Investment Rating - The investment rating for the company is "Buy" with a target price of HKD 14.00, indicating a potential upside of 32.8% from the current price of HKD 10.54 [1][3]. Core Views - The company is expected to see a recovery in game revenue in the second half of 2024, driven by new game launches, particularly a reboot of its flagship IP, "Magic Domain," in 2025. The first half of 2024 experienced a revenue decline due to product launch cycles and external factors, but profitability is expected to improve through cost reduction and efficiency measures [2][3]. - The adjusted net profit forecast for 2024 is set at RMB 1 billion, with a downward revision of the target price from HKD 15 to HKD 14 [2][3]. Financial Performance Summary - In the first half of 2024, total revenue decreased by 10% year-on-year to RMB 3.3 billion, with adjusted net profit at RMB 558 million, down 5% year-on-year. Game and Mynd.ai revenues fell by 1% and 23% respectively [2][6]. - The company’s game revenue is projected to recover in the second half of 2024, with anticipated positive growth driven by 2-3 new game releases [2][6]. - The financial forecasts for 2024E to 2026E show a decline in revenue estimates, with total revenue expected to be RMB 6.545 billion in 2024, down 13% from previous estimates [3][9]. Key Financial Metrics - The company reported a gross profit margin of 66.6% for 2024E, reflecting an increase from 61.9% in 2023 [3][9]. - The adjusted operating profit margin is projected to be 17.8% for 2024E, up from 16.7% in 2023 [3][9]. - The forecasted net profit for 2024 is RMB 1.007 billion, with a net profit margin of 15.9% [9].

Revenue Performance - Domestic game revenue increased by 2.1% year-on-year to RMB 1.36 billion, driven by enhanced player engagement and retention[2] - Overall game revenue for the first half of 2024 reached RMB 1.86 billion, a decrease of 3.0% year-on-year, accounting for 87.8% of game and application service revenue[4] - The flagship IP "Magic Domain" generated revenue of RMB 1.69 billion, with a year-on-year decline of 3.8% due to external factors affecting the overseas version[4] - The "Honor of Kings" IP saw a 29.6% year-on-year revenue increase, attributed to gameplay enhancements and successful esports events[5] - Revenue for the first half of 2024 was RMB 3.3 billion, a decrease of 10.3% year-on-year[9] - Revenue from games and application services was RMB 2.12 billion, accounting for 64.3% of total revenue, a decrease of 0.8% year-on-year[9] - Revenue from Mynd.ai was RMB 1.18 billion, accounting for 35.7% of total revenue, a decrease of 23.5% year-on-year[9] - Total revenue for the six months was RMB 3,301 million, down from RMB 3,681 million, indicating a decline of 10.3%[14] - Revenue from prepaid game cards was RMB 1,862 million, while revenue from education services was RMB 276 million, contributing to a total revenue of RMB 3,301 million for the six months ended June 30, 2024[29] Profitability and Financial Metrics - Gross profit was RMB 2.2 billion, a decrease of 3.8% year-on-year[9] - Operating profit for the six months ended June 30, 2024, was RMB 634 million, a decrease of 9.3% compared to RMB 699 million in 2023[12] - Non-GAAP operating profit was RMB 640 million, down from RMB 692 million, reflecting a decline of 7.5% year-over-year[12] - Profit attributable to the company's owners was RMB 400 million, a decrease of 20% from RMB 500 million in the previous year[12] - Gross profit margin decreased to 66.7% from 62.1%, with gross profit at RMB 2,199 million compared to RMB 2,287 million[14] - Total comprehensive income for the period was RMB 294 million, down from RMB 513 million, reflecting a decrease of 42.7%[15] Cash Flow and Assets - Operating cash flow increased by RMB 340 million compared to the same period last year[7] - Cash and cash equivalents increased to RMB 2,382 million from RMB 2,241 