Investment Rating - The report initiates coverage with a "Buy" rating for the company [13]. Core Viewpoints - The company has established a diversified business system covering platforms, games, and social interactions, with a solid foundation in the internet cafe management platform and a focus on AI and social gaming to expand its market potential [4][9]. Summary by Sections Company Overview - The company started as an internet cafe management platform and has gradually developed into a scene-based pan-entertainment platform, with a multi-faceted business system that includes platform services, gaming, and social interactions [4][9]. Platform Business - The internet cafe industry is expected to grow steadily, with the online service industry projected to increase from approximately 50 billion in 2023 to around 90 billion by 2024. The company's platform, 易乐游, holds a leading position in the market with a market share of 32.7% as of 2018 [10][66]. Gaming Business - The gaming segment is anticipated to see stable growth, with existing IP games maintaining strong performance and new titles like "真·三国无双 天下" expected to launch in 2025. The self-developed game "星之翼" has shown promising results, indicating the company's capability in game development [11][39]. Social Business - The company has a competitive edge in the social gaming sector with products like "带带电竞" and "给麦," which leverage AI to enhance user experience and create diverse monetization opportunities. The potential for overseas expansion in AI social products is also highlighted [12][39]. Financial Analysis - The company experienced a revenue decline of 14.56% in 2024, attributed to the absence of new IP games and a slight decrease in revenue from major products. However, a significant recovery was noted in Q1 2025, with a revenue growth of 24.16% [33][39]. Future Outlook - The company is expected to see a turning point in performance in 2025, driven by stable revenue from existing games and growth in social products. The forecasted net profits for 2025-2027 are 152 million, 202 million, and 245 million respectively, with corresponding EPS of 0.31, 0.41, and 0.50 [13][39].

Group 1 - The core viewpoint of the report emphasizes the ongoing transformation in the media industry, particularly focusing on the gaming sector and the commercialization of AI applications [1][12] - As of June 30, 2025, the media industry index increased by 12.77%, outperforming the CSI 300 index by 12.74 percentage points and the ChiNext index by 3.99 percentage points [4] - The gaming sub-sector has shown the highest growth, with an increase of approximately 39.16% since the beginning of the year, while the publishing index saw a modest rise of about 1.30% [4] Group 2 - The report highlights a significant decline in the price-to-earnings (PE) ratios across various sub-sectors of the media industry, with the publishing sector at a relatively low PE of 19 times and the film and television sector at a higher PE of 46 times [6] - The current PE (TTM) for the media industry is around 43 times, which is above the historical valuation mean [6] Group 3 - The report notes that the Chinese gaming market reached a size of 28.05 billion yuan in May 2025, reflecting a year-on-year growth of 9.9% [13] - The report indicates a favorable policy environment, with various local governments providing financial support for high-quality gaming projects, including one-time grants of up to 5 million yuan [13] Group 4 - The gaming industry is characterized by two growth models: wave-type and step-type growth, with the former being influenced by new product cycles and the latter relying on core products with longer life cycles [14] - The report discusses the normalization of game license approvals, with 147 domestic game licenses and 11 imported licenses issued in June 2025, contributing to a robust supply of new content [15] Group 5 - The report identifies key companies in the media sector, such as Kuaishou, which launched the AI video generation model "Keling," and Kunlun Wanwei, which released the "Tiangong" AI model [24][31] - The report emphasizes the importance of AI applications in enhancing content creation and operational efficiency within the media industry [48]

