The Zhitong Finance app learned that Nomura published a research report and gave Jinshan Software (03888) a target price of HK$16.5 to maintain its “reduced holdings” rating. Nomura believes that Jinshan Software predicts a price-earnings ratio of 36 times next year, which means there will be 11% potential downside. Among its peers, the bank favors Tencent (00700).

According to Nomura, the company's third-quarter revenue was 2 billion yuan (same below), up 32% year on year, in line with the company's expectations. The gross margin for the period was 40.7%, higher than the bank's forecast of 39%. This mainly benefited from the high-margin gaming business and the growing margin of the cloud business.

Nomura reported that Jinshan Software's third-quarter game revenue was 663 million yuan, down 2% from the previous year, exceeding the company's expectations, mainly because the computer game “Sword Man Love 3” performed better than expected. The company's management said that the fourth season of “Sword Man Love 3” and the mobile game “Sword Net 3” will both be updated. Cloud business revenue for the third quarter was 976 million yuan, up 62%. The increase was slower than Alibaba Cloud's 64% and Tencent Cloud's 80%, especially considering that Jinshan's cloud base was far lower than the above two.