CENTURY HUATONG(SZ:002602)2026-01-30 03:14Century Huatong (002602.SZ) Conference Call Summary Company Overview - Century Huatong is an online game developer and auto parts manufacturer, with significant revenue contributions from both sectors. In 2018, the company generated total revenue of RMB 8,124 million, with 66% from online gaming and 34% from auto parts [doc id='29'][doc id='30']. Key Financial Highlights - FY25 Preliminary Results: Revenues are expected to increase by 68% year-over-year to RMB 38 billion, with Q4 2025 revenues projected at approximately RMB 10.7 billion [doc id='1']. - Earnings Projections: Reported earnings for FY25 are estimated between RMB 5.55 billion and RMB 6.98 billion, reflecting a year-over-year increase of 253% to 285% [doc id='5']. - Future Growth: Revenue and profit growth for FY26 is projected at 25% and 52%, respectively, with a reaffirmed 30% earnings CAGR [doc id='1']. Revenue Breakdown - Kingshot: Expected to generate monthly gross revenues of approximately USD 130 million, with profitability anticipated starting September 2025. This title is projected to be a significant earnings driver in FY26 [doc id='3']. - Casual Games: Titles like Tasty Travel and Truck Star are maintaining strong momentum, with management committed to investing in this segment despite longer payback periods due to larger total addressable markets (TAM) [doc id='4']. Earnings Adjustments - Adjustments to FY25-27 revenue estimates reflect a ramp-up in overseas Kingshot and casual games, with revenue revisions of -0.7%, +1.1%, and +1.6% for the respective years [doc id='2']. - Reported earnings for FY25-27 have been raised by 8.8%, 8.7%, and 8.4% to RMB 5.9 billion, RMB 9.0 billion, and RMB 9.6 billion, respectively, due to operating leverage from sales and marketing (S&M) and R&D [doc id='2']. Profitability Metrics - Gross Profit Margin: Expected to remain strong, with gross margins projected at 69.7% for FY25 and improving to 70.1% in FY26 [doc id='22']. - Net Profit: Projected net profit for FY25 is RMB 5.9 billion, with a diluted EPS of RMB 0.788, reflecting a significant increase from previous years [doc id='6']. Market Position and Strategy - Century Huatong has emerged as the third-largest game company in China, leveraging successful titles like Whiteout Survival and Kingshot to differentiate itself from market leaders Tencent and NetEase [doc id='30']. - The company maintains a "Buy" rating with a target price increase to RMB 24, based on a 20x FY26E PE ratio, aligning with the average for A-share gaming companies [doc id='31']. Risks and Considerations - Potential risks include delays in launching significant game titles and a faster-than-expected slowdown in the auto parts business, which could impact overall performance [doc id='32']. Conclusion - Century Huatong is positioned for robust growth driven by its gaming segment, particularly through successful titles and strategic investments in casual games. The company's financial outlook remains positive, with significant revenue and profit growth anticipated in the coming years.