The “Let's Go Muffin” national service and regions such as Japan and South Korea are expected to continue to perform well. According to TapTap, the “Let's Go Muffin” national service will be tested for file deletion from April 16 to April 26. According to the App Store, it is expected to be officially launched on May 15. “Let's Go Muffin” has remained at the top of the iOS bestseller list since it was launched in Hong Kong, Macau, and Taiwan on January 24. According to data.ai data, it sold 18 million US dollars in February, ranking 15th among overseas games. According to point data, the turnover in March exceeded 2012 million US dollars, ranking first in overseas games in Hong Kong, Macao and Taiwan. We believe that the company's “Let's Go Muffin” has achieved outstanding performance in Hong Kong, Macao and Taiwan. On the one hand, it has benefited from excellent product quality: “Let's Go Muffin” combines placement and RPG gameplay, and is both casual and easy, and also has high social attributes and user stickiness. On the other hand, it has benefited from the company's good publicity and operation: at the leisure racetrack, the company has released the self-developed product “Play Polly Every Day” and the agency product “Endless Urara”, and the distribution of various leisure placement products has accumulated mature distribution capabilities for the company. As of April 10, “Let's Go Muffin” had more than 310,000 reservations on TapTap, with a rating of 8.1. The launch of “Let's Go Muffin” in China and more overseas regions such as Japan and South Korea is expected to continue its good performance in Hong Kong, Macao and Taiwan, contributing to a considerable increase in the company's performance. Based on expectations for games and the company's business, we maintain our 2024-2026 profit forecast. The company's net profit for 2024-2026 is 5.62/6.74/788 million yuan, corresponding EPS is 1.2/1.4/1.6 yuan respectively, and the current stock price corresponds to PE 11.2/9.4/8.0 times, respectively. We are optimistic about the performance of “Let's Go Muffin” national service and other overseas regions, and maintain a “buy” rating.
Acquire minority shares in overseas distribution companies to further strengthen global distribution capabilities According to the announcement, the company will acquire the remaining 35% of X.D. Global's shares in a non-wholly-owned subsidiary. X.D. Global is mainly engaged in overseas distribution and operation of high-quality games. The net profit after tax in 2023 is 46.02 million yuan. This acquisition is expected to strengthen the company's overseas operation capacity and lay a solid foundation for the overseas distribution of subsequent products.
Increased demand for new game launches is expected to continue to drive TapTap's revenue growth to reach 1,297 billion yuan in 2023 (+32.63% year over year). Thanks to the company's strategic adjustments to TapTap, the 2023H2 MAU has returned to the growth trend, and the 2023Q4 MAU has surpassed 2022/Q4. We believe that with the steady distribution of game versions and the increase in the number of versions, demand for new game launches may continue to grow, driving TapTap's revenue to continue to grow. Meanwhile, continuous optimization of TapTap or drive MAU to continue to pick up.
Risk warning: TapTap's revenue growth fell short of expectations, new game launch performance fell short of expectations, etc.