Investment Rating - The report maintains a "Buy" rating for the company with a target price adjusted to HKD 15, indicating a potential upside of 37% from the current price of HKD 10.96 [2][3][14] Core Insights - The company's revenue for 2023 was RMB 7.1 billion, a decrease of 10% year-on-year, which was below market expectations by 3.1%. Game and application service revenue grew by 6.6% to RMB 4.2 billion, while Mynd.ai revenue fell by 25.7% to RMB 2.9 billion due to the normalization of the post-pandemic operating environment [2][3] - The gross margin improved by 7.0 percentage points to 61.9%, primarily due to the increased proportion of high-margin game revenue. The adjusted net profit was RMB 0.96 billion, with an adjusted net profit margin of 13.5% [2][3] - The company declared a final dividend of HKD 0.4 per share, bringing the total annual dividend to HKD 1.8 per share, resulting in a dividend yield of 16.4% [2] Revenue and Profit Forecast - The company expects revenues of RMB 7.2 billion and RMB 7.6 billion for FY24E and FY25E, respectively, with adjusted net profits projected at RMB 1.1 billion and RMB 1.3 billion for the same periods [3][14] - The target price corresponds to an 8x P/E ratio for 2024 [2][3] Game Business Performance - The gaming segment remained stable, with game revenue increasing by 9.6% to RMB 3.8 billion. Domestic game revenue grew by 10.5%, while overseas revenue increased by 4.5%, affected by a decline in player activity post-pandemic [2][3] - The core game IP "Magic Domain" maintained stability, with its revenue rising by 14% to RMB 2.9 billion and user engagement increasing by 50% year-on-year [2] Education Software Market Position - The company’s Promethean brand continues to lead the global K-12 interactive flat panel display market (excluding China) with a market share of 17.4%. Recently, Promethean launched a comprehensive SaaS solution to leverage hardware advantages and explore software revenue opportunities [2][3]

传媒 | 证券研究报告 — 调整盈利预测 2024年4月1日 00777.HK 网龙 买入 海外教育平板保持领先地位，游戏业务增长稳健 原评级：买入 市场价格:港币 10.96 网龙发布2023年业绩，全年营业收入71.0亿元，同比-9.7%；经营利润8.2亿元， 板块评级:强于大市 同比-28.6%；归母净利润5.5亿元，同比-34.1%；non-IFRS归母净利润9.6亿元， 同比-24.9%。魔域IP生命力强盛，教育平板开启SaaS变现，维持买入评级。 股价表现 支撑评级的要点 18% 11%  游戏收入实现高个位数增长，魔域IP生命力强盛。2023年公司游戏及应 用服务收入 41.9亿元，同比+6.6%，占收入比例 59%；经营利润 14.0亿 4% 元，同比+12.9%。其中，游戏收入38亿元，同比+9.6%；国内/海外游戏 (3%) 收入分别同比+10.5%/+4.5%；端游/手游收入分别同比+11.1%/2.0%至 (11%) 32/5.9亿元。《魔域》IP收入同比+12.4%至34亿元，通过高频推出新玩 (18%) 法、新内容以及提升玩家体验，2023 年魔域 IP 用户平均游戏时长同比 r ...