million, showing a growth of 6.3%[16] - Total assets as of June 30, 2024, were RMB 11,561 million, compared to RMB 10,982 million at the end of 2023, representing a growth of 5.3%[18] - The company's net asset value increased to RMB 6,280 million from RMB 6,174 million, reflecting an increase of 1.7%[18] - Net cash generated from operating activities for the six months ended June 30, 2024, was RMB 259 million, a decrease of 43.4% compared to RMB 457 million for the same period in 2023[19] - The net cash used in investing activities was RMB 247 million, down from RMB 549 million year-over-year, indicating a reduction of 55.1%[19] - The net cash generated from financing activities increased significantly to RMB 156 million from RMB 20 million, representing a growth of 680%[19] Game Development and Future Plans - The new game "Code - Alpha" is expected to launch in multiple countries in the second half of the year, contributing to revenue growth[2] - The new Roguelike game "Star Sea Assault" received an 8.0 user rating on TapTap and is projected for global release in 2025[5] - The company plans to implement a multi-faceted growth strategy for the "Magic Domain" IP, including the launch of "Magic Domain Rebirth" in Q1 2025[4] - The company is actively developing new games targeting various genres, including MMORPG and card games, to expand its market presence[5] - The overseas market for "End of Oath" is expected to launch in the first half of 2025, following positive feedback from testing[5] - Mynd.ai plans to launch four to five new games based on existing flagship IP and new IP in the next six to nine months[6] Shareholder and Corporate Governance - The company paid a mid-term dividend of HKD 0.40 per share, amounting to RMB 194 million[37] - The company has complied with the corporate governance code throughout the review period[76] - The Audit Committee was established on October 15, 2007, to oversee the company's financial reporting and internal control systems[77] - The Audit Committee consists of three independent non-executive directors, including the chairman, Mr. Li Shengzong[77] - The interim financial results for the six months ending June 30, 2024, have been reviewed by the Audit Committee, which confirmed compliance with applicable accounting standards[77] Debt and Liabilities - The total liabilities decreased from RMB 1,555 million to RMB 1,425 million, a reduction of approximately 8.4%[43] - The company added bank loans totaling RMB 863 million during the reporting period, compared to RMB 703 million in the previous six months[45] - The total bank loans amounted to approximately RMB 1,318 million, up from RMB 1,034 million as of December 31, 2023, with fixed-rate loans increasing to RMB 1,121 million from RMB 762 million[52] - The asset-liability ratio increased to 0.21 as of June 30, 2024, from 0.17 as of December 31, 2023[52] Employee and Share Option Plans - The total number of employees increased to 6,123 as of June 30, 2024, from 5,984 as of December 31, 2023, with R&D staff rising to 3,165 from 3,021[53] - The company has adopted the 2024 Share Option Scheme and the 2024 Share Award Scheme, which collectively allow for a total of 53,126,253 share options and awards, representing 10% of the company's shares[62] - The 2024 Share Option Scheme is set to last for ten years starting from June 6, 2024, and aims to reward eligible participants for their contributions to the group[63] - The company’s share option plans are designed to incentivize employees and service providers for their contributions to the group[63]

