3927.54 points on September 23, showing a slight increase of 0.18% after three consecutive days of decline [1]. - The A-share gaming sector has seen a remarkable performance this year, with the Shenwan Gaming Index rising by 78.72% year-to-date as of September 23 [2]. - ST Huatuo leads the sector with a staggering 300.78% increase in stock price this year, supported by a total market capitalization of 153 billion yuan [4]. Group 2: Company Performance - ST Huatuo reported a revenue of 17.207 billion yuan for the first half of 2025, marking an 85.5% year-on-year increase, and a net profit of 2.656 billion yuan, up 129.33% [7][8]. - Giant Network's stock price has surged over 240% this year, reaching a market capitalization of 83.2 billion yuan [4]. - Jibite's stock price has also rebounded, exceeding 500 yuan per share, with a year-to-date increase of over 170% [4]. Group 3: Industry Trends - The domestic gaming market's actual sales revenue reached 168 billion yuan in the first half of 2025, a 14.08% year-on-year growth, with the user base nearing 679 million [7]. - The issuance of gaming licenses has been robust, with 1119 licenses granted from January to August 2025, a 20% increase year-on-year [7]. - The gaming sector's revenue growth is expected to continue, with projections indicating a potential 20 times P/E ratio by 2026 [5]. Group 4: AI Integration - AI is becoming a key focus in the gaming industry, with 52% of developers using generative AI tools, transitioning from concept exploration to practical application [11]. - Companies like Youzu Network and Giant Network are actively integrating AI into their operations, enhancing player engagement and operational efficiency [12]. - However, the integration of AI requires significant long-term investment and may pose regulatory risks, with companies facing potential profitability challenges in the short term [13].

Summary of the Conference Call for Giant Network Company Overview - **Company**: Giant Network - **Key Game**: Supernatural Action Group Industry Insights - The gaming industry is expected to see a revival in 2025, with the domestic self-developed game market projected to grow nearly 20% [doc id='2'][doc id='26'] - The overall gaming market is becoming more resilient, with increased total playtime and user spending [doc id='26'][doc id='27'] - The supply side of the gaming industry has seen a significant increase in the number of game licenses issued, rising from over 80 per month in 2023 to 166 in August 2025 [doc id='28'] Key Points on Supernatural Action Group - The game has maintained strong revenue performance due to frequent skin updates and IP collaborations, with expected revenue of 4-5 billion CNY in September 2025 [doc id='2'][doc id='3'] - The user base is expanding to include male players, similar to the model of Pop Mart, which could further enhance market reach [doc id='2'][doc id='4'] - The game is projected to achieve an annual revenue of 30-40 billion CNY in 2026, with a profit margin of 40%-50% [doc id='2'][doc id='10'] - Marketing expenses are focused on high ROI content and brand investments, rather than broad advertising [doc id='11'] Financial Performance and Projections - Giant Network's stable core business includes the Journey series, which contributes approximately 30 billion CNY annually, and other games like Ball Battle and Space Kill, expected to contribute 16-17 billion CNY [doc id='12'][doc id='13'] - The company’s profit forecast for next year is between 35 billion to 40 billion CNY, with a potential market capitalization of 1 trillion CNY if valued at 25 times earnings [doc id='13'][doc id='24'] - The third quarter is expected to show significant growth, with profits potentially doubling from the second quarter [doc id='24] Market Dynamics - The competitive landscape is shifting, with large companies focusing on optimizing existing games rather than launching new blockbuster titles, creating opportunities for mid-sized companies like Giant Network [doc id='29] - The gaming industry is experiencing a self-optimization phase, with companies refining their teams and project pipelines to improve success rates [doc id='31'][doc id='32'] AI and Marketing Trends - AI has been integrated into game development processes, enhancing productivity without leading to significant layoffs [doc id='34'] - Sales expense ratios are decreasing due to a shift from traditional advertising to more effective content and community marketing strategies [doc id='33'] Investment Recommendations - Recommended investments include Giant Network and ST Huatuo, with projected market capitalizations of 1.2 trillion CNY and 1.5 trillion CNY respectively [doc id='36]