Financial Performance - NetDragon Websoft Holdings Limited reported a revenue of RMB 3.8 billion for the year 2023, representing a year-on-year growth of 9.6% compared to a decline of 5.8% in 2022[3]. - Total revenue for the company was RMB 7.1 billion, a decrease of 9.7% year-over-year[11]. - The company's revenue for the year ended December 31, 2023, was RMB 7,101 million, a decrease of 9.7% compared to RMB 7,866 million in 2022[15]. - Gross profit for the same period was RMB 4,398 million, reflecting a slight increase of 1.9% from RMB 4,315 million in the previous year[15]. - Operating profit decreased to RMB 821 million, down 28.6% from RMB 1,150 million in 2022[15]. - The net profit for the year was RMB 447 million, a decline of 41.5% compared to RMB 764 million in 2022[15]. - Basic earnings per share for 2023 was RMB 103.00, down from RMB 154.15 in 2022, representing a decrease of 33.2%[17]. - The company reported a total comprehensive income of RMB 468 million for the year, down from RMB 809 million in 2022, a decrease of 42.1%[17]. Gaming Business - The gaming business accounted for 89.7% of total revenue, with domestic and overseas gaming revenues growing by 10.5% and 4.5% respectively[5]. - The flagship IP "Magic Domain" achieved a revenue increase of 12.4% to RMB 3.4 billion, with the PC version growing by 14% to RMB 2.9 billion[5]. - The average gaming duration for users of the "Magic Domain" IP increased by 50.4% year-on-year, indicating higher player engagement[5]. - The mobile game "Magic Domain Interconnected Version" saw a 50.4% increase in monthly active users, contributing to a stronger player base[6]. - Revenue from gaming and application services was RMB 4.2 billion, accounting for 59% of total revenue, with a year-over-year growth of 6.6%[11]. Mynd.ai Performance - In 2023, Mynd.ai's revenue was RMB 2.9 billion, a decrease of 25.7% compared to RMB 3.9 billion in 2022[8]. - Mynd.ai's gross margin reached 25%, an increase of 1.3 percentage points from the previous year, due to lower raw material and shipping costs[8]. - The company reported a net loss of RMB 930 million from Mynd.ai, compared to a profit of RMB 300 million in 2022, primarily due to a decline in sales volume as the market normalized[11]. - Mynd.ai aims to enhance its software business and develop subscription-based SaaS revenue opportunities[9]. Dividends and Shareholder Returns - The total dividend for 2023 was announced at HKD 1.80 per share, including a final dividend of HKD 0.40 per share[4]. - The proposed final dividend for 2023 is HKD 0.40 per share, amounting to approximately RMB 193 million, consistent with the previous year's dividend[36]. - The company incurred a cash outflow of RMB 877 million in dividends paid, down from RMB 1,225 million in the previous year, indicating a reduction of 28.4%[21]. Cash Flow and Investments - Operating cash flow increased by 4.2% year-over-year to RMB 1.1 billion[11]. - The net cash generated from operating activities for the year ended December 31, 2023, was RMB 1,115 million, an increase of 4.2% from RMB 1,070 million in 2022[20]. - The net cash used in investing activities amounted to RMB 915 million, compared to RMB 106 million in the previous year, indicating a significant increase in investment outflows[20]. - New bank loans added during the year were RMB 1,150 million, up from RMB 878 million in 2022, reflecting a 31% increase in financing activities[21]. Market Presence and Expansion Plans - The company plans to expand its market presence in Japan, the Middle East, and Indonesia in 2024[7]. - The company successfully completed the spin-off of its overseas education business, Mynd.ai, which is expected to enhance competitiveness in the hardware sector[3]. Share Repurchase and Stock Options - The company repurchased a total of 9,844,500 shares at a total cost of HKD 146.7 million during the fiscal year ending December 31, 2023[77]. - The share repurchase aimed to enhance the earnings per share for the company and its shareholders[77]. - As of December 31, 2023, the total unexercised options under the 2018 Share Option Scheme amounted to 1,223,000 shares[56]. Corporate Governance and Compliance - The audit committee confirmed that the financial statements complied with applicable accounting standards and regulations[76]. - The company has adhered to the corporate governance code throughout the review year[75]. - The company confirmed compliance with the trading standards set out in the listing rules for the year ending December 31, 2023[68].

【TechWeb】3月8日消息，网龙网络控股有限公司宣布，将在沙特阿拉伯开展一系列的战略合作以改变 该国的教育技术格局。这些倡议亮相于上周在利雅得举行的沙特阿拉伯人类能力倡议大会上。 据介绍，在该大会上，网龙与沙特阿拉伯教育部达成共识，双方将紧密合作，共同探索和评估由网龙提 供的创新教育技术解决方案，以提升该国教育的质量和可及性。 同时，网龙在此次活动期间签署了两项协议，包括： 1.与沙特阿拉伯职业技术培训总机构（TVTC）签署行动计划协议。该协议涵盖了虚拟培训中心、职教 数字内容、学习管理系统和电子竞技等合作领域。 2.与沙特朱拜勒和延布皇家委员会签署谅解备忘录(MOU)。与皇家委员会签署的MOU有望成为网龙进 入该国K-12市场的首个切入点，使网龙在规模化推广教育技术解决方案方面占据有利的竞争地位。 MOU的范围涵盖了教育技术领域的联合研究合作机会，以及设计和实施综合教育技术项目的合作关 系。 ...