Share Valuation - The fair value of the awarded shares on July 27, 2023, and October 27, 2023, were HKD 3,696,000 and HKD 1,668,000 respectively[1] - The closing prices of the shares prior to the awards on July 27, 2023, and October 27, 2023, were HKD 14.128 and HKD 13.74 respectively[1] Expense Recognition - The total amount to be recognized as expenses for the awarded shares is based on their fair value, considering all market performance conditions[1] - The company will adjust its estimates of the number of shares expected to vest based on non-market vesting and service conditions at each reporting period end[1] - The adjustments to the original estimates will be reflected in the consolidated income statement and will correspondingly adjust equity[1] Reporting Impact - The information provided does not affect other data disclosed in the 2023 annual report[2]

本次电话会议仅服务于长江证券研究所白名单客户未经长江证券事先书面许可任何机构或个人不得以任何形式对外公布、复制、刊载、转载、转发、引用本次会议相关内容否则由此造成的一切后果及法律责任由该机构或个人承担长江证券保留追究其法律责任的权利 各位投资者晚上好我是长江城的高超今天给各位领导汇报一下我们关于细分的互联网领域的一个持续的跟踪我们之前也提到过我们现在每周固定是打造三档栏目周二晚上是AI的黄金档 对于整个AI的这个技术变革以及应用端进行一个持续的跟踪周三是MR的超声波这个栏目的话主要是针对技术硬件跟软件端的一个布局进行演讲那周四晚上或者是周天晚上的这档栏目的话就是对整个传媒互联网细分的一些赛道包括我们前期对于这个电影票房对于广告的一个这个复苏对于游戏短剧等等不同的领域它的一个跟踪 那互联网的话也是近期大家看到这前一周跟这一周来看的话是整个互联网整个一级报业绩的一个密集的这个发布期所以这一期的话我们就是只对我们重点跟踪的篇内容赛道的一些互联网厂商他们的一级报进行一个简单的这个综述跟热点的一个提取整体来看的话我们是认为整体表现的话的亮点主要体现在三个方面 一个方面是来自于在相对而言比较高渗透率高基数的情况下整个运营 ...

Financial Performance - In 2023, NetDragon's gaming business revenue rebounded strongly, achieving RMB 3.8 billion, a year-on-year increase of 9.6% compared to a decline of 5.8% in 2022[4]. - Total revenue for 2023 was RMB 7.101 billion, a decrease of 9.7% year-on-year[17]. - Revenue from gaming and application services was RMB 4.189 billion, accounting for 59.0% of total revenue, with a year-on-year growth of 6.6%[17]. - Revenue from Mynd.ai was RMB 2.910 billion, representing a 25.7% decrease year-on-year[17]. - Gross profit for 2023 was RMB 4.398 billion, reflecting a 1.9% increase year-on-year[17]. - Operating profit decreased by 28.6% year-on-year to RMB 821 million[17]. - Profit attributable to the company's owners was RMB 550 million, down 34.1% year-on-year[17]. - Basic earnings per share for 2023 was RMB 103.00, compared to RMB 154.15 in 2022[15]. - Cash flow from operating activities increased by 4.2% year-on-year to RMB 1.1 billion[17]. - Non-GAAP operating profit was RMB 1.1 billion, a decrease of 12.7% year-on-year[17]. Gaming Business Highlights - NetDragon's gaming revenue has increased 3.9 times over the past decade, with nine out of ten years showing revenue growth[4]. - NetDragon's core gaming IPs have shown strong performance, contributing to the overall growth of the gaming business[3]. - Domestic and overseas game revenues grew by 10.5% and 4.5% respectively, with overseas revenue accounting for 15% of total game revenue despite a 5.7% decline in overall overseas revenue for Chinese game developers[21]. - The flagship IP "Magic Domain" achieved a revenue increase of 12.4% to RMB 3.4 billion, with the flagship PC game generating RMB 2.9 billion, a 14% year-on-year growth[21]. - The mobile version of "Magic Domain" saw a 50.4% increase in monthly active users, contributing to 36.2% of PC game active users[22]. - The "Honor of Kings" IP experienced a revenue growth of 5.8% in 2023, supported by a strong player base of over 300 million[22]. - The company plans to launch a new game, "Code-Alpha," in 2024, leveraging the success of the "Conquest" game[22]. Education Business Developments - The company successfully completed the spin-off of its overseas education business, Mynd.ai, which is now listed in the United States, enhancing its competitiveness in the hardware sector[5]. - The company aims to redefine the education industry landscape through its leadership position in the classroom hardware and software market[6]. - NetDragon's education business hardware sales have returned to pre-pandemic levels, indicating recovery in the sector[5]. - Mynd.ai's revenue for 2023 was RMB 2.9 billion, down from RMB 3.9 billion in 2022, reflecting a return to normalcy post-COVID-19[24]. - The gross margin for Mynd.ai increased to 25%, up 1.3 percentage points from 2022, due to lower raw material