The Zhitong Finance App learned that Shen Wan Hongyuan released a research report saying that considering that Xindong Company (02400) was affected by AI investment, tax supplements, etc., the profit forecast was lowered. The company's adjusted net profit for 2026-2028 is 15.92/20.11/2.241 billion yuan (the original forecast was 21.45/25.25/2,841 billion yuan). The current market value corresponds to an overall profit of only 10x PE for 26 years. Using SOTP valuation, TapTap and the game business were respectively given 15/13 times PE, corresponding to a reasonable market value of RMB 27.5 billion and a reasonable share price of HK$66.24 per share, maintaining a “buy” rating; the bank believes that TapTap's value is undervalued and that AI creative equality clearly favors the platform. It is optimistic that TapTap is expected to benefit from high version growth and AI creation to enhance the community ecosystem. At the same time, game stocks are rising steadily and new products contribute flexibly.
Shen Wan Hongyuan's main views are as follows:
AI creation equality stimulates game supply, and the TapTap ecosystem is a natural fit for AI games
AI creation equality stimulates game supply, the “creator-player” ecosystem is strengthened, and the increase in platform value is expected to continue. There have been examples in 26 years: the AI creation platform TapTap Maker, which was released by the company in January, has launched more than 6,000 games up to now, and the number of Maker game user retention and time is higher than the platform market. In September, the Tap Creative Workshop AI game “Put Yourself in a Place” (simulated management) exploded, with 630,000 downloads/8.5 rating. The TapTap App's top 12 free iOS free list reached a new high during the year. The success of the “Little Workshop” AI game verified the natural adaptation of the TapTap ecosystem and AI games, and we look forward to commercializing the AI platform Maker and Agent Cindy for a long time.
A high increase in version numbers, new products in the industry are expected to boost Tap's revenue, and profit H2 is expected to recover
Tap's revenue growth in the first half of the year was pressured by low supply of major new games. Low competition dragged down ECPM's decline, and at the same time, some of Maker's advertising positions were diverted. However, since '26, the game's monthly edition numbers have repeatedly reached new highs. '27 may usher in intensive new product launches to drive a recovery in Tap's advertising revenue. Among them, there is no shortage of high-investment products from leading companies such as Tencent and NetEase. Recent highlights: Miha Tour “Starry Valley” 26 and NetEase's “Infinity” (January '27). PC version: Users continue to grow, focusing on product refinement and user size in the short term, which is expected to benefit from the diversification trend of the industry. The company's H1 profit side is affected by Maker investments and one-time tax supplements. According to the company's results, the tax rate may continue to rise in the future, but H2 AI investment is expected to drop sharply, and Tap expects profit improvement.
Game: Pay attention to the evergreen attributes of existing products, and be optimistic about the elasticity of new products in 26-27
“Heartfelt Town” + “Torchlight” contributes to core game profits. According to point data, the high overseas monthly turnover of “Small Town” was in the early stages of launch (co-branded with “My Little Pony”). Currently, the single month is still stable, and the national uniform flow rate is still steady; “Torch” Q3 continues to grow compared to Q1 (the high point of Q2 is the anniversary). Subsequent key products are highly flexible: if “RO2” succeeds, it is expected to be 27Q1 (optimistic about ROIP+ open world sufficient game content), and “Muffin 2” is expected to be 27 years.
Focus on shareholder returns
The company has repurchased a total of HK$800 million since this year, with a shareholder return of about 4% based on current market value.
Risk Alerts
The risk of a decline in game stock; the risk that self-development of games falls short of expectations; competition in the game industry increases the risk.