Core Viewpoint - The rapid development of AI continues to disrupt the market, with NetDragon (00777) emphasizing its dual-driven strategy in gaming and education, particularly focusing on its education business following the successful spin-off and listing of its overseas education segment as "Mynd.ai" [1][4] Company Strategy - NetDragon's education business accounts for over 50% of its revenue, with the recent spin-off allowing for a focused approach on AI in education, aiming to establish Mynd.ai as a global SaaS company [1][4] - The management highlighted three reasons for the spin-off: better understanding of the company's value by local investors, potential for stock price and market value enhancement, and the release of company potential to pursue its vision [1][3] Market Position - NetDragon's education segment has shown a compound annual growth rate (CAGR) of 14.01% from 2018 to 2022, with its interactive flat panel (IFPD) products leading the global market with over 20% market share [1][2] - The company has established a competitive advantage through an integrated hardware-software-content model, targeting schools with its products [2][3] Financial Impact - The spin-off of Mynd.ai is expected to improve cash flow significantly, allowing for independent financing and reducing reliance on the parent company for funding [3][4] - The education business is projected to accelerate growth through AI+education SaaS services, enhancing profitability and optimizing the company's overall financial performance [4][5] Industry Outlook - The global education information technology market is expanding, with a market size exceeding 2.5 trillion yuan in 2020, and AI is anticipated to further upgrade educational products [2][3] - NetDragon's early investment in AI technology positions it well to capitalize on the evolving educational landscape, with plans to integrate AI into its existing product offerings [2][3] Valuation Insights - The dual strategy of gaming and education remains unchanged, with the gaming segment continuing to contribute significantly to profits and cash flow [4][5] - Analysts express optimism regarding the spin-off, suggesting it will enhance the company's focus on AI+education and improve overall valuation, with target prices indicating substantial upside potential [4][5]

Revenue Performance - Revenue for the first half of 2023 was RMB 3.7 billion, a decrease of 13% year-on-year[7]. - Game business revenue reached RMB 1.9 billion, accounting for 52% of total revenue, with an 8% year-on-year increase[7]. - Education business revenue was RMB 1.7 billion, representing 47% of total revenue, down 29% year-on-year[7]. - Revenue for the six months ended June 30, 2023, was RMB 3,681 million, a decrease of 13.2% compared to RMB 4,240 million for the same period in 2022[73]. - Revenue from online and mobile games was RMB 1,920 million, an increase of 8.1% compared to RMB 1,776 million in the previous year[91]. - Education revenue, including sales of educational equipment and related services, was RMB 1,720 million, down 28.7% from RMB 2,410 million in the same period last year[91]. - Revenue from mobile solutions, products, and marketing was RMB 41 million, slightly up from RMB 38 million in the previous year[91]. - Revenue from the Chinese market was RMB 1,790 million, while revenue from the United States was RMB 1,463 million, indicating a significant contribution from both regions[96]. Profitability Metrics - Gross profit amounted to RMB 2.3 billion, a decrease of 2% year-on-year[7]. - Operating profit was RMB 699 million, a decrease of 6% year-on-year[7]. - Non-GAAP operating profit was RMB 692 million, down 19% year-on-year[7]. - Net profit for the period was RMB 453 million, a decrease of 16.5% compared to RMB 542 million in the prior year[74]. - Basic earnings per share for the period was RMB 92.61, down from RMB 104.42 in the same period last year[74]. - The company reported a profit before tax of RMB 579 million for the six months ended June 30, 2023, compared to RMB 713 million in the same period of 2022, reflecting a decrease of approximately 18.8%[99]. - The company reported a profit of RMB 500 million for the six months ended June 30, 2023, a decrease of 11.5% compared to RMB 565 million for the same period in 2022[109]. Dividends and Shareholder Returns - The company announced an interim special dividend of HKD 1.0 per share and an interim dividend of HKD 0.4 per share[7]. - The interim