Summary of ShengTian Network Conference Call Company Overview - ShengTian Network is focusing on three main business segments: scene business, gaming business, and social platform [2][3][4] Key Points and Arguments Scene Business - The company is transitioning from traditional internet cafes to e-sports hotels and cloud gaming, covering PC, Web, and large-screen terminals [3][4] - The company provides SaaS services for cloud gaming and has extended into advertising [3] - There has been a rebound in internet cafe numbers post-pandemic, contributing to short-term revenue and profit [2][3] Gaming Business - ShengTian Network has acquired game IP operation capabilities through mergers and has successfully launched mobile and C-end games [2][3] - Plans for 2025 include launching a pet-catching SLG hybrid game and "Dynasty Warriors 8," with several games signed for the Steam platform [2][3][4] - The gaming segment is expected to become a significant pillar of future performance [3][4] Social Platform - The "DaiDai" product has provided stable revenue, with increased demand for companionship and cloud social services driven by PC traffic growth [2][4] - The "GeiMai" platform is an AI application content trial platform, enhancing model selection, tuning, and localization capabilities [2][4] AI Initiatives - ShengTian Network is actively investing in AI, including AI glasses and smart cockpit hardware, and developing AI applications on the GeiMai platform [2][5] - The company has built strong application capabilities, optimizing computing power and training for specific vertical materials [5] - To address the challenge of low payment acceptance for AI applications in China, the company has launched virtual podcast and companionship services [6][7] International Market Opportunities - The overseas market shows a strong willingness to pay for AI applications, with high profit margins in vertical products [8] - The company has launched two overseas products: an AI social product and an AI tool product, both achieving initial success [8] - Plans to enhance international competitiveness include launching the AI game "YanLing QiYue" overseas [3][8] Market Trends - The PC gaming market has shown signs of recovery, driven by the release of multi-platform games and an increase in 3A titles [14] - The company is expanding its internet cafe presence to attract more users, particularly women, and modernizing the environment [14] Future Outlook - ShengTian Network aims to improve its industry ranking and become a top player by 2026, despite regulatory challenges [19][20] - The company expects stable operations in the coming quarters, with support from Alibaba to boost revenue [25] - Upcoming game releases include a hybrid pet game and "Dynasty Warriors 8," with a focus on overseas distribution [27][28] Additional Insights - The gaming companionship market has three main demands: team formation, leveling assistance, and emotional support [15][16] - Modern social needs are diverse, with many seeking short-term companionship and shared experiences through the internet [17][18] - The company is focusing on AI social companionship products with diverse character designs to enhance user experience [9][10] Conclusion - ShengTian Network is strategically positioning itself across multiple segments, leveraging AI and gaming to drive future growth while addressing challenges in domestic and international markets [2][3][4][5][8][19][20]

Investment Rating - The report assigns an "Accumulate" rating for the company, marking its first coverage [4][7]. Core Views - The company is focused on building a diversified entertainment ecosystem, leveraging AI to drive social growth [4]. - The company has shown a strong recovery trend in its performance, with a significant increase in revenue and net profit in the first quarter of 2025 [6]. - The company is well-positioned in the digital entertainment landscape, with a robust IP operation and a strong pipeline of new products [6][9]. Summary by Sections Company Overview - The company, Hubei Shengtian Network Technology Co., Ltd., was established in 2009 and is a leading digital entertainment platform in China, focusing on a "platform-content-service" integrated operation system [14][19]. - The company has a diverse product matrix that includes cloud gaming, esports hotels, and game operations, supported by a strong IP portfolio [20][24]. IP Operation Business - The company has a solid foundation in the game IP market, with a significant portion of revenue coming from IP products [40]. - The company has established long-term partnerships with major game manufacturers, enhancing its IP operation capabilities [45][50]. Game Development and Publishing - The company has made significant strides in self-developed and independent games, with successful titles like "Star Wings" and "True Three Kingdoms" [54][57]. - The independent game studio, Paras Games, has produced high-quality content, establishing itself as a benchmark in the industry [57]. AI Integration - The company launched its AI platform, VRACE, which integrates various AI technologies to enhance gaming and social experiences [61]. - The AI platform aims to provide intelligent companionship services, significantly improving user engagement on social platforms [61].

Group 1: Company Performance and Financials - In Q1 2025, the company achieved a revenue of 315 million CNY, representing a year-on-year growth of 24.16% [12] - The net profit attributable to shareholders was 25.43 million CNY, showing a significant increase of 78.56% year-on-year [12] Group 2: Game Development and International Expansion - The company is focusing on overseas expansion in both social and gaming sectors, with key products like "Star Wings" being launched in Japan, Korea, and Southeast Asia [3][5] - "Star Wings" achieved significant success in Japan, ranking second on both Google Play and App Store in its first month, and contributing over 60% to the company's revenue from games in Japan by 2025 [3][5] Group 3: AI and Technology Integration - The company is leveraging its VRACE AI platform to enhance game and social experiences, exploring applications in virtual companionship, content generation, and player behavior analysis [4][15] - The AI-driven social app "Give Mai" integrates multi-modal AI technologies, achieving breakthroughs in emotional analysis and voice recognition [16] Group 4: Strategic Partnerships and IP Development - The company is deepening collaborations with international IP partners like Koei Tecmo to extend the lifecycle of core IPs such as "Three Kingdoms" and "Dynasty Warriors" [3][10] - A partnership with "Koto's Frame Arms Girl" has been established to enhance the IP attributes of "Star Wings" through character and item collaborations [7][8] Group 5: Future Goals and Market Strategy - For 2025, the company aims to drive growth through AI innovations, focusing on content creation and expanding into new entertainment scenarios [9][10] - The company plans to explore acquisition opportunities in gaming, social, AI applications, and AR/VR sectors to strengthen its market position [10]

