Giant Network(SZ:002558)2025-11-03 02:36Summary of Giant Network (002558.SZ) Conference Call Company Overview - Company: Giant Network - Ticker: 002558.SZ - Industry: Online Gaming, specifically MMORPG (Massively Multiplayer Online Role-Playing Games) Key Financial Highlights - 3Q25 Performance: - Revenues increased by 116% year-over-year to Rmb1.71 billion - Profit reached Rmb640 million in 3Q25, which would have exceeded market expectations if the same deferred recognition cycle as 2Q25 was applied [1][2][4] - Future Revenue Estimates: - FY25-27E revenues revised upwards by 6.3%, 11.2%, and 12.0% to Rmb5.2 billion, Rmb7.6 billion, and Rmb8.0 billion respectively [2][17] - Earnings Summary: - 2025E net profit projected at Rmb2.022 billion, with significant growth expected in 2026E and 2027E [6][19] Core Product Insights - Supernatural Action: - Cumulative grossing reached approximately Rmb1.5 billion by 3Q25, with Rmb500 million in September alone [4] - Anticipated longer lifecycle and higher lifetime value due to unique female-oriented positioning and high daily engagement [1][4] - Expected to perform well during upcoming promotional periods, particularly during Chinese New Year [4] Management Changes - CEO Transition: - Resignation of CEO Mr. Zhang Dong, succeeded by Ms. Liu Wei, focusing on young talent development [5] Valuation and Investment Strategy - Target Price: - Increased to Rmb42, based on a 22x FY26E EPS of Rmb1.89, reflecting a 10% premium to A-share gaming peers [3][26] - Investment Rating: - Maintained a Buy rating, citing strong growth potential from Supernatural Action and future game developments [1][25] Risks and Challenges - Downside Risks: - Shorter-than-expected lifecycle for Supernatural Action - Challenges in overseas expansion - Failure to effectively implement AIGC technology to reduce costs and enhance content quality [27] Additional Financial Metrics - Market Capitalization: Approximately Rmb68.664 billion (US$9.673 billion) [7] - Expected Total Return: - Expected share price return of 18.3% and dividend yield of 1.1%, leading to a total expected return of 19.5% [7] Conclusion Giant Network is positioned for significant growth driven by its flagship title, Supernatural Action, and a strategic focus on young talent and new game development. The recent management changes and positive financial revisions support a bullish outlook, although potential risks remain that could impact future performance.