special dividend and interim dividend declared for the six months ending June 30, 2023, are HKD 1.0 and HKD 0.4 per ordinary share, respectively, totaling HKD 1.4 per share[38]. - The total dividend amount for the six months ending June 30, 2023, is expected to be distributed on or around November 30, 2023[38]. - The board declared an interim special dividend of HKD 1.0 per share and an interim dividend of HKD 0.4 per share, compared to HKD 0.5 and HKD 0.4 per share in 2022[62]. Cash Flow and Financial Position - As of June 30, 2023, the group's cash and cash equivalents amounted to approximately RMB 4,173 million, an increase from RMB 3,909 million as of December 31, 2022[19]. - The group's net current assets as of June 30, 2023, were approximately RMB 3,878 million, compared to RMB 3,723 million as of December 31, 2022[19]. - The total assets as of June 30, 2023, amounted to RMB 7,031 million, an increase from RMB 6,687 million at the end of 2022[75]. - Cash and cash equivalents were RMB 3,645 million, slightly down from RMB 3,701 million at the end of 2022[75]. - The company reported a significant increase in interest expenses on convertible and exchangeable bonds, rising to RMB 108 million from RMB 90 million, an increase of 20%[79]. - The company’s total liabilities increased to RMB 1,583 million, up from RMB 1,468 million, indicating a rise of 7.8%[76]. - The company's equity attributable to owners increased to RMB 7,132 million, a rise of 3.4% from RMB 6,899 million[76]. Employee and Talent Management - As of June 30, 2023, the total number of employees in the group reached 5,207, an increase from 5,135 at the end of 2022 and 4,784 a year earlier[27]. - The company attracted 501 new talents in the first half of 2023, including 62 senior elite talents, and conducted campus recruitment activities that attracted 9,233 graduates[28]. - Total employee costs increased to RMB 1,170 million in the first half of 2023, up from RMB 1,043 million in the same period of 2022, reflecting a rise of 12.2%[107]. - The remuneration for directors and other key management personnel for the six months ended June 30, 2023, was RMB 94 million, up from RMB 66 million in the same period of 2022, representing a 42.4% increase[146]. Market and Product Development - The company aims to enhance revenue growth in its education business by strengthening product segmentation and integrating AI tools into its products[17]. - The launch of the new interactive panel ActivPanel LX aims to capture a larger market share in the cost-effective segment[10]. - The company is developing a flagship mobile game version 2.0 for "Honor of Kings" aimed at the overseas market[13]. - Multiple AIGC projects have been initiated to enhance player experience, focusing on NPCs and AI companions[12]. - The company has plans for market expansion and new product development, focusing on mobile solutions and educational products[98]. Corporate Governance and Shareholder Structure - Liu Dejian holds a beneficial interest of 40.75% in the company through DJM Holding Ltd., which owns 35.99% of the voting shares[41]. - DJM Holding Ltd. holds 35.99% of the company's shares, making it the largest shareholder[46]. - International Data Group owns approximately 10.08% of the company's shares, alongside Ho Chi Sing, who also holds 10.08%[46][47]. - The company maintains transparency regarding the interests and holdings of its directors and key executives in the company's shares[40]. Financial Instruments and Investments - The company issued convertible and exchangeable bonds totaling $150 million, equivalent to approximately HK$1,174.5 million, which can be converted into 279,510,479 ordinary shares of Best, representing 11.16% of the total issued share capital[57]. - The total amount of convertible and exchangeable bonds was RMB 1,469 million as of June 30, 2023, up from RMB 1,333 million as of December 31, 2022[125]. - The group holds a 40% stake in Yunqi Smart Technology Co., Ltd., a joint venture[143]. - The group holds a 60% stake in Fujian Guoteng Information Technology Co., Ltd., a joint venture[143]. Sustainability and Corporate Responsibility - The company improved its S&P Global Sustainability score to 40, ranking in the top 7% of the interactive media, services, and home entertainment industry[10]. - The company has received multiple awards, including recognition for outstanding corporate social responsibility and competitiveness in the gaming industry[18].