and shipping costs[24]. Strategic Initiatives and Future Plans - The company plans to continue creating long-term value for shareholders in 2024, building on its growth strategies[7]. - The company aims to expand its market presence in Japan, the Middle East, and Indonesia in 2024, focusing on new game development projects[23]. - Mynd.ai plans to enhance its software business and develop subscription-based SaaS revenue opportunities in 2024[25]. - The company is committed to enhancing its software quality management system, led by its senior vice president, Mr. Lin, who has a strong background in software quality assurance[50]. Corporate Governance and Management - The company has a strong management team with over 30 years of experience in the IT and telecommunications industry, led by Vice Chairman Dr. Liang Nianjian[43]. - The company has received multiple awards for its contributions to the economy and youth development in Fujian Province[44]. - The board of directors includes four executive directors and four non-executive directors, with a focus on strategic oversight and performance monitoring[119]. - The company has adopted corporate governance practices in line with the listing rules, ensuring effective risk management[118]. - The company has implemented a board diversity policy since 2013 and continues to monitor and maintain it[151]. Employee and Workplace Culture - The company emphasizes a learning culture, encouraging lifelong learning and conducting comprehensive training for employees[40]. - The company provides a friendly and enjoyable work environment with comprehensive facilities, including sports courts and a swimming pool[41]. - The company has established employee inclusion groups to enhance communication and cooperation among diverse groups, focusing on gender, race, LGBTQ+, and disability[193]. - The company conducts annual health check-ups for employees and provides comfortable spaces for pregnant and breastfeeding employees[193]. Sustainability and ESG Commitment - In December 2023, NetDragon received an upgrade in its ESG rating to BBB from MSCI, reflecting its commitment to sustainable development[7]. - The company is committed to balancing economic growth, social progress, and environmental protection as part of its sustainable development governance[148]. - The company has established a comprehensive cybersecurity management framework, ensuring strict compliance with local laws and regulations related to information security[165]. - The company has implemented advanced monitoring systems to detect and respond to suspicious network activities promptly[178]. Risk Management and Compliance - The company is committed to complying with various legal and regulatory requirements to protect employee rights and ensure data security[54]. - The company acknowledges the risks associated with new technologies and games that could render current offerings less appealing, impacting profitability and growth prospects[52]. - The group may face significant adverse tax consequences if the Chinese tax authorities determine that the contractual arrangements are not established on an arm's length basis[93]. - The company has established a dedicated internal audit department to oversee employee feedback and suggestions, ensuring a transparent communication environment[198].

Table_BaseInfo 2024 年 4 月 9 日 公司动态分析 网龙（777.HK） 证券研究报告 软件互联网 整体业绩保持稳定，教育业务未来可期 投资评级： Xx 买入 xx 事件：2023年公司收入71亿元，同比下降10%；归母净利润5.5亿元，同比 下降34%。游戏业务全年收入42亿元，同比提高7%，教育业务（MYND.AI）收 目标价格： 16.0 港元 入29亿元，同比下降26%。我们认为公司游戏业务2024年将保持增长态势， 现价(2024-4-9)： 11.06港元 而教育业务最差的时间已经过去，市场逐渐恢复常态，2023年或是业绩低点， 值得关注。 报告摘要 总市值(亿港元) 58.8 整体收入下滑，游戏基本盘保持稳健 公司2023年整体收入同比下降10%至71 流通市值(亿港元) 58.8 亿元，其中游戏业务同比增长7%至42亿元。游戏业务在本年度保持增长，国 总股本(亿股) 5.3 流通股本(亿股) 5.3 内及海外业务收入分别同比增长11%和5%（海外游戏收入占比15%）。得益于 12个月低/高(港元) 10.5/15 公司正确的游戏运营策略 - 通过高频更新提升游戏可玩性、满 ...

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。 ...