The company completed strategic adjustments, or promoted efficient and healthy development, and maintained the “buy” rating. In 2024, the company made organizational structure, management mechanism and business strategy adjustments, which had a certain impact on short-term performance. Subsequently, new games were launched one after another, entering a new product cycle, and the company's performance is expected to reverse. Based on the company's performance and product cycle, we lowered our profit forecast. We expect the company's 2024-2026 net profit to be -5.89/7.88/12.04 billion yuan (previous value was 10.52/12.83/14.38) billion yuan, corresponding EPS was -0.30/0.41/0.62 yuan respectively, and the current stock price corresponding to 2025-2026 PE is 29.9/19.6 times, respectively. We are optimistic that the new product cycle will drive the company's performance improvement and maintain a “buy” rating.

High-quality art, rich gameplay, and authentic Xianxia MMO design may help “World of Immortals” achieve good performance. The company developed its own MMO mobile game “World of Immortals”. The public beta for the MMO game “World of Immortals” was released on December 19. “World of Immortals” is based on the Unreal 5 engine and has excellent art and graphics performance. In terms of gameplay, rich gameplay such as PVP (team copy), PVE (world boss, 200v200 stronghold battle, 100v100 gang league, map faction, etc.), and PVX (map exploration, home gameplay, etc.) can meet the game needs of different users. In particular, the performance in the traditional MMO gameplay of team copy has made the game well received by many players. In terms of battle system design, “World of Immortals” follows the battle design logic of classic MMOs. Additional game windows such as “retaliation” and “uncontrol” have been added to the game's skill chain, making the PVP gameplay more in-depth. In terms of paid design, “World of Immortals” uses a seasonal system with no sales values. The paid content mainly consists of monthly cards (42 yuan), battle orders (68, 128 yuan), and a design mall, which tends to operate for a long period of time. Furthermore, the choice that “World of Immortals” is not mobile allows the game to take full advantage of PC performance and provide a better gaming experience.

Based on the user influence of the well-known IP “Zhi Xian” and the excellent quality of “Zhi Xian World” itself, the number of reservations on the official website of “Zhi Xian World” has exceeded 3 million, and it is expected to contribute a considerable increase in the company's performance after the official launch.

“Different Ring” was first revealed to be well received, or the next leading two-dimensional open world game “Different Ring” was developed based on the Unreal 5 engine, and is another two-dimensional open world game after the company's “Tower of Magic.”

Currently, the first PV & actual demo video of “Different Ring” has been viewed over 9 million on Station B, and an offline closed demo event was held on September 22. It was well received by players. Based on the company's rich R&D experience and unique game design in an open city, “Another Ring” is expected to become the leading open world game, further driving the company's performance reversal.

Risk warning: New game launch times or sales performance fall short of expectations, film and television business calculation risks such as impairment.