XD (2400.HK): Stable 2026 Outlook With Bigger Catalysts in 2027E; TP Adj. to HK$70

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XD (2400.HK): Stable 2026 Outlook With Bigger Catalysts in 2027E; TP Adj. to HK$70

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08 Jul 2026 19:40:54 ET │ 14 pages

XD (2400.HK)

Stable 2026 Outlook With Bigger Catalysts in 2027E; TP Adj. to HK$70

CITI'S TAKE

With XD likely reporting 1H26 results by late-Aug, we expect moderate yoy

revenue growth driven by incremental contribution of overseas Heartopia

and seasonal update of Torchlight partly offset by other maturing products. Buy / High Risk

While upcoming 2nd anniversary update of Heartopia with Sanrio’s IP Short-Term View: Downside

collaboration on Jul 17 likely boosts near-term grossing performance, we

Price (08 Jul 26 16:10) HK$48.92expect XD to likely wrap up 2026 as a stable year with bigger catalysts

including releases of RO2/Muffin 2 likely kicking-in by early/late 2027E and Target price HK$70.00↓

update of longer-term product pipeline for 28-29E. We also expect stable from HK$90.00yoy growth for TapTap in 1H26 with steady user expansion and limited ad

pricing upside while 2H will depend on new market supplies. Post revision Expected share price return 43.1%

considering recent sector sentiment, we lower TP to HK$70 (from HK$90), Expected dividend yield 0.0%

based on 18x (from 22x) at 10% premium (unchanged) to China gaming peer Expected total return 43.1%average rolling forward to 2027E EPS. Maintain Buy/HR.

Market Cap HK$23,937M

Estimate revisions — We lower FY26-28E revenue by -14/-10/-6.7% to Rmb6.32bn, US$3,052M

Rmb6.95bn, and Rmb7.49bn mainly to update latest trajectory for Heartopia, new

game expectations, and stable TapTap growth. We also adjust FY26-28E adjusted

profit by -16/-10/-7.3% to Rmb1.58/1.81/2.03bn; we believe current consensus

estimates may not fully bake in higher effective tax rate since 2026E, upfront S&M Price Performance