Financial Performance - Game revenue for the first half of 2023 reached RMB 1.9 billion, an 8% year-on-year increase and a 16% quarter-on-quarter increase[3] - In the first half of 2023, total revenue was RMB 3.7 billion, a year-over-year decrease of 13%[8] - Revenue from the gaming business was RMB 1.9 billion, accounting for 52% of total revenue, with an 8% year-over-year increase[8] - Revenue from the education business was RMB 1.7 billion, accounting for 47% of total revenue, reflecting a 29% year-over-year decrease[8] - The operating profit for the first half of 2023 was RMB 699 million, a year-over-year decrease of 6%[8] - Net profit for the period was RMB 453 million, a decrease of 16.5% from RMB 542 million in the prior year[12] - Basic earnings per share decreased to RMB 92.61 from RMB 104.42, representing a decline of 11.3%[14] - The group reported a total profit before tax of RMB 579 million, compared to RMB 580 million in the same period last year, indicating a stable performance despite revenue decline[30] Market Performance - Domestic game business revenue grew by 9% year-on-year, significantly outperforming the market growth rate of 2%[3] - The flagship game "Magic Domain" saw a 10% year-on-year revenue increase, with a 22% quarter-on-quarter increase[3] - The company maintained its leading position in the global market outside of China, with the highest market share in key markets such as the US, Germany, and the UK[5] Education Business - Education business revenue declined by 29% year-on-year to RMB 1.7 billion, reflecting the overall market trend post-pandemic[5] - The cumulative registered users of the national primary and secondary school smart education platform exceeded 84 million, with over 25 billion page views as of June 30, 2023[6] - The company signed a merger agreement to spin off its overseas education business with a valuation of $750 million, which is expected to enhance financing options and governance structure[7] Dividends and Shareholder Returns - A special dividend of HKD 1.0 per share and an interim dividend of HKD 0.40 per share were announced for the first half of 2023[2] - The company declared an interim special dividend of HKD 1.0 per share, amounting to RMB 490 million, and an interim dividend of HKD 0.4 per share, amounting to RMB 196 million[38] - The board declared an interim special dividend of HKD 1.0 per share and an interim dividend of HKD 0.4 per share for the six months ending June 30, 2023[74] Cash Flow and Assets - Cash and cash equivalents were RMB 3,645 million, slightly down from RMB 3,701 million[15] - The company reported a net cash inflow from operating activities of RMB 457 million, down from RMB 480 million in the previous year[20] - Total assets as of June 30, 2023, increased to RMB 7,031 million from RMB 6,687 million at the end of 2022, marking a growth of 5.1%[15] Research and Development - The company plans to launch multiple new games, including MMORPGs and a new casual game, in the second half of 2023[4] - The integration of generative AI (AIGC) into game operations is expected to enhance content production efficiency and improve player experience[4] - The number of research and development employees increased to 3,068 as of June 30, 2023, from 2,960 as of December 31, 2022[50] Corporate Governance - The company has adopted a code of conduct for securities transactions that meets or exceeds the standards set by the listing rules[73] - The Audit Committee reviewed the interim financial performance for the six months ending June 30, 2023, ensuring compliance with applicable accounting standards[77] - The company has adhered to the corporate governance code throughout the review period[77] Share Repurchase - The company repurchased a total of 9,844,500 shares at a total cost of HKD 146.7 million during the period ending June 30, 2023[78] - The repurchased shares were subsequently canceled in June 2023[78] - In April 2023, the company repurchased 3,633,500 shares at a price range of HKD 14.46 to HKD 15.44, totaling HKD 54.4 million[79]

Financial Performance - The company achieved a revenue growth of 11.8% year-on-year, surpassing RMB 7.9 billion in 2022[12]. - The gross profit for 2022 was RMB 4.315 billion, with a gross margin of approximately 54.8%[9]. - Operating profit for 2022 was RMB 1.15 billion, reflecting a decrease of 17% compared to the previous year[9]. - The net profit attributable to the company's owners for 2022 was RMB 834 million, down from RMB 1.062 billion in 2021[10]. - The company reported a basic earnings per share of RMB 154.15 for 2022, compared to RMB 191.67 in 2021[10]. - Total revenue for the year was RMB 7.9 billion, representing an 11.8% year-on-year increase[16]. - Operating profit decreased by 17.0% year-on-year to RMB 1.2 billion, with a significant drop in profit from the gaming segment by 14.1% to RMB 1.8 billion[16]. - Cash flow from operating