1. Event Overview On October 14, the company released a performance forecast. In 20Q3, it is expected to increase 150 million yuan to 190 million yuan, a year-on-year increase of 105.96% to 134.21%. Net profit of the mother was 292-332 million yuan, with a median value of 312 million yuan, an increase of about 120% over the previous year. Net profit for the 20Q3 single quarter is expected to reach 82 million yuan to 122 million yuan, with a median value of 102 million yuan, an increase of 82% over the previous year. The median net profit of 20Q3 after deducting non-return to the mother is expected to be 259 million yuan, up 101% year on year. The median net profit after deducting non-return net profit in 20Q3 is expected to be 82 million yuan in a single quarter, up 58% year on year. 2. Analysis and Judgment: Performance in 20Q3 continues to grow at a high rate, and the “Three Kingdoms” series products continue to gain strength. The company expects a median net profit of 312 million yuan in 20Q3, an increase of 120% over the previous year, with impressive performance. (1) Thanks to the optimization of the “Dream Three Kingdoms” mobile game operation plan and the launch of the Wegame platform, the “Dream Three Kingdoms” mobile game recharge revenue increased year-on-year; at the same time, the “Dream Three Kingdoms” mobile game began its 10th anniversary celebration on September 26, and we expect the profits generated from the event to be further reflected in Q4. (2) The recharge revenue of the company's mobile game product “Dream Three Kingdoms” reprint increased year-on-year. In 2020Q2, the average ranking of iOS game bestsellers was 207th, up to 63rd in this list; 2020Q3 ranked 206th in the iOS game bestseller list, reaching the highest 39th place in the list. The overall performance is relatively stable. (3) Xiamen Youdong Network, which has been acquired by the company since March 2019, is included in the scope of the company's consolidated statements, enhancing the company's performance. The net profit promises of Youdong Network 20-21 are 60 million yuan and 72 million yuan respectively (with 80% equity ratio, the promised net profit is 48 million yuan and 57.6 million yuan). New mobile game titles are about to be launched. Q4 is expected to boost new and old products simultaneously. In the mobile game business, “Dream Three Kingdoms” began its 10th anniversary on September 26. In the first week after the event began, it basically remained at number one on the list of popular new products on Wegame, and remained in the TOP2 list as of October 14. Thanks to the 10th anniversary event, it is expected that the Q4 mobile game business will continue to grow. In the mobile game business, the company's retro martial arts category mobile game “My Knight” was scheduled to be launched in November. Currently, the number of reservations on the official website exceeds 1 million; the two-dimensional mobile game “X2-Demon Demon” was revised and scheduled to be launched on October 22. Currently, the number of pre-orders on all platforms exceeds 3 million; the company also has the Roguelike game “Genesis Out of Control” in the company's reserves; and the MOBA game “Pinnacle Battleground” authorized by DC. The company's product reserves are diversified, and we are optimistic about breakthroughs in the company's product categories. 3. Investment recommendations We forecast that the net profit of the company in 2020-2022 will be 415 million yuan, 626 million yuan, and 8.0 million yuan. The PE corresponding to the company's current stock price is 24X, 16X, and 13X respectively, which is relatively cost-effective. In the short to medium term, we are optimistic about the recovery of the company's main product, “Dream Three Kingdoms”, and the long-term operation of mobile games to stabilize the basic performance market. After 20 years of product years, new games such as “My Knight” and “X2” continued to increase profits, long-term optimism about the deep cooperation between the company and Tencent to help research and operation, and strategic deployment of VR business in advance. At the same time, the company's cash flow quality is good, and the company's management is highly focused on the product, maintaining a “recommended” rating. 4. Risk warning: New games are not launched as scheduled, game flow falls short of expectations, and the risk of game policy regulation at home and abroad.