Feiyu Technology: Profit quality improves, valuation at a relatively low level within the sector

Feiyu Technology (01022) announced its audited annual results for the year ended December 31, 2025. As a leading domestic internet game developer and operator, the company focuses on the R&D and operation of interactive entertainment products, with a core layout in HTML5 games, classic IP game operations, and overseas market expansion. It also deepens IP commercialization and advertising business, delivering the most impressive growth report since its listing. During the year, the Group's total revenue was approximately RMB 810 million, a significant year-on-year surge of 192.8%; profit attributable to owners of the parent company successfully reached RMB 105 million, achieving a full-year turnaround from loss to profit. This not only marks the company's operating performance entering a new development stage but also, with a high gross profit margin of 91.8% and a robust financial structure, validates the strong resilience and profit quality of its core business.

At the core business level, HTML5 games have become the absolute main engine driving the Group's growth. Full-year game operation revenue was approximately RMB 767 million, a sharp increase of 221.3% year-on-year, of which HTML5 game business revenue reached about RMB 623 million, accounting for a high 76.9% of total revenue, a leap forward compared to 32.5% in 2024. This breakthrough growth is primarily supported by the continuous monetization of the HTML5 hit game "One Step Two Steps" launched in the second half of 2024. With its lightweight gameplay and strong social attributes, this product quickly covered a massive user base, becoming the core support for the Group's revenue contribution during the year. In terms of product matrix construction, Feiyu Technology has not stopped at the success of a single product and is actively preparing multiple new HTML5 games. By enriching product line scenarios and gameplay, it continues to strengthen the advantage of its traffic pool, laying a solid foundation for subsequent growth.

Impressive user and commercialization data further confirm the core competitiveness of the HTML5 business. The company's cumulative registered users for HTML5 games exceeded 90.3 million, with a single-month active user (MAU) of 4.7 million in December, maintaining high levels in both user scale and activity. In terms of commercialization, the average monthly paying user (MPU) was about 177 thousand, and the average revenue per paying user (ARPPU) reached RMB 293.7, a substantial year-on-year increase of 168.9%. The high ARPPU reflects the dual improvement in users' willingness to pay and the product's commercial value. Meanwhile, leveraging the traffic empowerment of the HTML5 game matrix, the Group's advertising business achieved a synchronous year-on-year growth of 35.5%, with revenue reaching RMB 33.05 million, showing initial success in the diversified revenue channel layout and further broadening the profit margin.

The series "Shen Xian Dao" and "Defend the Radish" have been online for over a decade but still maintain strong user stickiness and commercial vitality. Among them, "Shen Xian Dao," launched nearly 15 years ago, has seen steady ARPPU growth driven by loyal players' sustained willingness to pay, thanks to continuous version iterations and operational refinement. "Defend the Radish" continuously activates the payment potential of casual game users through frequent content updates and new feature introductions, driving a 9.1% year-on-year increase in the series' ARPPU. In exploring IP commercialization, Feiyu Technology has also achieved remarkable results: during the year, it launched six "Defend the Radish" figurine blind boxes, with cumulative sales exceeding 250 thousand units, of which the "Warm Winter Series" sold out in just 1.5 hours; it upgraded the exclusive mini-program "Defend the Radish Collector" and participated in multiple offline exhibitions, with four limited-edition blind box series selling out immediately upon launch. The potential of fan economy has been fully unleashed, not only achieving diversified conversion of IP value but also strengthening the deep connection between the brand and users.

The accelerated implementation of overseas market expansion has opened up new growth space for Feiyu Technology. In May 2025, the company launched the new VR game "Cat in Town" on Meta's virtual reality platform, successfully testing the waters in emerging gaming platforms and becoming a pioneer benchmark for the company's technological innovation and overseas layout. At the same time, the Group has specifically established overseas R&D studios and publishing centers, focusing on creating customized products for overseas market user needs. This not only helps open up new revenue sources and diversify domestic market competition risks but also enables the promotion of mature IPs like "Shen Xian Dao" and "Defend the Radish" to the global market, extending the IP life cycle. Currently, overseas business has begun to show results, becoming an important potential segment for the Group's performance growth.

In terms of finance and R&D, Feiyu Technology also demonstrates robust operational strength. The Group's gross profit margin for the year reached 91.8%, up 6.1 percentage points year-on-year. The high gross margin reflects the company's core advantages in product R&D and operational efficiency, as well as the high-profit attribute of the HTML5 game business. The financial structure continued to optimize, with total cash and cash equivalents at year-end reaching RMB 221 million, a year-on-year increase of 119.7%. Net current assets increased to RMB 243 million, and the gearing ratio decreased to 26.2%, with both liquidity and debt repayment ability at excellent industry levels. In terms of R&D investment, the company adheres to technology as the core driving force. In 2025, R&D costs reached RMB 86.62 million, a year-on-year increase of 26.9%, with a focus on upgrading core HTML5 game technology and new product R&D, laying a solid foundation for continuous product iteration and technological innovation.

In the capital market, the company's stock price surged from HK$0.235 at the beginning of 2025 to HK$0.56 at year-end, with a full-year increase of 138.3%. The performance explosion drove a strong rebound in the stock price. As of March 30, 2026, the stock price was reported at HK$0.51, corresponding to a P/E ratio of only 7.61 times and a P/B ratio of 1.35 times. The valuation is at an extremely attractive low level with sufficient safety margin, possessing significant room for valuation repair and outstanding investment value.$Feiyu Technology (01022)$