GTHT Securities has released a research report maintaining an "Overweight" rating for TANWAN (09890). The firm projects the company's earnings per share (EPS) for 2025-2027 to be RMB 2.94, RMB 2.26, and RMB 2.80, respectively. Considering TANWAN's robust pipeline of new games scheduled for 2026, which is expected to drive a return to high revenue growth, and the anticipated significant improvement in operational and marketing efficiency through the application of new technologies like AI, the report assigns the company a dynamic price-to-earnings (P/E) ratio of 12 for 2026. Based on an exchange rate of RMB 1.00 to HKD 1.14, this translates to a target price of HKD 30.92.
The key viewpoints from GTHT Securities are outlined below.
Full-year 2025 net profit is forecasted to be no less than RMB 1.5 billion, representing significant year-on-year growth. The company has issued a positive profit alert, anticipating a full-year net profit for 2025 of not less than RMB 1.5 billion. This marks a substantial increase compared to the RMB 44 million recorded in the same period of 2024. The primary reasons for this growth include: 1) a significant increase in fair value gains from financial assets held in other listed companies, which are measured at fair value through profit or loss; 2) improved earnings from overseas game publishing operations, a segment characterized by high operating profit margins; and 3) a reduction in sales and distribution expenses, thereby lowering the marketing expense ratio and boosting profitability of the gaming business. This cost reduction is attributed to the application of AI technology, optimization of advertising algorithms, the fact that some pipeline games have not yet undergone large-scale promotion, and certain existing game products reaching maturity, allowing for lower user acquisition costs leveraged by brand recognition.
Successful issuance of HKD 468 million in convertible bonds accelerates AI + gaming strategy. On December 18, 2025, the company announced the issuance of zero-coupon convertible bonds with a total value of HKD 468 million. The proceeds from this offering are earmarked specifically for strategic layout and investment in AI-related industries. In the AI domain, TANWAN has already established a comprehensive, end-to-end AI technology system covering publishing, operations, and research & development. The company has independently developed the "Hetu" data intelligence analysis system, the "Luoshu" omni-channel media management system, and has further upgraded its "X Smart Platform" with integrated AI technologies. GTHT Securities believes that AI technology, in the form of intelligent agents, has deeply permeated all aspects of the company's operations—from AI-generated content (AIGC) for marketing materials to AI-driven operations and optimized advertising algorithms—and is poised to fully empower growth in the company's core business.
Substantial new game pipeline sets the stage for a major product year in 2026. After years of exploration, the company has formed a diverse product matrix encompassing various IPs such as Legend, Miracle, and Rexjue. For 2026, TANWAN boasts a rich pipeline of new products. Key upcoming titles include "King Legend 2," "New Moon Continent," "Project: HD," "Douluo Dalu: Zhu Xie Legend," and "Tian Long Ba Bu 2: Fei Long Zai Tian," which are expected to contribute significantly to future performance.
Risk factors include potential delays in new game launches and slower-than-expected development in AI application technologies.