Summary of ShengTian Network Conference Call Company Overview - ShengTian Network is expected to see continued improvement in performance during Q2 and Q3 of 2025, benefiting from previously accounted game projects, and is currently in a light operational state [2][4]. Financial Position - The company holds approximately 1 billion yuan in cash, indicating potential for mergers and acquisitions to further expand its business and enhance market competitiveness [2][4]. AI Application Developments - ShengTian Network has made strides in AI applications, with a product named "GeiMai" generating monthly revenue of approximately 3-4 million yuan. The company plans to launch an AI companion product during the summer, targeting overseas markets with expectations of reaching monthly revenues in the tens of millions [2][5]. - The company intends to add AI virtual character features, such as an astrologer role, to its domestic version to attract younger female users and increase user engagement [2][5]. Key Game Products and Market Performance - Important game products include "Three Kingdoms Strategy Edition" and "Heart's Wings." The monthly revenue for "Three Kingdoms Strategy Edition" remains stable, while "Heart's Wings" plans to enter the South Korean and Southeast Asian markets to mitigate potential declines in the Japanese market [2][6][7]. - A new fighting game developed by the "Heart's Wings" team is expected to undergo testing during the summer, having faced delays due to strict Japanese IP review processes [2][7]. Profit Forecast and Valuation Outlook - The profit forecast for ShengTian Network in 2025 is projected to be between 100 million to 150 million yuan. The company is expected to shift from a gaming-focused entity to one that emphasizes AI applications, which typically have higher valuation levels, leading to a positive outlook for future development [2][8].

Core Viewpoint - The company experienced a decline in overall performance in 2024, but showed signs of recovery in Q1 2025 with new product launches and positive growth metrics [1][2][3]. Financial Performance - In 2024, the company reported revenue of 1.136 billion yuan, a year-on-year decrease of 14.56%, and a net profit attributable to shareholders of -261 million yuan, a decline of 253.84% [1]. - For Q1 2025, the company achieved revenue of 315 million yuan, reflecting a year-on-year growth of 24.16%, and a net profit attributable to shareholders of 25 million yuan, an increase of 78.56% [1]. Asset Impairment and Challenges - The company's 2024 performance was pressured by asset impairment, with a net profit of -263 million yuan in Q4 2024, primarily due to an asset impairment loss of 268 million yuan [2]. - The impairment was driven by declining revenues from subsidiary Tianxi Interactive's products, leading to a goodwill impairment provision of 219 million yuan, and underperformance of new products [2]. New Product Launches and Growth Prospects - In Q1 2025, the company returned to a growth trajectory with several new products expected to launch within the year [3]. - The game "Star Wings," developed by an invested company and released in Japan in November 2024, achieved significant success, ranking second on both Google Play and App Store, with over 60% of monthly revenue coming from Japan [3]. - The self-developed IP fighting game "True Three Kingdoms: The World" is currently in the review stage and is expected to launch in 2025 [3]. AI Application Development - The company is actively investing in AI applications, with continuous iterations on its core product "Give Mai," which introduced features like "AI-generated songs" and "AI music greeting cards" in Q1 2025 [4]. - In the gaming sector, the self-developed AI mini-game "Word Spirit Legend" has integrated Doubao AI, and the AI social reasoning mini-game "Secret Bomb" has completed internal platform testing [4]. Revenue and Profit Forecast - The company forecasts revenues of 1.51 billion, 1.74 billion, and 1.95 billion yuan for 2025-2027, with year-on-year growth rates of 33%, 15%, and 12% respectively [5]. - Net profits are projected to be 154 million, 176 million, and 205 million yuan for the same period, with growth rates of 159.26%, 14.14%, and 16.40% respectively [5]. - The price-to-earnings ratios are expected to be 38x, 34x, and 29x for 2025-2027 [5].

Group 1: AI Product Development - The company launched the AI-native music social app "Ge Mai" in 2023, which integrates AI applications for music socializing and creation, achieving breakthroughs in emotional analysis, voice, and text recognition [2][5] - The company plans to introduce AI virtual human features, including AI companions and emotional consultants, enhancing user interaction in social scenarios [3][4] Group 2: AI Strategy and Infrastructure - The company has established a comprehensive AI platform covering application, model, and infrastructure layers, with the AI Innovation Lab founded in 2023 to drive deep integration of AI technology [4][6] - The company has developed its own cloud and computing infrastructure, achieving ultra-low latency of 0-20ms and creating a flexible computing pool to support AI inference needs [6] Group 3: Game Development and IP Strategy - The company is collaborating with international IP partners like Koei Tecmo to develop derivative products and extend the lifecycle of core IPs such as "Romance of the Three Kingdoms" [8][9] - The original IP game "Star Wings" was launched in Japan in November 2024, with plans for releases in Korea and Southeast Asia in 2025, achieving over 60% of monthly revenue from Japan [9][10] Group 4: Financial Performance and Future Outlook - In Q1 2025, the company reported a revenue increase of 24.16% year-on-year, driven by significant growth in advertising and game distribution revenues [12][13] - The company has over 1 billion in cash reserves, providing a solid financial foundation for future development and potential mergers and acquisitions [13] Group 5: Challenges in Overseas Expansion - The company faces challenges in overseas markets, including complex regulatory policies and cultural preferences, which could hinder product acceptance and launch [11] - To mitigate risks, the company has formed specialized operational teams to study target market regulations and user needs [11]

