CICC has released a research report reiterating an "Outperform Industry" rating and a target price of HK$89.5 for XD INC (02400), implying a 28% upside potential based on a 23x 2026 P/E ratio. The net profit attributable to parent company forecasts for 2025-2027 are maintained at RMB 1.43 billion, RMB 1.69 billion, and RMB 1.96 billion, respectively. The current share price corresponds to 18x and 15x P/E ratios for 2026 and 2027. The international launch of "XD Town" serves as further validation of the company's "Evergreen Games + Globalization" strategy, highlighting its IP revitalization capabilities and the long-term value of high-DAU game genres. Key points from CICC are as follows: Recent Company Developments The overseas pre-download for "XD Town" topped the iOS free game charts in multiple regions/countries on January 7, with official servers launching at 9:00 AM Beijing Time on January 8 (10:00 PM UTC-5 on January 7). The product supports Android, iOS, and PC platforms with cross-platform account functionality. Initial download and user acquisition performance exceeded expectations; focus is now on user accumulation, retention, and the impact of localized operations such as IP collaborations. Since its testing phase began in November 2025, pre-registrations for the international version have climbed steadily, surpassing one million prior to its January 2026 launch. As of 10:00 AM on January 8, the game ranked first on the iOS game download charts in 16 countries/regions, including Japan, South Korea, the US, and Singapore/Malaysia/Thailand. The report suggests that early-stage focus should be on overseas user accumulation. Given that the product has been operational in the domestic market for a year and a half, it has accumulated substantial content, which the report believes will lead to a smoother transition from user acquisition to monetization overseas compared to the initial domestic launch. Regarding subsequent operations (Traditional Chinese version), a collaboration with "My Little Pony" is scheduled to begin in February 2026. Execution of Flagship Product Longevity and Globalization Strategy; Also Monitor "Torchlight" Operations and TapTap Platform Growth Increments Beyond the international version of "XD Town," the report identifies other growth drivers for the company within the year: 1) "Torchlight": The report estimates that the quarter-on-quarter gross revenue growth trend seen in 2H25 may continue into 2026; following the completion of the IP acquisition announced in December 2025, the company will secure global intellectual property rights for the series, further strengthening its influence over the IP. The S1 season for the product commenced on January 16, 2026; 2) TapTap: The report anticipates a rich supply of games in the industry in 2026, potentially enabling the platform to achieve double-digit year-on-year growth in advertising revenue; 3) Continued expansion of the ADN business. Emphasis on Shareholder Returns, Initiates HK$400 Million Automatic Share Buyback Plan On January 5, the company announced the initiation of an automatic share buyback plan (expiring June 4, 2026), noting it had received an exemption from the Stock Exchange allowing automatic repurchases during restricted periods, with all repurchased shares to be cancelled. The report views the buyback as demonstrating the company's confidence in long-term growth while also benefiting shareholder equity. Risk reminders: Policy changes; Game performance below expectations; TapTap commercialization below expectations; Intensifying competition.