Introduction to this report:
The flagship “Torchlight” has been in operation for a long time, and the new product “Sword of the Mugulan” has full potential to be scheduled for the national service. 23H2 game revenue is expected to recover.
Summary:
Maintain the “Overweight” rating. The long-term operation of the flagship product, a major new product, the national service, has been set, and a recovery in game revenue is imminent. Maintaining the profit forecast, the adjusted net profit for 2023-2025 is expected to be $275/4.56/605, corresponding to PE 19X/12X/9X, and maintaining the target price of HK$26.99.
The “Torchlight” SS3 preseason has started, and the ranking is expected to rise again. The game uses a seasonal system for updates and iterations. The SS2 season was launched on September 8 and now has a TapTap rating of 7.4; the SS3 preseason “Huntsman Parade” started on October 27. As an independent mini-season between official seasons, the preseason has an independent season theme, special mechanics, and limited content. This “Huntsman Parade” preseason has official self-propelled games, treasure chests everywhere, boss roaming, and various limited content, so that all hunters can get higher output efficiency, better revenue, and more challenges The brush experience. “Torchlight:
“Infinite” is a three-month season, superimposed on preseason games, etc. High-frequency season content updates and gameplay iterations are expected to help continue to attract users and drive a steady recovery in product performance.
“Sword of the Mule” has been released for public beta, and its unique pixel style pays homage to the classics. “Sword of the Mule: For This Peaceful World” is an SRPG game developed by the company itself. Currently, the national service is officially scheduled for November 23. As a medieval-themed chess game, this game chose a classic medieval story of sword and magic. It focuses on a pixel style rare in mobile chess games. It uses a 3D engine to render in a pixel style, and combines various new technologies to enhance visual impact. Furthermore, the gameplay is similar to traditional chess games, the story is rich, and the three-dimensional map and other designs pay homage to the classic game “Royal Knights 2,” which strives to provide players with a high-quality, pure chess experience, and still has differentiated competitiveness in the SRPG market, which has a loyal user base of players.
The international service has performed well, and the national service is worth looking forward to an imminent recovery in game revenue. “Sword of the Valley: For This Peaceful World” was launched on August 7 in Hong Kong, Macao, and Taiwan. On the first day, it topped the iPhone mobile game download list in Hong Kong, Macao, and Taiwan, and successfully ranked 9th in the growth list. According to point data, the game had 170,000 global downloads in August, with estimated global revenue of 3.23 million US dollars. Currently, the TapTap rating is 8.1 million. According to player feedback, players are quite approving of the game's graphic style, character drawing, map design, music dubbing, etc., and the card drawing mechanism still needs to be optimized. Based on the impressive performance of the international service and player feedback from multiple rounds of testing, we believe that the “Sword of the Mugulan” national uniform has some commercial potential. Combined with the long-term operation of the flagship product “Torchlight: Infinity”, it is expected to jointly drive the company's 23H2 game revenue recovery and profit release throughout the year.
Risk warning: industry regulation is becoming stricter; product performance is sluggish; launch progress falls short of expectations.