We deem 2m copies sold globally across PC platforms of niche inhouse “Escape from Duckov” from 16 Oct launch to noon 28 Oct exceeded market expectation. We see innovative PvE mode and entertaining game experience facilitated by engaging content and frequent upgrades amid expanding extraction shooter game market are primary contributors. We expect potential addition of official co-op mode, multi-terminal versions, controller support and various IP format operations will extract its value propositions. We currently estimate 2% and 10% increases in 4Q25 total revenue and adj. Op from this blockbuster game. Maintain BUY and raise TP to US$35/ HK$270.
Key Factors for Rating
“Escape from Duckov” breaks out as a promising IP. “Escape from Duckov” (逃离鸭科夫), the top-down single player PvE extraction shooter by inhouse niche studio “Team Soda” featuring ducks as its protagonists, was launched worldwide across various PC platforms on 16 Oct. Bolstered by its affordable pricing mechanism (domestic at RMB58) and a 2-week 12% off launch discount, Duckov has sold 1m copies globally within the first week and surpassed 2m by noon 28 Oct. We attribute its strong performance to: i) expanding extraction shooter market, especially domestically, due to Delta force and Arena breakout; ii) innovative PvE gameplay eliminating competitive pressure while focusing on an entertaining, rewarding looting experience; iii) engaging content and vibrant community enriched by players’ feedback (e.g. “Boo Bomb” has become eatable) and active 3rd party MOD creation. We deem the potential addition of highly anticipated co-op mode, multi-terminal versions including mobile, mini-game and console, as well as controller support will further unleash its future sales potential. Moreover, we believe Co. will expand this IP through various online and offline formats. Thus, we record the net additions of this outperformed game into our 4Q25 forecasts, leading to 8%/ 2%/ 10% increases of mobile game / total revenue/ adj. operating profit estimates in 4Q25E.
Progress of other pipelines on track. “Sanguo: Ncard” will launch its first paid wipe test on Android and PC on 30 Oct (postponed from 23 Oct). “Trikcal Re: Vive”, a collectible subculture RPG, has been launched overseas on 9 Oct and started domestic iOS reservation on 26 Oct. “SanMou” also announced on 23 Oct that its overseas version will soon be launched simultaneously in HK, TW, MC, SG, MY and started test enrolment. We deem Co. dedicates to execute its “game-genre rejuvenation” appealing to Gen-Z for its game strategies.
Key Risks for Rating
Downside: (i) slower-than-expected macro recovery; (ii) ineffective monetisation; (iii) content creator and user engagement; (iv) content supply and quality; and (v) regulations on games, streaming, advertising, data collection, taxation, etc.
Valuation
Maintain BUY and raise our PEG based TP to US$35/ HK$270 on 0.75x forward 12M PEG and 44% 2025E-27E adj. net profit CAGR, and US$1.05 forward 12 month adj. EPADS. This implies 42x/ 25x FY2025/26E adj. PER.