Huaxing Capital raises XD INC's target price to 80 yuan, rating "Hold"

AASTOCKS
2025.09.04 02:10

Huaxing Capital published a research report indicating that XD INC (02400.HK) saw a 39% year-on-year increase in revenue in the first half of the year, with adjusted net profit soaring 235% year-on-year, benefiting from the growth of its gaming and platform TapTap businesses, in line with earlier profit warnings. The firm believes the performance is solid, mainly due to the relatively small increase in marketing expenses, achieving a 39% year-on-year growth in gaming business, while the TapTap business grew due to improved conversion efficiency and higher user engagement.

The firm raised its revenue forecasts for 2025 to 2027 by 23% to 25%, and adjusted net profit forecasts by 83% to 86%, while also increasing the valuation basis and extending it to 2026. Based on a projected price-to-earnings ratio of 18 times for next year (previously projected at 15 times for this year), the target price was raised to HKD 80, with a rating of "Hold."

The firm explained that its target price-to-earnings ratio is lower than NetEase-S (09999.HK) at 20 times, due to XD INC's smaller gaming portfolio and limited visibility for growth after this year

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