Investment Rating - The report maintains a "Strong Buy" investment rating for the company [2][5]. Core Insights - The company reported a revenue of 1.662 billion RMB for the first half of 2025, representing a year-on-year growth of 16.47%, and a net profit of 777 million RMB, up 8.27% year-on-year. In Q2 alone, revenue reached 938 million RMB, with a growth of 28.42%, and net profit was 429 million RMB, growing by 17.49% year-on-year [1][5]. - The company has a robust pipeline of new games, with the self-developed game "Supernatural Action Team" showing rapid user and revenue growth since its launch, although its main contributions will be recognized in future reporting periods due to revenue deferral [5]. - The flagship mobile game "Original Journey" has performed excellently, with a significant increase in user base and stable monthly revenue of 100 million RMB. The company also continues to innovate in the casual gaming sector [5]. - The company is actively embracing AI technology, collaborating with major firms to enhance gaming experiences and user engagement [5]. Financial Performance - The company’s total revenue is projected to reach 4.413 billion RMB in 2025, with a year-on-year growth of 51%. The net profit is expected to be 2.056 billion RMB, reflecting a growth of 44% [6][9]. - The company’s financial ratios indicate a healthy growth trajectory, with a projected PE ratio of 29.4 for 2025, decreasing to 16.3 by 2027 [9][6]. - The company’s cash flow from operating activities is expected to improve significantly, reaching 2.796 billion RMB by 2027 [7]. Market Position - The company has a total market capitalization of 6.04 billion RMB, with a strong return on equity (ROE) of 10.6% [2][5]. - The company’s debt levels are low, with an asset-liability ratio of 13.4%, indicating strong financial stability [2][9].

Investment Rating - The report maintains a "Buy" rating for the company [9]. Core Views - The company achieved revenue of 938 million yuan in Q2 2025, representing a year-on-year increase of 28.42% and a quarter-on-quarter increase of 29.64%. The net profit attributable to the parent company was 429 million yuan, up 17.49% year-on-year and 23.37% quarter-on-quarter [2][5]. - The game "Supernatural Action Group" has shown exponential growth in user scale and revenue, reaching a peak of over 1 million concurrent users in July. The game has consistently ranked in the top 10 of the iOS free games chart and reached a highest position of 4 in the iOS revenue chart [6]. - The company’s deferred revenue has increased significantly, with confirmed deferred income of 889 million yuan as of June 30, 2025, compared to 761 million yuan on March 31, 2025, and 498 million yuan in Q2 2024. This increase is expected to continue contributing to revenue growth [6]. Summary by Sections Financial Performance - In the first half of 2025, the company reported total revenue of 1.662 billion yuan, a year-on-year increase of 16.47%. The net profit attributable to the parent company was 777 million yuan, up 8.27% year-on-year [5]. - The company’s Q2 2025 revenue was 938 million yuan, with a net profit of 429 million yuan and a non-recurring net profit of 444 million yuan [2][5]. Game Performance and Development - The game "Supernatural Action Group" has achieved significant user growth and revenue, with a stable monthly revenue of around 100 million yuan for "Original Journey" and a total of over 20 million new users in the first half of the year [6]. - Several new games are in the pipeline, including "Five Thousand Years" and "Famous Generals Kill," which are expected to contribute to future revenue growth [7]. Sales and Marketing - Sales expenses increased to 317 million yuan in Q2 2025, with a sales expense ratio of 33.8%. However, the overall return on investment (ROI) from marketing efforts remains favorable [7]. - The company is actively pursuing a comprehensive layout of games combined with AI technology, enhancing user engagement and playtime [7]. Profit Forecast - The company is projected to achieve net profits of 2.26 billion yuan and 3.18 billion yuan in 2025 and 2026, respectively, corresponding to price-to-earnings ratios of 26.2 and 18.6 [7].

