愷英網路：回購股份擬註銷增強股東回報，產品儲備釋放值得期待

公司擬變更回購股份用途並註銷，進一步增強投資者回報

公司公告，擬變更2023年8月30日公司董事會審議通過的《關於回購公司股份方案的議案》的回購股份用途，由原方案“用於後續員工持股計劃、股權激勵計劃”變更為“用於註銷並減少公司註冊資本”，即對公司回購專用證券帳戶中的1607.44萬股股份進行註銷並相應減少公司註冊資本。 註銷完成後，公司總股本將由21.53億股減少為21.36億股。 測算回購股份註銷后將增厚每股EPS約0.75%。

2023年公司管理層換屆后，重視投資者回報，通過現金分紅、回購、控股股東及管理層增持等方式持續增強市場信心。1）2023年上半年、2023年下半年、2024年上半年均派發2.1億元的半年度股息（每股0.1元）。 2）2023年下半年，公司以自有資金約2億元回購1607.44萬股。3）2023年11月，公司董事長金鋒通過股份轉讓方式增持公司股份約1.5億元;2023年12月，董事長金鋒通過集中競價方式增持公司股份約2000萬元;2024年3月，董事長金鋒通過集中競價方式增持公司股份1.1億元。 4）2024年7月公司發佈公告，控股股東、實際控制人、董事長金鋒以及全體高級管理人員承諾未來5年不減持公司股份，並將於2024年1月1日-2028年12月31日期間收到的公司稅後分紅所得用於持續每年增持公司股份。 我們認為，本次回購股份用途變更為用於註銷進一步反映了公司注重投資者回報的經營理念，推動投資價值提升。

公司經營業績穩健增長，2025年產品儲備豐富，AI應用值得期待

公司2024年前三季度營業收入同比增長30%，歸母凈利潤同比增長18%，扣非歸母凈利潤同比增長23%。《王者傳奇2》《龍之谷世界》《代號：熱血江湖》《代號：仙境傳說RO》《代號：紅月》《代號：千年》《開心小礦工》《生存大作戰》《太上補天卷》《代號：黑貓警長》《代號：古龍》《代號：射鵰英雄傳》《代號：斗羅》《代號：背包》《代號：小兵》《代號：三國》《數碼寶貝：源碼》《盜墓筆記：啟程》《古怪的小雞》《代號：奧特曼》《代號：大富翁》《代號：拳皇》《代號：死神》《三國：天下歸心》《蒸汽堡壘》《代號：霸王大陸》等一批遊戲將在2025年陸續上線。關注1月13日公司的2025年度產品發佈會。

2024年11月，公司研發的愷英智慧NPC文本生成演算法通過審核，獲批備案編號。 2023年，公司自研的“形意”大模型已應用於實際研發場景中。 目前已經在動畫和場景製作上有了較大的突破，大幅提升了項目組的開發效率，發展成涵蓋介面生成、地圖生成、動畫生成、代碼生成和數值生成的完整工具鏈。 此外，公司投資的終極幻境發佈了3D AI伴侶產品“EVE”的預告視頻。

Kingnet’s change of tack signals a strategic rethink toward shareholder returns to maximize investor value. In view of the company’s steady ability to generate profits and a fat pipeline of potential product launches slated for 2025E, we maintain our BUY call on the stock.

The gist: BUY

· New Kingnet management favors investor returns in a strategic rethink

· Sound financials, fat product pipeline and AI application potential in 2025E

· Outlook: current high-growth trend; incremental potential of product pipeline

New Kingnet management favors investor returns in a strategic rethink

Cancelling stock option plans: Kingnet Network announced on 10 Jan it will cancel earlier plans for the use of shares it had repurchased in 23H2. The 16.0744m shares had been approved by the board of directors on 30 Aug 2023 and set aside in a special securities account for employee stock ownership and equity incentive purposes. The cancellation of plans now shrinks the company’s registered capital from 2.153bn shares to 2.136bn shares. We estimate this increases Kingnet’s EPS by about 0.75%.

New management, new direction: Kingnet had a change of management in 2023 and the new team is focusing on investor returns. It wants to boost market confidence through cash dividends and share buybacks, as well as beefing up stakes held by controlling shareholders and management. The actions taken have included:

· Dividends: a total of RMB210m (RMB0.1 per share) was distributed in 23H1, 23H2 and 24H1.

· Buybacks: the company repurchased 16.0744m shares for about RMB200m using its own funds in 23H2.

· Stake expansion: chairman Jin Feng expanded his stake in Kingnet in a series of transactions:

- November 2023: Jin boosted his stake for about RMB150m through a share transfer; 

- December 2023: Jin added about RMB20m to his shares through a centralized bid; 

- March 2024: Jin increased his stake for RMB110m through a centralized bid. 

· Stakeholders’ commitment: Kingnet’s controlling shareholder and actual controller, chairman Jin Feng, and all senior management personnel, have declared they will not reduce their shareholdings for a period of 5 years, the company announced on 2 July 2024. On top of that, they will use their after-tax dividends received from Kingnet every year in the period from 1 Jan 2024 to 31 Dec 2028 to increase their stakes.

Our take: the change of purpose for the share repurchase reflects a broader refocus of corporate philosophy on investor returns and demonstrates a push to raise Kingnet’s investment value, in our view.

Sound financials, fat game product pipeline and AI application potential in 2025E

Financials: Kingnet is doing well on financial metrics, having increased revenue by 30% yoy and net profit by 18% yoy in 24Q1-3, while ex-nonrecurring net profit rose 23% yoy. 

Rich game pipeline: we would monitor the company’s pipeline game launches slated for 2025E, including the following titles and working titles: Legend of Master 2, World of Dragon Nest, Codename: Legend of Mir 2, Codename: Ragnarok Online, Codename: Red Moon, Codename: Millennium, Happy Little Miner, Survival Battle, Taishang Bu Tian Juan, Codename: Black Cat Sheriff, Codename: Ancient Dragon, Codename: The Eagle Shooting Heroes, Codename: Douluo, Codename: Backpack, Codename: Soldier, Codename: Three Kingdoms, Digimon: Source Code, Tomb Raiders, Weird Chicken, Codename: Ultraman, Codename: Monopoly, Codename: King of Fighters, Codename: Death, Romance of Three Kingdoms: All Hearts Turned to Him, Steam Fortress and Codename: ArchLord. 

Proprietary AI breakthroughs: 

· Text-based NPC algo: Kingnet’s proprietary smart text-generation non-player character algorithm obtained approval and received a registration number in November 2024. 

· Xingyi LLM: prior to that, the company had begun to apply its proprietary Xingyi large language model to actual R&D scenarios in 2023. 

· Chain of AI tools: more recently, major breakthroughs in animation and scene production greatly raised project teams’ development efficiency and led to the development of a complete tool chain, covering interface generation, map generation, animation generation, code generation and numerical generation. 

· Eve AI companion: Ultimate Wonderland Network Technology, of which Kingnet is an investor, released a video promo of Eve, its 3D AI companion product.