NETDRAGON(HK:00777) BOCOM International·2025-04-02 08:28Investment Rating - The investment rating for the company is downgraded to Neutral [2][3]. Core Insights - The company's revenue growth in gaming and education is facing uncertainty in the short term, with a target price adjustment from HKD 14.00 to HKD 10.20, reflecting a potential decline of 2.7% [2][3]. - The company is focusing on the improvement of the education market in Europe and the US, as well as the anticipated recovery in gaming revenue in the second half of the year [2][8]. Financial Performance Summary - 2024 Performance: Total revenue is expected to decline by 15% to RMB 6,047 million, with gaming and Mynd.ai revenues decreasing by 6% and 28% respectively [7][8]. - 2025 Forecast: Revenue is projected to further decline to RMB 5,241 million, with gaming revenue at RMB 3,555 million and Mynd.ai at RMB 1,685 million, both showing a decrease of 10% and 20% respectively [6][8]. - Profitability Metrics: Adjusted net profit is expected to drop to RMB 530 million in 2025, down 26% from the previous year, with a net profit margin of 10.1% [6][8]. Revenue Breakdown - Gaming and Applications: Revenue is forecasted to be RMB 3,555 million in 2025, down from RMB 3,938 million in 2024 [8]. - Mynd.ai: Expected revenue for 2025 is RMB 1,685 million, a significant drop from RMB 2,106 million in 2024 [8]. Cost and Expense Management - The company is implementing cost-saving measures, particularly in operational expenses, which are projected to decrease from RMB 3,351 million in 2024 to RMB 2,878 million in 2025 [8][14]. - Adjusted operating profit is expected to decline to RMB 577 million in 2025, with an operating profit margin of 11.0% [6][8]. Market Position and Valuation - The company's market capitalization is approximately HKD 5,565.61 million, with a 52-week high of HKD 12.78 and a low of HKD 9.47 [5][8]. - The stock's average trading volume is 1.83 million shares per day, indicating moderate liquidity [5].