Ge Long Hui·2025-09-24 04:32Core Viewpoint - The company is experiencing a decline in revenue for 2025, but its overall profitability is improving due to cost optimization measures and a focus on enhancing operational efficiency [1][2]. Group 1: Financial Performance - In 2025, the company achieved a revenue of 2.38 billion RMB, a year-on-year decrease of 28%, with a gross profit of 1.7 billion RMB, down 24.7% [1]. - The gross margin improved by 2.9 percentage points to 69.5%, indicating enhanced overall profitability [1]. - Operating expenses were reduced to 1.35 billion RMB, a year-on-year decrease of 15.6%, reflecting the effectiveness of cost optimization initiatives [1]. - The company has a solid financial position with net cash of approximately 2.3 billion RMB and holds 12,000 Ethereum as digital asset reserves [1]. Group 2: Business Segments - The gaming and other businesses generated revenue of 1.74 billion RMB in the first half of 2025, down 18% year-on-year, but only a slight decline of 4% compared to the second half of 2024, indicating signs of stabilization [2]. - The monthly active users (MAU) of "Magic Domain" increased by 11% year-on-year, and mobile revenue showed a quarter-on-quarter increase, reflecting improved user engagement and retention [2]. - The gaming business's operating profit margin rebounded to 28.8%, nearing historical normal levels [2]. - The education business, Mynd.ai, reported revenue of 640 million RMB in the first half of 2025, primarily impacted by tightened customer budgets [2]. - The company is actively exploring emerging markets to seek new growth opportunities amid challenges in traditional markets [2]. Group 3: Future Outlook - The company has adjusted its target price to 20.24 HKD, maintaining a buy rating, based on the robust development of gaming IPs and the potential of the education market [3]. - The expected growth from the gaming business and successful expansion into overseas markets, along with the promotion of tablet products, is anticipated to drive future performance [3].