Summary of Giant Network's Conference Call Company Overview - **Company**: Giant Network - **Date**: August 28, 2025 Key Points Industry and Company Performance - Giant Network's self-developed game "Supernatural Action Group" has become a market hit, with over 1 million concurrent users in July, maintaining a top position in the iOS game rankings, indicating exponential growth in users and revenue [2][4] - The flagship mobile game "Original Journey" saw over 20 million new users in the first half of the year after a second promotion of its mini-program version, with average monthly revenue stabilizing around 100 million RMB [2][4] - "Ball Ball Battle" also showed positive user growth, adding over 10 million users in the first half of the year, with active mini-program users exceeding 1 million, demonstrating significant success among younger demographics [2][4] Financial Performance - In the first half of 2025, Giant Network achieved revenue of 1.662 billion RMB, a year-on-year increase of 16.47%, and a net profit of 777 million RMB, up 8.27% year-on-year [4] - The company plans to distribute a dividend of 1.5 RMB per 10 shares (including tax), totaling 284 million RMB, which accounts for 36.5% of the net profit attributable to shareholders [2][10] AI Integration and Innovations - Giant Network is increasing its investment in AI, integrating AI technology into core products to enhance interaction and gameplay mechanisms [5][6] - The new mode "Endgame Match" was launched in "Space Kill," collaborating with major domestic models to create a mixed competitive mechanism between multiple users and AI entities [6] - Several AI research achievements have been recognized at international academic conferences, covering areas such as multimodal generation and audio-video synthesis [6] Product Lifecycle and Future Plans - The company aims to extend the lifecycle of "Supernatural Action Group" by enhancing product quality, adding content and gameplay, and engaging in IP collaborations, although commercialization is not prioritized at this stage [2][7] - No specific plans were disclosed for future products targeting young female demographics, but the company will continue to monitor this market [2][7] Market Expansion and Investments - Giant Network is considering overseas market expansion, but developing native products for international markets requires time and resources [8] - The company holds indirect shares in Playtika, which recently launched a successful Disney IP game, but the long-term impact of this acquisition remains to be seen [8] Competitive Landscape and Future Outlook - The company does not see significant competition for "Supernatural Action Group," attributing its success to a young and agile team that has invested heavily in resources following positive product performance [13] - The gaming industry is expected to see a shift in talent dynamics, with Chinese companies gaining a stronger foothold globally [16] User Engagement and Retention Strategies - The gameplay of "Supernatural Action Group" encourages social interaction, leading to longer user retention times [18] - The company plans to maintain user engagement through continuous content updates, including new maps and characters, and seasonal events [21] Research and Development - R&D expenses increased by 50 million RMB in Q2 due to higher personnel costs and operational expenses related to new projects [19] Future Game Development - The company is exploring user-generated content (UGC) and player-generated content (PUGC) to enhance user engagement in "Supernatural Action Group" [23] - There are ongoing efforts to adapt advanced independent game mechanics from overseas while ensuring the gameplay is suitable for mobile platforms [24] Conclusion - Giant Network is positioned for growth with a strong product lineup, innovative AI integration, and a commitment to shareholder returns, while navigating competitive and market challenges effectively.

Core Insights - The company reported a revenue of 1.662 billion yuan for the first half of 2025, representing a year-on-year growth of 16.47% [1] - The net profit attributable to shareholders reached 777 million yuan, with a year-on-year increase of 8.27% [1] - The launch of the self-developed game "Supernatural Action Group" has led to rapid growth in user base and revenue, although the main contributions will be recognized in future reporting periods due to revenue deferral [1] Revenue and Profit Performance - The company achieved a revenue of 1.662 billion yuan, marking a 16.47% increase compared to the previous year [1] - The net profit attributable to shareholders was 777 million yuan, reflecting an 8.27% year-on-year growth [1] Game Performance and Market Strategy - The game "Space Kill" collaborated with well-known IPs such as "Detective Conan" and "Milk Dragon," enhancing game popularity and maintaining stable revenue [4] - The overseas game "Super Sus" maintained stable active user numbers, with significant revenue growth in the Southeast Asian market, particularly in Indonesia, where daily active users reached a two-year high [4] Dividend Distribution - The company announced a profit distribution plan for the first half of 2025, proposing a cash dividend of 1.50 yuan per 10 shares, totaling approximately 284 million yuan [4] - This marks the third consecutive year the company has implemented a mid-term dividend since 2023 [4]

Core Viewpoint - Giant Network reported a revenue of 1.662 billion yuan for the first half of 2025, representing a year-on-year growth of 16.47%, and a net profit attributable to shareholders of 777 million yuan, up 8.27% year-on-year [1] Group 1: Financial Performance - The company plans to distribute a cash dividend of 1.5 yuan per 10 shares, amounting to approximately 284 million yuan, marking the third consecutive year of mid-year dividends since 2023 [1] - Monthly average revenue for the flagship mobile game "Original Journey" has stabilized at 100 million yuan, supporting sustainable business development [1] Group 2: Game Development and User Growth - The newly launched game "Supernatural Action Group" has seen exponential growth in user base and revenue, with over 1 million concurrent users in July [2] - "Original Journey" has successfully added 5.86 million new users in its first month after launching a mini-game version, with total new users exceeding 20 million in the first half of the year [1] - "Ball Ball Battle" has improved user retention and reputation, with over 11 million new users in the first half of 2025, showing a month-on-month increase [2] Group 3: AI Integration and Innovation - The company is integrating AI technology into its core gaming business, enhancing product interaction and gameplay mechanisms [2] - The game "Space Kill" continues to iterate on AI-native gameplay, maintaining industry leadership [3] - Collaboration with cloud service providers like Volcano Cloud, Alibaba Cloud, and Tencent Cloud is ongoing to advance AI applications in the gaming sector [3]