GTHT Securities has released a research report maintaining an "Overweight" rating on TANWAN (09890). The firm forecasts earnings per share (EPS) for the company for 2025-2027 to be RMB 2.94, RMB 2.26, and RMB 2.80, respectively. Considering TANWAN's robust pipeline of new games for 2026, which is expected to drive a return to high revenue growth, and the application of new technologies like AI that are anticipated to significantly enhance operational and marketing efficiency, a 2026 dynamic price-to-earnings (P/E) ratio of 12 times is applied. Using an exchange rate of RMB 1 to HKD 1.14, this corresponds to a target price of HKD 30.92. The main points from GTHT Securities are as follows.
The full-year net profit for 2025 is projected to be no less than RMB 1.5 billion, representing high year-on-year growth. The company has issued a positive profit alert, estimating a significant increase from the RMB 44 million recorded in the same period of 2024. The growth is attributed to several factors: 1) a substantial increase in fair value gains from financial assets, specifically holdings in other listed companies measured at fair value through profit or loss; 2) improved earnings from overseas game publishing operations, which boast high operating profit margins; and 3) a reduction in sales and distribution expenses, thereby lowering the marketing expense ratio and boosting game business profits. This cost reduction is due to the application of AI technology and optimization of marketing algorithms, the fact that some pipeline games have not yet undergone large-scale promotion, and certain game products reaching maturity, allowing for lower user acquisition costs leveraged by brand效应.
Successfully issuing HKD 468 million in zero-coupon convertible bonds accelerates the AI + gaming strategy. On December 18, 2025, the company announced the issuance of zero-coupon convertible bonds totaling HKD 468 million. The raised funds will be specifically allocated for strategic layout and investment in AI-related industries. In the AI domain, TANWAN has already established a comprehensive AI technology system covering publishing, operations, and R&D. It has independently developed the "Hetu" data intelligence analysis system, the "Luoshu" omni-channel media management system, and further upgraded its "X Smart Platform" by integrating AI technologies. The analysis suggests that AI technology, in the form of intelligent agents, has deeply penetrated various aspects of the company's operations, from AI-generated content (AIGC) material creation to AI-driven operations and marketing algorithm optimization, and is expected to fully empower the growth of its main business.
A rich pipeline of new games sets the stage for a strong product year in 2026. After years of exploration, the company has formed a diverse product matrix encompassing IPs such as Legend, Miracle, and Hot Blooded Jianghu. For 2026, TANWAN has a substantial pipeline of new products. Key titles include "King Legend 2," "New Moon Continent," "Code: HD," "Douluo Dalu: Zhu Xie Legend," and "Tian Long Ba Bu 2: Fei Long Zai Tian," which are anticipated to drive subsequent performance growth.
Risk warnings include potential delays in new game launches and slower-than-expected development of AI application technologies.