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]

Investment Rating - The report assigns a "Buy-A" rating to the company, with a 6-month target price of 44.5 yuan [4]. Core Insights - The company demonstrated strong revenue growth in Q3 2025, achieving 1.706 billion yuan, a year-on-year increase of 115.63%, and a net profit of 640 million yuan, up 81.19% year-on-year [1]. - The game "Supernatural Action Group" has shown rapid user growth and revenue increase, contributing significantly to the company's performance [1][2]. - The company has a strong ability to release deferred revenue, with contract liabilities reaching 1.333 billion yuan in Q3 2025, indicating robust commercialization potential [2]. - The company maintains a focus on self-developed and high-quality games, with successful IPs like "Journey" and "Ball Battle," which form a stable performance base [2]. Summary by Sections Financial Performance - In the first three quarters of 2025, the company reported total revenue of 3.368 billion yuan, a 51.84% increase year-on-year, and a net profit of 1.416 billion yuan, up 32.31% year-on-year [1]. - The gross margin for Q3 2025 was 90.46%, slightly up by 0.64 percentage points year-on-year [1]. - The sales expense ratio increased to 36.65%, up 1.41 percentage points year-on-year, reflecting higher advertising and channel costs [1]. Future Projections - The company expects revenues of 5.14 billion yuan, 7.36 billion yuan, and 8.085 billion yuan for 2025, 2026, and 2027 respectively, with net profits projected at 2.252 billion yuan, 3.367 billion yuan, and 3.691 billion yuan for the same years [3][8]. - The report anticipates that the deferred revenue will continue to be released, supporting future earnings growth [2]. Valuation Metrics - The report suggests a price-to-earnings (PE) ratio of 25 times for 2026, leading to a target price of 44.5 yuan [3]. - The expected earnings per share (EPS) for 2025, 2026, and 2027 are projected to be 1.19 yuan, 1.78 yuan, and 1.95 yuan respectively [3][8].

Core Insights - Giant Network (002558.SZ) reported a significant increase in Q3 2025, with revenue reaching 1.706 billion yuan, a year-on-year growth of 115.63%, and a net profit attributable to shareholders of 640 million yuan, up 81.19% [1] - The company's new game "Supernatural Action Group" has been a major driver of growth, performing exceptionally well during the summer [1][2] - For the first three quarters of 2025, the company achieved a total revenue of 3.368 billion yuan, with a year-on-year growth of 51.84% [1] Financial Performance - Q3 revenue was 1.706 billion yuan, with a net profit of 640 million yuan and a non-recurring net profit of 678 million yuan, reflecting year-on-year increases of 115.63%, 81.19%, and 73.88% respectively [1] - For the first three quarters, the company reported a net profit of 1.417 billion yuan and a non-recurring net profit of 1.484 billion yuan, with year-on-year growth rates of 51.84% and 16.50% respectively [1] Product Performance - "Supernatural Action Group" has become a phenomenon, showcasing strong long-term operational potential and exceeding market expectations [1] - The game achieved a milestone of over 1 million concurrent users in July and ranked in the top 5 of the iOS free games chart, peaking at 4th in the iOS revenue chart [2] - The product's success is attributed to the company's extensive experience in developing high DAU (Daily Active Users) products [2] Management Changes - Giant Network announced the return of Liu Wei as CEO and General Manager, focusing on nurturing young core talent [2] - The company's talent strategy emphasizes youth, with a commitment to empowering young individuals in key project roles, as seen in successful games like "Supernatural Action Group" [2]

Core Viewpoint - Giant Network is implementing a rotation mechanism for game business leaders to provide greater growth opportunities for young talent and align with future strategic adjustments [1][2] Group 1: Leadership Changes - CEO and General Manager Zhang Dong has resigned for personal reasons, with Director Liu Wei returning to take over these roles [1] - Liu Wei's focus will be on nurturing core talent within the company [1] Group 2: Talent Strategy - The rotation of game business leaders will be selected from young frontline staff, aiming to enhance decision-making efficiency and broaden growth opportunities [2] - This initiative is part of a broader strategy to cultivate young talent, as emphasized by Chairman Shi Yuzhu, who believes that gaming is a young person's industry [1][2] Group 3: Industry Context - The rotation mechanism for business leaders is not unique to Giant Network, as similar practices have been adopted by major companies like Huawei and Alibaba [2] - The emphasis on a young talent strategy is expected to strengthen the company's competitive edge and support the development of blockbuster games [2]

Core Viewpoint - Giant Network is implementing a rotation mechanism for game business leaders to provide greater growth opportunities for young talent and align with future strategic adjustments [1][2] Group 1: Leadership Changes - CEO and General Manager Zhang Dong has resigned for personal reasons, with Director Liu Wei returning to take over these roles [1] - Liu Wei's focus will be on nurturing core talent within the company [1] Group 2: Talent Strategy - The rotation system for game business leaders will select candidates from young frontline staff, aiming to enhance decision-making efficiency and broaden growth opportunities [2] - This initiative is part of a broader strategy to cultivate young talent, as emphasized by Chairman Shi Yuzhu, who believes that gaming is a young person's industry [1][2] Group 3: Industry Context - The rotation mechanism is not unique to Giant Network, as similar practices have been adopted by major companies like Huawei and Alibaba to build a talent pipeline for senior management [2] - The deepening of the youth-oriented talent strategy is expected to help Giant Network continue producing hit games and strengthen its competitive edge [2]

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].

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]