【Zhongyuan Media】G-bits(603444)Annual Report Review: New products drive significant year-over-year growth, sustained high shareholder returns

The company released its 2025 annual report. In 2025, operating revenue was RMB 6.21B, YoY +67.89%; net profit attributable to the parent was RMB 1.79B, YoY +89.82%. In 2025 Q4, operating revenue was RMB 1.72B, YoY +95.91%, QoQ -12.65%; net profit attributable to the parent was RMB 580 million, YoY +101.63%, QoQ +1.77%.

Investment highlights:

New product releases drive performance growth. In 2025, the company launched new titles《Ask Swordsman to Live Long (Mainland Version)》《Staff Sword Legend (Mainland Version)》《Staff Sword Legend (Overseas Version)》《Fellows, Come Dig for Treasure》，which achieved RMB 1.7B, RMB 824 million, RMB 792 million, and RMB 603 million in transaction流水, respectively. The outstanding performance of new products drove the company’s full-year performance growth. The launch of the overseas versions of《Staff Sword Legend》and《Ask Swordsman to Live Long》pushed the company’s overseas operating revenue to grow by 85.80% to RMB 929 million. The agent product《Jiu Mu Zhi Ye》was launched in December 2025. In the first 3 months after launch, transaction流水 exceeded RMB 200 million; however, because the launch time fell at year-end, it had not yet realized profits at the financial level.

Meanwhile, newly launched products brought a large amount of deferred revenue. As of the end of 2025, the company’s unamortized balance of充值 and props totaled RMB 767 million, up RMB 289 million compared with the end of 2024. As players’充值 continue to be consumed, it will be recognized as revenue in phases.

Self-developed product revenue increases gross margin. In 2025, the company’s overall gross margin was 93.90% (YoY +6.04 pct). The gross margin improvement was driven by a significant year-over-year increase in operating revenue of self-developed products; however, the R&D revenue share payments made to external R&D partners decreased by 30.37% year over year. Overseas business gross margin was 94.72% (YoY +10.84 pct). This was mainly because self-developed product《Staff Sword Legend (Overseas Version)》contributed incremental revenue, without the need to make revenue share payments to external R&D partners. On the expense side, various expenses increased to different degrees, but the growth rates differed significantly: sales expense ratio was 33.57% (YoY +7.04 pct). The increase in sales expense ratio was significant, mainly because the launch of new products drove higher distribution and publishing efforts; administrative expense ratio was 6.56% (-1.89 pct); R&D expense ratio was 14.30% (-6.20 pct). The growth in these expense ratios was far smaller than the growth in operating revenue, and the expense ratios fell to varying degrees.

Key reserved products target overseas markets. The company’s current main reserved products include the overseas versions of its self-developed products《Staff Sword Legend》and《Ask Swordsman to Live Long》，which are expected to launch in the U.S., Europe, and other regions in 2026H1 and 2026H2, respectively; the Hong Kong, Macau, and Taiwan version of the agent product《Jiu Mu Zhi Ye》and the agent product《Lost Castle 2》, which is expected to be launched in Mainland China in 2026. These are expected to contribute incremental performance to the company.

Continue to maintain a high dividend payout ratio and place emphasis on shareholder returns. For 2025, the company expects to distribute dividends of RMB 1.41B in total, accounting for 78.4% of the company’s full-year net profit attributable to the parent. Based on the closing price on the day the annual report was released, the dividend yield is approximately 5.4%. At the same time, the company expects to continue to maintain three dividends per year—semiannual, the first three quarters, and the full year—in 2026 and 2027. The dividend scale will not be less than 50% of the net profit attributable to the parent. Since the company’s listing in January 2017, the cumulative amount of cash dividends has been RMB 7.42B, which is 8.25 times the net amount of IPO financing.

Investment recommendation: The company’s new product performance is excellent and will contribute incremental earnings to the company. In 2026, products are targeted at overseas markets and are expected to form a driving force for performance growth. On the industry front, Google Google Play and Apple China have announced in succession that they will reduce channel revenue shares, which is a meaningful positive for game companies and IAP games. In addition, the company continues to attach great importance to shareholder returns, maintain a relatively high dividend payout ratio, and has a dividend yield that is competitive. The company expects EPS for 2026-2028 to be RMB 27.29, RMB 29.26, and RMB 30.56, respectively. Based on the closing price on March 27, 2026, the corresponding PE ratios are 13.60x, 12.68x, and 12.14x. Maintain the “Buy” rating.

Risk warning: overseas expansion falling short of expectations, increased promotion and distribution publishing expenses, exchange-rate risk, and product performance falling short of expectations.

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The analyst who signs this report has the practice qualification for securities analysts granted by the China Securities Association, and my employment complies with relevant regulatory compliance requirements. I independently and objectively prepare this report based on a diligent and prudent professional attitude, professional and rigorous research methods, and analytical logic. This report accurately reflects my research viewpoints, and I am responsible for the contents and viewpoints of the report. I ensure that the information sources of the report comply with laws and regulations.

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