Core 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].

Core Viewpoint - The company is experiencing a decline in revenue and profit for the first half of 2025, but shows signs of operational improvement and cost optimization, particularly in its gaming segment, while the education business faces short-term challenges [1][2][3] Group 1: Financial Performance - In the first half of 2025, the company achieved revenue of 2.38 billion RMB, a year-on-year decline 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 decreased by 15.6% to 1.35 billion RMB, reflecting the effectiveness of cost optimization measures [1] - The company maintains a solid financial position with net cash of approximately 1.5 billion RMB and holds 12,000 Ethereum as digital asset reserves [1] - A mid-term dividend of 0.5 HKD per share has been announced, with a commitment to return at least 600 million HKD to shareholders through dividends and share buybacks over the next year [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 operating profit margin for the gaming business rebounded to 28.8%, nearing historical normal levels [2] - New product developments include "Code MY" which began small-scale testing in August, and plans to launch "Magic Domain" and "Code Alpha" in overseas markets [2] - The education segment, Mynd.ai, reported revenue of 640 million RMB, impacted by tightened customer budgets, with ongoing efforts to optimize costs and explore emerging markets for growth [2] Group 3: Investment Outlook - The target price has been adjusted to 17.27 HKD, maintaining a buy rating based on the robust performance of the gaming business and the potential market space in education [3] - The steady development of gaming IPs and expansion into overseas markets, along with successful tablet product promotions, are expected to drive future growth [3] - The valuation method remains unchanged, with a projected 55% upside from the last closing price [3]

Core Viewpoint - First Shanghai maintains a "buy" rating for NetDragon (00777), highlighting the robustness of the company's gaming business and the potential market space for its education business. The steady development of gaming IPs and the expansion into overseas markets, along with the successful promotion of tablet products, are expected to drive new performance growth for the company. The target price is set at HKD 17.27, indicating a 55% upside from the previous closing price [1] Group 1: 2025 Mid-Year Performance - NetDragon is projected to achieve revenue of RMB 2.38 billion in the first half of 2025, with a gross profit of RMB 1.7 billion and a gross margin increase of 2.9 percentage points to 69.5%, reflecting enhanced overall profitability [1] - Operating expenses are expected to be RMB 1.35 billion, a decrease of 15.6% year-on-year, indicating the effectiveness of cost optimization and efficiency improvement measures [1] - The company has a solid financial position with net cash of approximately RMB 1.5 billion and holds 12,000 Ethereum as part of its digital asset reserves [1] - A mid-term dividend of HKD 0.5 per share has been announced, with a commitment to return at least HKD 600 million to shareholders through dividends and share buybacks over the next year [1] Group 2: Gaming Business - In the first half of 2025, the gaming and other businesses generated revenue of RMB 1.74 billion, showing signs of stabilization and recovery compared to the second half of 2024 [2] - The Monthly Active Users (MAU) of "Magic Domain" increased by 11% year-on-year, with mobile revenue also showing a quarter-on-quarter increase, indicating improved user engagement and retention [2] - The operating profit margin for the gaming business has rebounded to 28.8%, nearing historical normal levels, due to ongoing cost reduction and efficiency enhancement efforts [2] - Upcoming product launches include "Code MY" which began small-scale testing in August, and plans to launch "Magic Domain" and "Code Alpha" in multiple overseas markets in the second half of the year [2] Group 3: Education Business - The Mynd.ai business generated revenue of RMB 640 million in the first half of 2025 [3] - In response to challenges from reduced global education technology spending, the company will continue to pursue cost optimization [3] - Despite weak performance in traditional markets in Europe and the US, the company is actively exploring emerging markets for new growth opportunities [3] - While short-term pressures from fluctuations in overseas education budgets remain, the long-term core logic of increasing digital penetration in global education remains unchanged [3]