Investment Rating - The investment rating for the company is "Buy" (maintained) [1] Core Views - The report highlights the successful launch of "Heart Town" international version, which topped the free charts in over 50 regions and achieved 5 million downloads shortly after its release. This game is expected to enhance user engagement and retention, contributing to revenue growth [4][5] - The upcoming holiday season is anticipated to boost revenue from existing games, while new game developments are expected to provide significant revenue increments. The company forecasts net profits of 1.507 billion, 2.006 billion, and 2.387 billion for 2025, 2026, and 2027 respectively, with corresponding P/E ratios of 25, 19, and 16 [4][6] - The report emphasizes the growth potential of TapTap, with a projected revenue increase of 33% year-on-year in the first half of 2025, driven by improvements in advertising algorithms and the launch of high-profile games [6] Financial Summary and Valuation Metrics - Revenue projections for the company are as follows: - 2023: 3,389 million - 2024: 5,012 million - 2025: 6,353 million - 2026: 7,620 million - 2027: 8,441 million - Year-on-year growth rates are expected to be 47.9% in 2024, 26.7% in 2025, 20.0% in 2026, and 10.8% in 2027 [6] - Net profit projections are as follows: - 2023: -554 million - 2024: 812 million - 2025: 1,507 million - 2026: 2,006 million - 2027: 2,387 million - The report indicates a significant improvement in net profit margins, with net profit margins expected to reach 23.7% in 2025 and 28.3% in 2027 [6]

Core Viewpoint - CICC maintains an "outperform" rating for Xindong Company (02400) with a target price of HKD 89.5, indicating a potential upside of 28% based on a 23x P/E for 2026 [1] Company Status - The international version of "Xindong Town" topped the iOS free game charts in multiple regions/countries upon its pre-download launch on January 7, with the official launch on January 8 [2] - The game supports Android, iOS, and PC platforms with account interoperability, and initial download performance exceeded expectations [2] - As of January 8, the game had over one million pre-registrations since testing began in November 2025, and it ranked first in the iOS download charts in 16 countries/regions [2] - The company believes that the overseas user acquisition and monetization process will be smoother compared to the domestic launch due to the game's rich content accumulated over 1.5 years [2] - Future operations will include a collaboration with "My Little Pony" set to launch in February 2026 [2] Growth Opportunities - In addition to "Xindong Town," the company anticipates growth from "Torchlight," which is expected to see a sequential revenue increase in the second half of 2025, continuing into 2026 [2] - The company completed the acquisition of IP rights for "Torchlight" globally, enhancing its influence over the IP [2] - The first season of the product will start on January 16, 2026 [2] - The TapTap platform is expected to achieve double-digit year-on-year growth in advertising revenue due to a rich supply in the gaming industry [2] - ADN business is also expected to continue expanding [2] Shareholder Returns - The company announced a HKD 400 million automatic share buyback plan set to expire on June 4, 2026, with all repurchased shares to be canceled [3] - This buyback reflects the company's long-term growth confidence and is beneficial for enhancing shareholder equity [3]

Investment Rating - The investment rating for the company is "Buy" (maintained) [5] Core Views - The company announced a share buyback of up to HKD 400 million over five months, reflecting confidence in long-term development [5] - The upcoming holiday season is expected to boost revenue for the core product "Heart Town," with the international version set to launch on January 8, 2026, and has already garnered over one million global pre-registrations [5] - The company is optimistic about growth driven by festive events, regional expansion, and new game launches, with several high-profile mobile and PC games expected to launch in 2026 [5] - The performance of the game "Iser" in the domestic market has led to a downward revision of net profit forecasts for 2025-2027 [5] Financial Summary and Valuation Metrics - Revenue projections are as follows: - 2023: HKD 3,389 million - 2024: HKD 5,012 million - 2025: HKD 6,353 million - 2026: HKD 7,620 million - 2027: HKD 8,441 million - Year-over-year growth rates for revenue are projected at: - 2024: 47.9% - 2025: 26.7% - 2026: 20.0% - 2027: 10.8% [8] - Net profit projections are as follows: - 2023: -HKD 554 million - 2024: HKD 812 million - 2025: HKD 1,507 million - 2026: HKD 2,006 million - 2027: HKD 2,387 million - Year-over-year growth rates for net profit are projected at: - 2024: 1077.3% - 2025: 85.7% - 2026: 33.2% - 2027: 19.0% [8] - The current price-to-earnings (P/E) ratios are projected as follows: - 2025: 20.8 - 2026: 15.6 - 2027: 13.1 [8]