Guojin Securities Initiates Coverage on XD INC (02400) with "Buy" Rating, Cites Dual Growth Drivers from In-House Development and Platform

Stock News11-24

Guojin Securities has initiated coverage on XD INC (02400) with a "Buy" rating and a target price of HK$103.2, citing the company's growth potential driven by its in-house game pipeline and platform ecosystem. As a global game developer and publisher, XD INC has demonstrated strong performance with successful titles like *Let’s Go Meow* and sustained user and monetization growth on its TapTap platform.

**Company Overview** XD INC is a global game developer and publisher with extensive experience in R&D, distribution, and agency operations. Its portfolio includes popular titles such as *Let’s Go Meow*, *XD Town*, *Ether*, *Ragnarok M: Eternal Love*, and *Torchlight: Infinite*. According to Sensor Tower, the company ranked among the top 100 global mobile game publishers by revenue in October 2025 and secured the 22nd spot in China’s mobile game publisher revenue rankings.

XD INC also operates TapTap, China’s largest comprehensive gaming community platform, which combines game discovery, downloads, and social interaction for players while offering developers full-cycle support from testing to operations.

**Validated In-House Development Capabilities** Since 2024, XD INC’s self-developed games, including *Let’s Go Meow*, *XD Town*, and *Ether*, have delivered standout performances, reflecting the company’s ability to create high-quality games with precise market positioning. The launch of *XD Town*’s international version and new regional releases like *Ragnarok M: Eternal Love 2* are expected to further drive growth.

**TapTap’s Growth and Monetization Potential** 1. **Bilateral "User-Game" Effect**: TapTap’s zero-commission policy and sizable user base attract high-quality games, while its expanding library of first- and third-party titles draws more gamers to the platform. 2. **iOS Ecosystem Expansion**: The gradual opening of China’s iOS app ecosystem could unlock additional growth opportunities for TapTap. 3. **PC Version Launch**: TapTap’s PC edition aims to capture users of multi-platform, PC, and indie games. 4. **TapAND Business Model**: The newly established TapAND segment shows promising early-stage traction with significant market potential. 5. **Revenue Growth**: TapTap generated RMB1.01 billion in revenue in H1 2025 (YoY +37.6%). Guojin projects TapTap’s revenue to grow by 35.5%, 25.0%, and 14.6% YoY in 2025, 2026, and 2027, respectively.

**Earnings Forecast and Valuation** Leveraging operational scale, XD INC’s net profit growth is expected to outpace revenue growth. Guojin forecasts net profits attributable to shareholders of RMB1.70 billion, RMB2.12 billion, and RMB2.55 billion for 2025–2027, representing YoY increases of 111.2%, 24.3%, and 20.0%, with corresponding EPS of RMB3.44, RMB4.28, and RMB5.16. Based on industry valuations, the firm assigns a 22x 2026 P/E multiple, yielding the HK$103.2 target price.

**Risks** Potential risks include underperformance of new games, slower-than-expected TapTap revenue growth, and tightening industry regulations.

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