activities increased by 4.2% year-on-year to RMB 1.1 billion, indicating a stable cash generation capability[16]. Revenue Breakdown - Game revenue decreased by 5.8% year-on-year to RMB 3.4 billion, while mobile game revenue slightly declined by 0.2%, outperforming the domestic mobile game market's decline of 14.4%[13]. - The flagship mobile game "Magic Domain Pocket Edition" achieved a revenue growth of 6.2% year-on-year, supported by a ROI-focused user acquisition strategy and continuous content updates[13]. - Overseas business revenue grew by 6.5% year-on-year to RMB 540 million, accounting for 15.7% of total game revenue, with significant contributions from the "Conquest" IP[13]. - Education business revenue increased by 34.2% year-on-year to RMB 4.3 billion, marking a historical high and reflecting a growing market share despite increased competition[14]. - Total revenue for the education business reached RMB 4.3 billion, a year-on-year increase of 34.2%, accounting for 55.1% of total revenue[19]. Strategic Initiatives - The company emphasized strengthening strategic partnerships and enhancing market strategies as key growth drivers[12]. - The company is positioned for long-term sustainable development through its efforts in 2022[12]. - The company plans to expand its market presence through strategic partnerships and acquisitions, including the acquisition of Explain Everything, a leading digital whiteboard platform[20]. - The company announced a strategic partnership with AI education technology leader Merlyn Mind to develop an AI-supported interactive panel, expected to launch with the next product update[19]. Research and Development - Research and development expenses increased to RMB 1.224 billion in 2022, representing a 5.5% increase from the previous year[9]. - The company added over 300 R&D personnel during the year to enhance its game development capabilities[19]. - Research and development expenses for gaming increased by 16.7% year-on-year to RMB 768 million, accounting for 22.4% of gaming revenue[25]. Corporate Governance - The company is committed to maintaining high standards of corporate governance and compliance through its audit and remuneration committees[47]. - The company’s board of directors includes both executive and independent non-executive members, ensuring governance and oversight[62]. - The company has established an audit committee responsible for reviewing financial reporting procedures and risk management[105]. - The company has adopted a new share option scheme effective from May 24, 2018, replacing the previous scheme[114]. Shareholder Information - The company announced a final dividend of HKD 0.40 per ordinary share, maintaining the same level as the previous year, with total dividends accounting for 73.0% of the annual profit attributable to owners[15]. - The company proposed a final dividend of HKD 0.4 per share, with an expected payout of approximately RMB 193 million, scheduled for July 7, 2023[58]. - The top five customers accounted for approximately 22.7% of total revenue, while the largest customer contributed about 12.0%[61]. Employee Engagement and Development - The total number of employees as of December 31, 2022, is 5,135, reflecting the company's commitment to talent acquisition and development[37]. - The company has received multiple employer brand awards in 2022, including the "2022 Most Loved Employer Award" and "2023 Outstanding Employer Award" for its innovative employment practices[37]. - The company is actively promoting a "metaverse organization" model, focusing on open communication and innovation to enhance employee engagement and value creation[38]. Risk Management - The company has taken measures to mitigate risks associated with its structural contracts, including annual reviews and disclosures in reports[99]. - The company is committed to hiring external legal advisors to ensure compliance with existing contracts and regulations[99]. - The company has established a comprehensive cybersecurity management framework to ensure robust governance and operational continuity[181]. Compliance and Ethics - The company emphasizes strict compliance with data protection laws and regulations to safeguard employee and customer privacy[57]. - The company provides multiple reporting channels for employees to report unethical behavior, including an internal OA system[172]. - The company has updated its business ethics rules and code of conduct 15 times over the past 20 years, currently at version 7.3[171]. Market Challenges - The company operates in the competitive online and mobile gaming industry, facing challenges from major players like Electronic Arts and Tencent[55]. - The company relies on consumer spending for revenue, which may be affected by economic uncertainties and inflation[56]. - The company faces risks related to new technologies that could render its game designs outdated[56].

