Core Insights - The "AI + Education" sector is experiencing a significant value reassessment driven by technological advancements and policy support, particularly with the introduction of DeepSeek, which reduces the cost of AI model development and deployment [1] - The Ministry of Education and other departments have issued guidelines to accelerate digital education, focusing on integration, intelligence, and internationalization, which is expected to stimulate the application of AI in education [1] Company Developments - NetDragon has been a pioneer in the "AI + Education" field, having invested in AI research since 2017 and successfully commercializing various AI educational products [1][2] - The company aims to establish the largest global education content production center in Hong Kong, enhancing the efficiency and quality of interactive educational games [2] - NetDragon's AI education content unit, "Photosynthesis," was showcased at the Global Smart Education Conference in September 2024, highlighting the company's innovative capabilities [2] Strategic Partnerships - NetDragon is collaborating with Thailand's Ministry of Higher Education to launch an online AI education platform, providing vocational training in sectors like new energy vehicles, aligning with national policies for developing skilled talent in emerging markets [2] - The company has formed a strategic partnership with Hong Kong Polytechnic University to integrate advanced AI and vocational training content into its education platforms [2] Technological Integration - NetDragon's subsidiary, Mynd.ai, has been independently listed and is set to launch new SaaS products that will incorporate AI technology, enhancing the educational experience for users [3] - The company is a technical service partner for the National Smart Education Public Service Platform, which has over 163 million registered users, indicating its significant role in the national education framework [3][4] Market Positioning - NetDragon has established a strong foundation in educational technology, with over a decade of experience in content, software, and hardware, positioning itself to benefit from the dual support of technological advancements and favorable policies [4] - The company has been recognized for its collaboration with educational institutions to develop modern industry colleges, showcasing its commitment to integrating education with industry needs [5] Financial Performance - NetDragon's gaming sector is also benefiting from AI applications, with popular games like "Heroes of the Storm" integrating AI features to enhance player experience [6] - The company has a history of consistent dividend payments, with a proposed annual dividend of 0.9 HKD per share for 2024, reflecting a dividend yield of over 9% [6]

Core Viewpoint - NetDragon reported a 14.8% year-on-year decline in revenue for the fiscal year ending December 31, 2024, despite a significant growth of 356% in its education services business [3][4]. Group 1: Financial Performance - Total revenue for NetDragon in 2024 was RMB 6 billion, down from the previous year [3]. - Gross profit decreased by 10.4% to RMB 3.9 billion, while net profit attributable to shareholders fell by 43.5% to RMB 311 million [3]. - The company recorded a net profit of RMB 114 million, a decline of 74.4% year-on-year [3]. - The gaming and application services segment generated RMB 3.9 billion, accounting for 65.1% of total revenue, down 6.0% [3]. - Revenue from the overseas education subsidiary Mynd.ai was RMB 2.1 billion, representing 34.8% of total revenue, a decrease of 27.6% [3]. Group 2: Business Segments - Mynd.ai's revenue decline was attributed to challenges in the global education market, while the company is transitioning from a hardware supplier to a leader in the "Classroom as a Service" (CaaS) sector [5]. - Mynd.ai's education device sales revenue was RMB 1.77 billion, down 37.5%, while education services revenue surged to RMB 333 million, up 356% [4][5]. - Mynd.ai reported a loss of RMB 279 million, but this represented an 11.4% reduction in losses compared to the previous year [4]. Group 3: Strategic Initiatives - The implementation of the "AI+ strategy" improved operational efficiency, reducing employee costs by nearly RMB 100 million [4]. - The company optimized its capital structure, leading to a 19.1% increase in pre-tax profit to RMB 756 million [4]. - Net cash increased by 13.3% to RMB 2.1 billion, with stable operating cash flow of RMB 1.1 billion [4]. Group 4: Workforce and Corporate Actions - The number of employees increased from 5,984 at the beginning of the year to 6,123 mid-year, but decreased to 4,593 by year-end [5]. - The company completed the sale of non-strategic early education business in October 2024, which helped repay some debt and optimize cost structure [5]. - NetDragon announced a final dividend of HKD 0.50 per share, totaling approximately RMB 246 million [6].