A Look At XD Inc. (SEHK:2400) Valuation After Upgraded 2025 Revenue And Profit Guidance

XD Inc. (SEHK:2400) issued unaudited earnings guidance for 2025, projecting revenue of at least CN¥5,710 million and net profit of at least CN¥1,580 million, both higher than its 2024 reported figures.

See our latest analysis for XD.

XD's HK$74.8 share price has seen a 20.35% 90 day share price return and a 96.11% 1 year total shareholder return, suggesting momentum has strengthened ahead of the 2025 guidance, while shorter term moves remain choppy.

If this guidance has you thinking about where growth could show up next in tech, it might be worth scanning our list of 62 profitable AI stocks that aren't just burning cash as another source of ideas.

With XD guiding to higher 2025 revenue and profit on top of a 96.11% 1 year total return, you have to ask: is there still upside left here, or is the market already pricing in the next leg of growth?

Price-to-Earnings of 23.3x: Is it justified?

XD is trading on a P/E of 23.3x, which sits above both the Hong Kong Entertainment industry average and its closest peer group, even after the recent share price strength.

The P/E ratio compares the current share price with earnings per share, so a higher figure typically reflects stronger earnings expectations or a willingness from investors to pay more for each unit of profit. For XD, this higher multiple sits alongside very large recent earnings growth and high quality past earnings, which helps explain why the market may be comfortable with a richer P/E.

Against that, the current 23.3x P/E is described as expensive versus the Hong Kong Entertainment industry average of 13.4x and an average of 8.9x among peers. It is also high compared to an estimated fair P/E of 14.4x, a level the market could gravitate toward if sentiment or growth expectations cool, which would leave less room for valuation expansion from here.

Explore the SWS fair ratio for XD

Result: Price-to-Earnings of 23.3x (OVERVALUED)

However, you still need to weigh risks such as execution on the 2025 guidance and any slowdown across its game and TapTap platform segments that could cool sentiment.

Find out about the key risks to this XD narrative.

Another way to look at value

While the 23.3x P/E makes XD look expensive against the Hong Kong Entertainment industry on earnings, our DCF model points the other way, with a fair value estimate of HK$109.86 versus the current HK$74.8. If both are using reasonable inputs, which one would you lean on?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out XD for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 222 high quality undervalued stocks. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Next Steps

If the mixed signals on valuation and guidance leave you unsure, it makes sense to look at the facts yourself and move quickly to shape your own view by weighing the 3 key rewards and 1 important warning sign.

Looking for more investment ideas?

Before you move on, give yourself a broader watchlist by pulling in a few other high quality ideas from different corners of the market.

• Spot potential value plays early by scanning our list of 222 high quality undervalued stocks that currently screen well on price and business quality.
• Strengthen your income focus by reviewing 462 dividend fortresses, where yields start at 5% and financial resilience sits at the center of the screen.
• Dial down risk without checking out of equities entirely by filtering through the 299 resilient stocks with low risk scores that clear our tougher risk checks.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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