Financial Data and Key Metrics Changes - The company reported significant changes in financial metrics, including revenue growth and profit margins, reflecting overall business performance [1] Business Line Data and Key Metrics Changes - Each business line showed varying performance, with some segments experiencing growth while others faced challenges, indicating a mixed operational landscape [1] Market Data and Key Metrics Changes - The company highlighted changes in market dynamics, including shifts in consumer demand and competitive pressures, which impacted overall market performance [1] Company Strategy and Development Direction - The company outlined its strategic focus on innovation and market expansion, aiming to strengthen its competitive position within the industry [1] Management Comments on Operating Environment and Future Outlook - Management provided insights into the current operating environment, discussing challenges and opportunities, and expressed a cautiously optimistic outlook for future growth [1] Other Important Information - Additional information included updates on new product launches and partnerships that are expected to drive future revenue [1] Q&A Session Summary Question: What are the expectations for revenue growth in the upcoming year? - Management indicated that they anticipate steady revenue growth driven by new product introductions and market expansion efforts [1] Question: How is the company addressing competitive pressures? - The company is focusing on enhancing product differentiation and customer engagement strategies to mitigate competitive risks [1] Question: What are the key challenges faced in the current market? - Management acknowledged supply chain disruptions and changing consumer preferences as significant challenges that the company is actively addressing [1]

Financial Performance - NetDragon Websoft Holdings Limited reported a revenue growth of 11.8% year-on-year, reaching RMB 77.9 billion for the fiscal year ending December 31, 2022[1]. - The education business achieved a record revenue of RMB 43.0 billion, representing a year-on-year increase of 34.2%, accounting for 55.1% of total revenue[3]. - Game business revenue decreased by 5.8% year-on-year to RMB 34.0 billion, with mobile game revenue slightly declining by 0.2% to RMB 577 million, outperforming the domestic mobile game market decline of 14.4%[6]. - The company announced a net profit attributable to shareholders of RMB 834 million for 2022, a decrease of 21.5% year-on-year[9]. - Operating profit for 2022 was RMB 1.2 billion, down 17.0% year-on-year[9]. - Revenue for 2022 was RMB 7,866 million, an increase of 11.8% from RMB 7,036 million in 2021[13]. - Gross profit decreased to RMB 4,315 million in 2022 from RMB 4,523 million in 2021, representing a decline of 4.6%[13]. - Net profit for the year was RMB 764 million, a decrease of 22.2% compared to RMB 983 million in 2021[13]. - The group reported a profit before tax of RMB 840 million for the year, compared to RMB 1,236 million in the previous year, indicating a decrease of about 32.1%[30]. Revenue Breakdown - Game revenue for 2022 was RMB 3.43 billion, a decrease of 5.8% year-on-year, while education revenue rose by 34.2% to RMB 4.3 billion[9]. - Revenue from online and mobile games was RMB 3,430 million, a decrease from RMB 3,642 million in the previous year, reflecting a decline of about 5.8%[27]. - Education revenue, including sales of educational equipment and related services, increased significantly to RMB 4,336 million from RMB 3,231 million, marking a growth of approximately 34.3%[27]. Strategic Initiatives - The company announced a strategic partnership with AI education technology leader Merlyn Mind to develop an AI-supported interactive panel, expected to launch with the next product update[5]. - The company acquired Explain Everything, a leading digital whiteboard platform, to enhance its product offerings and revenue-generating applications[3]. - The company aims to explore acquisition opportunities to expand market coverage and core competitiveness[8]. - The company plans to launch five new games based on the "Magic Domain" IP in 2023 and 2024, with the first game already released in March 2023[8]. Shareholder Returns - The company declared a final dividend of HKD 0.40 per share, with total dividends for the year amounting to HKD 1.30 per share, representing 73.0% of the total profit attributable to owners[2]. - The board proposed a final dividend of HKD 0.40 per share for the year ended December 31, 2022, totaling approximately RMB 193 million[67]. Cash Flow and Assets - Cash flow from operating activities increased by 4.2% year-on-year to RMB 1.1 billion[9]. - Total assets decreased to RMB 6,687 million in 2022 from RMB 6,941 million in 2021, a reduction of 3.7%[16]. - Cash and cash equivalents at year-end were RMB 3,701 million, slightly down from RMB 3,717 million in 2021[19]. - The company reported a net cash inflow from operating activities of RMB 1,070 million, an increase from RMB 1,027 million in 2021[18]. Employee and R&D Investments - The total number of employees increased to 5,135 as of December 31, 2022, from 4,834 in the previous year, with R&D staff rising to 2,960[47]. - R&D expenses grew by 16.7% year-on-year to RMB 768 million, representing 22.4% of game revenue[8]. Debt and Liabilities - New bank loans added in 2022 amounted to RMB 878 million, significantly higher than RMB 411 million in 2021[19]. - The debt-to-equity ratio increased to 0.11 as of December 31, 2022, compared to 0.06 in the previous year[46]. - Total bank loans amounted to approximately RMB 739 million as of December 31, 2022, up from RMB 403 million in 2021, with floating-rate loans at RMB 376 million and fixed-rate loans at RMB 363 million[46]. Corporate Governance - The company has complied with the corporate governance code throughout the review year[72]. - The audit committee reviewed the financial statements for the year ended December 31, 2022, ensuring compliance with applicable accounting standards[73].