Event: The TapTap game launch was held online on June 28. According to the company's official WeChat account, the launch was an open theme, “Players' Summer Starts at ___”. A total of 44 games were updated at the press conference, divided into “Transplant Masterpiece”, “Continue to Write a New Chapter”, “Dimensional Fantasy”, and “YEAH!” , “Exclusive Games” and “Spotlight Games” six chapters. Focus on products of various categories and styles.
The leading game uses TapTap's promotion to drive the platform's activity and growth. The games participating in this press conference include major products from leading manufacturers such as “Eternity”, “Desperate Zone Zero”, “Sword and Expedition: Departure”, and “The Sixteen Sounds of Yan Yun”. Among them, “Eternity” updated the new hero “Mount Yue”, and “The Sixteen Sounds of Yan Yun” revealed the new weapon “Rope Darts” for the first time. We believe that leading products from well-known game companies cooperate with TapTap to release updates, which will facilitate the platform's subsequent active user growth. In addition to products from major manufacturers, the live-action romance interactive movie “Done! The mobile version of “I'm Surrounded by Beautiful Women” is expected to launch in Q3 '24, and the TapTap platform opened a limited experience on June 28. It is recommended to focus on the active performance of platform users driven by the intensive launch of key products.
Self-developed game testing schedule to monitor subsequent launch performance. According to the company's official WeChat account, the company's life simulation game “Heartwarming Town” is scheduled for July 17; the new character “Doki” in “Ether Restart Day” with a virtual city theme in the near future will be revealed, and three tests will begin in the fall of 2024. We believe that the company's product distribution performance is excellent. “Heartbeat Town” has a high upfront investment. We recommend that you pay attention to the product launch performance.
Profit forecasting and investment advice. We maintain our previous performance forecasts. The company's net profit for 24-26 is estimated to be 558 million yuan, 764 million yuan, and 835 million yuan, respectively. Using the segmented valuation method, the company's game business is estimated to be reasonably valued at RMB 7.209 billion; the community business is reasonably valued at RMB 5.855 billion. The Company has a reasonable valuation of HK$14.36 billion (HK$1 = RMB 0.91), maintaining the firm's judgment of a reasonable value of HK$29.88 per share. Maintain a “buy” rating.
Risk warning. There is a risk that the competitive landscape will deteriorate, the risk that regulations will become stricter, the risk that self-developed games will fall short of expectations, and the monetization of TapTap users is uncertain.