NETDRAGON(HK:00777) 智通财经网·2025-04-01 11:24Core Viewpoint - Citic Securities maintains a "Buy" rating for NetDragon (00777) with a target price of HKD 16, projecting 2024 revenue and net profit at CNY 6.05 billion and CNY 310 million respectively, with expectations for recovery in the Mynd.ai business due to increasing global education informationization penetration [1] Overall Performance - In 2024, the company reported revenue and net profit of CNY 6.05 billion and CNY 310 million, respectively, impacted by a one-time non-cash deferred tax expense of approximately CNY 450 million; excluding this, net profit increased by 17.4% year-on-year [2] - The gross margin for the year was 65.2%, up by 3.3 percentage points; the expense ratios for sales, administration, and R&D were 12.5%, 19.3%, and 20.1%, respectively, increasing by 1.1, 2.4, and 3.4 percentage points year-on-year; the pre-tax profit was CNY 760 million, up by 19.1% [2] Gaming and Application Services Business - In 2024, the gaming and application services business generated revenue of CNY 3.94 billion, with a decline attributed to a strategic adjustment to lower the entry barrier for new users; the gross margin was 86.3% [3] - The expense ratios for R&D, sales, and administration were 31.2%, 12.4%, and 17.9%, respectively, increasing by 2.9, 1.3, and 2.4 percentage points year-on-year; the operating profit margin was 23.5% [3] - The company has proposed an "AI + Gaming" strategy in Q4 2024, aiming to reduce costs and improve efficiency, which is expected to stabilize profitability in the gaming business [3] Mynd.ai Business - In 2024, the Mynd.ai business reported revenue of CNY 2.11 billion, primarily due to the ongoing adjustment cycle in the overseas education informationization sector; the gross margin was 26.0%, up by 1.0 percentage point [4] - The expense ratios for R&D, sales, and administration were 9.6%, 12.6%, and 17.2%, respectively, increasing by 2.9, 1.4, and 8.0 percentage points year-on-year [4] Profit Forecast, Valuation, and Rating - For the gaming and application services business, a net profit of CNY 690 million is projected for 2025, with a valuation of 9x PE, leading to a market cap estimate of CNY 6.19 billion [5] - The Mynd.ai business is expected to generate revenue of CNY 1.72 billion in 2025, with a valuation of 0.7x PS, resulting in an estimated value of CNY 900 million [5] - Considering the company's active dividend policy and focus on shareholder returns, a valuation of CNY 940 million is assigned to the net cash of CNY 1.88 billion for 2025; the comprehensive target price is set at HKD 16, maintaining a "Buy" rating [5]