Performance Overview - In 2024, the company achieved operating revenue of 1.136 billion, a year-on-year decline of 14.56% [1] - The net profit attributable to shareholders was -261 million, and the net profit excluding non-recurring items was -272 million [1] - In Q1 2025, the company reported operating revenue of 315 million, a year-on-year increase of 24.16% [1] - The net profit attributable to shareholders for Q1 2025 was 25.43 million, a year-on-year increase of 78.56% [1] - The net profit excluding non-recurring items for Q1 2025 was 23.99 million, a year-on-year increase of 143.78% [1] Game Releases and Performance - The game "Star Wings" received positive reviews and was launched in the domestic market in Q2 2024, with a release in Japan on November 21, 2024 [2] - "Star Wings" achieved second place on both Google Play and App Store in Japan within its first month and ranked in the top two on Steam's Japanese sales chart [2] - The game "Heroic Legend" launched on Steam in Q2 2024, gaining significant attention and ranking ninth in Steam's domestic sales chart [2] - "Heroic Legend" also performed well in overseas markets, ranking in the top seven on Steam's Korean sales chart [2] - The company plans to release a DLC version for "Heroic Legend" in 2025 and will continue to develop the game for long-term operation [2] Technological Advancements - The company is rapidly iterating its product features and has seen a continuous increase in user numbers [3] - The integration of DeepSeek technology has led to breakthroughs in multi-modal models, including emotion analysis and voice recognition [3] - The launch of the "AI Astrology" feature combines astrology culture with AI technology to enhance user engagement [3] - The company is exploring AI and social interaction scenarios, aiming to develop AI virtual companions and enhance user experience [3] Strategic Partnerships - The company has partnered with NIO and Lantu Motors to explore multi-scenario entry points for cloud gaming [4] - NIO's new smart system version Banyan 3.0.0 will feature cloud gaming support from the company's platform [4] - The collaboration with Lantu Motors aims to enhance the entertainment experience in their new electric SUV [4] Revenue Forecast - The company is expected to achieve operating revenues of 1.533 billion, 1.809 billion, and 1.990 billion for the years 2025 to 2027, respectively [4] - The net profit attributable to shareholders is projected to be 141 million, 166 million, and 192 million for the same period [4] - Corresponding price-to-earnings ratios are estimated at 37, 32, and 27 times [4]

Investment Rating - The report maintains a "Buy" rating for the company [6] Core Views - The company reported a revenue of 1.136 billion yuan in 2024, a year-on-year decline of 14.56%, and a net profit attributable to shareholders of -261 million yuan [1] - In Q1 2025, the company achieved a revenue of 315 million yuan, a year-on-year increase of 24.16%, and a net profit attributable to shareholders of 25.43 million yuan, a year-on-year increase of 78.56% [1] - The new games "Star Wings" and "Heroic Legend" have received positive feedback and are expected to expand into new markets [2] - The integration of AI applications through the "Give Mai" platform is showing promising results, enhancing user engagement and social interaction [3] - Collaborations with NIO and Lantu Motors for cloud gaming support are set to enhance the entertainment experience in vehicles [4] - Revenue projections for 2025-2027 are 1.533 billion, 1.809 billion, and 1.990 billion yuan respectively, with net profits expected to be 141 million, 166 million, and 192 million yuan [4] Financial Overview - In 2024, the company experienced a revenue decline of 14.56% compared to 2023, with a projected revenue growth of 35% in 2025 [5] - The net profit for 2024 is projected to be -261 million yuan, with a significant recovery expected in 2025 with a net profit of 141 million yuan [5] - The earnings per share (EPS) is expected to recover from -0.53 yuan in 2024 to 0.29 yuan in 2025 [5] - The company’s price-to-earnings (P/E) ratio is projected to be 37, 32, and 27 for the years 2025, 2026, and 2027 respectively [5]