Tanwan (9890) investor relations material

Executive summary

• H1 2026 revenue was RMB1,883.5m, down 6.0% YoY; profit for the period fell 67.2% to RMB213.3m, reflecting lower fair-value gains and declining billings from mature domestic games.

• Overseas revenue rose 12.2% YoY to RMB351.9m, or 18.7% of total revenue; AI-enabled operations and a broad game pipeline are strategic priorities.

Financial highlights

• Gross profit was RMB1,001.4m, down 17.5% YoY; gross margin fell 7.3 percentage points to 53.2%.

• Profit before tax was RMB282.6m versus RMB784.9m; income tax expense was RMB69.3m, down 48.8% YoY.

• Other income and gains fell 52.8% to RMB251.8m, mainly due to fair-value gains declining to RMB225.0m from RMB475.6m.

• Cost of sales rose 11.5% to RMB882.1m; selling and distribution expenses were RMB852.7m, administrative expenses RMB74.6m and R&D costs RMB48.8m.

• Operating cash flow was an outflow of RMB101.0m, versus RMB468.5m; investing and financing cash flows were inflows of RMB622.0m and RMB401.4m.

Outlook and guidance

• Priorities include global distribution, localized operations, refined user acquisition, full-lifecycle game management and AI deployment to improve efficiency, retention and profitability; no quantified financial guidance was stated.

• Planned sequential releases include Soul Land: Legend of Evil Slayer, Legend of King 2, Blue Moon Dragon Slayer and Jin Yong-themed titles.

• Plans include refining AI short-drama production and expanding platform distribution and localized overseas distribution.

• Remaining convertible-bond proceeds are expected to be used by January 2027 for AI-related business and listed-security investments.