Guotai Haitong: Maintains "buy" rating for TANWAN (09890), with forecasted high profit growth in the 2025 annual report.

Guotai Haitong issued a research report stating that it maintains a "buy" rating for TANWAN (09890). The bank expects the company's EPS for 2025-2027 to be 2.94 yuan, 2.26 yuan, and 2.80 yuan respectively. Considering the company's rich reserves of new games for 2026 and the potential for high growth in revenue, as well as the expected significant improvement in operational and efficiency on the investment side with the application of new technologies such as AI, the bank gives the company a 12 times dynamic PE for 2026 and calculates a target price of 30.92 Hong Kong dollars based on the exchange rate of 1:1.14 RMB to HKD. Guotai Haitong's main points are as follows: - It is expected that the company's full-year net profit in 2025 will be no less than 1.5 billion yuan, with a significant year-on-year increase. - The company has issued positive profit forecasts, with the company expecting a full-year net profit of no less than 1.5 billion yuan for 2025, a significant increase from 44 million yuan in the same period in 2024. The reasons for the growth include: 1) the significant increase in fair value gains from financial assets related to other listed companies held by the company; 2) revenue enhancement from overseas game distribution business, which has a high operating profit margin; 3) decrease in sales and distribution expenses, thereby reducing the marketing expense rate and driving the growth of the game business profit, reasons including the application of AI technology and optimization of investment model algorithms, some reserved games not widely promoted, and some game products entering a mature stage relying on brand effects to lower customer acquisition costs. - Successful issuance of HKD 468 million convertible bonds to accelerate AI+game layout. - Rich reserves of new games, welcoming a year of product growth in 2026. Risks: Delay in the launch of new games, AI technology development not meeting expectations.