上市后首次单季度盈利，毛利率连续9 个季度提升，开启股东回报。2024Q3 公司经调整净利润达到2.4 亿元，顺利实现扭亏为盈。扭亏为盈主要原因：1）毛利润大幅增长：2024Q3 公司毛利率达到34.9%，同比+9.88pct，环比+4.95pct，高毛利业务游戏、广告占比提升拉动毛利率增长，同时带动毛利润同比增长76%达到25.5 亿元；2）运营效率持续提升：2024Q3 公司销售费用率16.5%，同比-0.64pct，环比-0.44pct，管理费用率6.9%，同比-1.68pct，环比-1.05pct，研发费用率12.4%，同比-5.96pct，环比-2.2pct。公司公告称将在未来24 个月内回购不超过2 亿美元的公开交易证券，股东回报增强。Brief performance review
On November 14, 2024, the company disclosed the results announcement for the third quarter of 2024. The 2024Q3 achieved revenue of 7.31 billion yuan, +16% year-on-year, and non-Gaap net profit of 0.236 billion yuan, turning a year-on-year loss into a profit.
Management analysis
It was the first profit in a single quarter since listing, and gross margin increased for 9 consecutive quarters, opening up shareholder returns. The adjusted net profit of 2024Q3 reached 0.24 billion yuan, successfully turning a loss into a profit. Main reasons for turning a loss into profit: 1) Significant increase in gross profit: 2024Q3's gross margin reached 34.9%, +9.88pct, and +4.95pct month-on-month. The increase in the share of high-margin business games and advertising led to an increase of 76% year-on-year to 2.55 billion yuan in gross profit; 2) Continued increase in operating efficiency: 2024Q3's sales expense ratio was 16.5%, year-on-year -0.64pct, month-on-month, -0.44pct, and management expense ratio 6.9% year-on-year, -1.68pct, month-on-month- 1.05pct, R&D cost rate 12.4%, year-on-year -5.96pct, month-on-month -2.2pct. The company announced that it will repurchase no more than 0.2 billion US dollars of publicly traded securities within the next 24 months, increasing shareholder returns.
“Three Kingdoms: Designing the World” has driven the game business to exceed expectations, and the strength of the e-commerce sector is expected to drive continued growth in the advertising business. 2024Q3:1) Game revenue was 1.82 billion yuan, +84% year over year. The company's SLG game “Three Kingdoms: Seek the World” led to high growth in the game business and entered the top 3 of the iOS game bestsellers for 3 consecutive seasons after launch. 2) Revenue from advertising business was 2.09 billion yuan, +28% year-on-year. The increase in the company's capacity in the e-commerce consumption sector is expected to continue to empower the advertising business. The average number of users watching 2024Q3 consumer content exceeds 40 million per day. In 2024, the GMV delivered by Double Eleven was +154% compared to the same period last year. The number of advertisers launched was 6.6 times that of last year, bringing more than 50% of new customers to all vertical industries. 2) Revenue from value-added services was 2.82 billion yuan, +9% year-on-year, and the number of company members reached 21.97 million in 2024Q3, -1.5% month-on-month. 4) Revenue from IP derivatives and other businesses was 0.57 billion yuan, -2% year-on-year.
Users: Community ecology is developing healthily, and the number of users and usage time have reached new highs. With 2024Q3, the company's average daily active users reached 0.107 billion, +4% year-on-year, and the average daily usage time reached 106 minutes, +6% over the same period last year. The number of video broadcasts in the company's dominant categories and new categories continued to grow rapidly, and the community ecosystem continued to prosper. The average number of monthly interactions reached 19.3 billion, +14% over the same period last year.
Profit Forecasts, Valuations, and Ratings
The company's revenue is expected to be 26.7/31.2/34.8 billion yuan in 2024/2025/2026, NON-GAAP net profit of -0.07/2.245/3.763 billion yuan, respectively. The current stock price corresponding to 2025/2026 P/E is 28.18/16.81X, respectively, maintaining a “buy” rating.
Risk warning
User growth falls short of expectations; advertisers' demand falls short of expectations; quality upgrade mainstream risk; game launch time or performance falls short of expectations.
