Soochow Securities·2025-12-02 11:16Investment Rating - The report assigns a "Buy" rating for the company, marking its first coverage [4]. Core Insights - The company leverages its long-standing IPs in gaming and embraces AI to enhance efficiency and reduce costs, particularly in the MMORPG sector [2][36]. - The education segment, led by Mynd.ai, is transitioning towards a SaaS model, which is expected to improve profitability as the market for educational hardware enters a replacement cycle [3][55]. - Strategic investments in AI, AR, and the broader entertainment sector are aimed at building a long-term growth ecosystem [4][69]. Summary by Sections 1. Gaming and Application Services - The company has a strong foundation in MMORPGs, with flagship IPs like "Magic Domain," "Conquest," and "Spirit of Heroes" contributing to stable cash flow [36]. - AI integration has led to a 26.7% reduction in R&D costs in the gaming segment, enhancing profitability [51]. - The gaming segment is expected to generate revenues of 2,594 million, 3,160 million, and 3,318 million yuan from 2025 to 2027, with respective year-on-year growth rates of -25%, +7%, and +5% [76]. 2. Education Segment - Mynd.ai, a leader in educational interactive display devices, has a market share of nearly 16% in the global stock of interactive devices as of 2024 [3][56]. - The transition to a SaaS model is underway, with a 8% quarter-on-quarter growth in SaaS subscriptions, particularly for the flagship application "Explain Everything" [63]. - Revenue from the education segment is projected to be 1,685 million, 1,769 million, and 1,946 million yuan from 2025 to 2027, with year-on-year growth rates of -20%, +5%, and +10% [76]. 3. Strategic Investments - The company has made strategic investments in AI, AR, and the entertainment sector to create synergies with its core gaming and education businesses [4][69]. - Investments in companies like Rokid and Shuaiku Network are expected to enhance market competitiveness and provide new channels for user engagement [72][75]. - The collaboration with Zhongke Wenge aims to develop AI applications for various sectors, positioning the company as a leader in AI technology deployment [70].