KINGNET(002517) 华创证券·2024-11-06 11:09Investment Rating - The report maintains a "Recommendation" rating for the company, indicating an expectation to outperform the benchmark index by 10%-20% over the next six months [1][16]. Core Views - The company's Q3 2024 performance exceeded expectations, with a quarterly revenue of 1.37 billion yuan, representing a year-over-year increase of 30% and a quarter-over-quarter increase of 10%. The gross profit for the quarter was 1.13 billion yuan, up 29% year-over-year and 11% quarter-over-quarter. The net profit attributable to shareholders was 470 million yuan, reflecting a 32% year-over-year increase and a 23% quarter-over-quarter increase [1]. - The company has a solid foundation in its legacy products, particularly in the nostalgic gaming segment, which has shown resilience. Key titles like "Angel Battle" and "Original Legend" performed well, contributing to a robust revenue stream [1]. - The company has a rich pipeline of innovative IP products, with several new releases expected to drive significant revenue growth in upcoming quarters. Notable upcoming titles include "Tomb Raider: Journey" and "Douluo Continent: Legend of Evil" [1]. Financial Summary - The company adjusted its revenue forecasts for 2024-2026 to 5.55 billion, 6.38 billion, and 7.25 billion yuan, respectively, with year-over-year growth rates of 29%, 15%, and 14%. The net profit forecasts were adjusted to 1.73 billion, 1.98 billion, and 2.23 billion yuan, with corresponding growth rates of 19%, 15%, and 13% [1][2]. - The current market valuation is based on a target price of 18.42 yuan, suggesting a potential upside of 36% from the current price of 13.54 yuan [3]. Financial Indicators - Total revenue for 2023 is projected at 4.295 billion yuan, with a year-over-year growth rate of 15.3%. The net profit for 2023 is expected to be 1.462 billion yuan, reflecting a significant year-over-year growth of 42.6% [2][7]. - The company’s earnings per share (EPS) is forecasted to increase from 0.68 yuan in 2023 to 1.04 yuan by 2026, with a corresponding decrease in the price-to-earnings (P/E) ratio from 20 to 13 over the same period [2][7].