Core Insights - NetDragon's transformation and focus strategy on "AI + Education" and "AI + Gaming" has attracted significant attention from top-tier international capital, with BlackRock increasing its stake to over 5% [1] Group 1: AI Strategy - The company is implementing a dual-driven strategy of "AI + Education" and "AI + Gaming" [1] - In the gaming sector, NetDragon has established an AI production center that enhances collaboration and automatic content generation across different game teams, significantly improving efficiency [1] - The flagship IP "Magic Domain" is set to launch multilingual versions to expand into new overseas markets with the help of the AI production center [1] Group 2: Education Sector - In the education sector, NetDragon is leveraging its first-mover advantage in AI to capture market share both domestically and internationally [1] - The Mynd.ai business serves as the core operational entity for overseas classroom technology, integrating AI voice assistant technology with interactive display hardware to enhance product competitiveness [1] Group 3: Technological Investments - The company's strategic layout in cutting-edge technology and AI ecosystems is becoming increasingly valuable, with recent investments leading to the launch of a new generation of AI glasses [2] - NetDragon's subsidiaries are expanding their influence in cultural creativity and IP operations, enhancing their commercialization capabilities [2] - Future strategic investments will focus on AI, XR, robotics, and blockchain technologies, reinforcing synergies with the company's main business [2]

机构：第一上海 2025 中期业绩承压：网龙2025 年上班年实现营收23.8 亿元，同比下滑28%，毛利为人民币17 亿元，同 比减少24.7%，毛利率同比提升2.9 个百分点至69.5%，反映公司整体盈利能力增强。经营开支为13.5 亿 元，同比降低15.6%，集团推行的成本优化和效率提升措施已初步显现成效，预计将在2025 年下半年进 一步充分体现。公司当前财务状况稳健，账面净现金规模约为23 亿元人民币，并持有12,000 枚以太币 作为其数字资产储备。与此同时，公司宣布派发中期股息每股0.5 港元，并承诺在未来一年内通过股息 及股份回购等方式，向股东提供总额不低于6 亿港元的回报。 游戏业务主动调整：2025 年上半年，公司游戏及其他业务实现收入17.4 亿元，同比下降18%，但相较 2024 年下半年仅环比微降4%，显示出企稳回升的态势。其中，《魔域》MAU 同比增长11%，手机版收 入也实现环比增长，反映用户活跃与留存水平有所提升，玩家体验持续优化。通过持续推进降本增效， 该业务经营利润率环比回升至28.8%，已接近历史常态水平。产品储备方面，《代号MY》已于8 月启动 小规模测试，预计明年正式 ...

Group 1: Company Overview - NetDragon's revenue for the first half of 2025 was RMB 2.38 billion, a year-on-year decline of 28%[5] - The gross profit was RMB 1.7 billion, down 24.7% year-on-year, but the gross margin improved by 2.9 percentage points to 69.5%[5] - The company has a net cash position of approximately RMB 2.3 billion and holds 12,000 Ethereum as digital asset reserves[5] Group 2: Business Segments - The gaming and other businesses generated RMB 1.74 billion in revenue, a decrease of 18% year-on-year, but only a 4% decline compared to the second half of 2024, indicating stabilization[6] - The education segment, Mynd.ai, reported revenue of RMB 640 million, impacted by tightened customer budgets, with ongoing cost optimization efforts[7] Group 3: Financial Projections - The target price for NetDragon is set at HKD 20.24, representing a 71% upside from the last closing price[8] - The adjusted EPS for 2025 is projected at HKD 1.004, a decrease of 25% from previous estimates, while 2026 EPS is expected to be HKD 1.175, down 22%[2] Group 4: Market Strategy - The company plans to return at least HKD 600 million to shareholders through dividends and share buybacks over the next year[5] - New game titles and expansion into overseas markets are expected to drive future growth, with several products in the pipeline for release[6]

中信维持公司2025~2027年EPS预测0.64/1.10/1.82港元，并采用分部估值法，①游戏及应用服务业务， 预测2025年净利润为6.9亿元，参考行业可比公司现价对应2025年估值水平(三七互娱（002555） 16xPE，恺英网络（002517）23xPE，均为Wind一致预期)，给予公司游戏及应用服务业务2025年9倍 PE，对应市值61.9亿元;②Mynd.ai业务，该行预计该业务2025年营收为17.2亿元，参考行业可比公司现 价对应2025年估值水平(视源股份（002841）1.2xPS，康冠科技（001308）1.0xPS，均为中信证券研究 部预测)，给予公司Mynd.ai (截至2025.06.30公司持股74.1%)业务2025年0.7倍PS，给予公司Mynd.ai业务 估值9.0亿元(估值折价均考虑到公司持股上市)。此外，考虑到公司积极分红，充分注重股东回报，该行 给予公司2025年净现金(20.7亿元)估值10.4亿元(对应2025年0.5xPS)。 1H25公司核心板块游戏及应用服务业务收入17.4亿元，业绩表现已环比企稳。该业务板块毛利率高达 86.2%，研发、销售、行政费用 ...

Core Viewpoint - Citic Securities maintains a "buy" rating for NetDragon (00777), projecting growth in the gaming business and recovery in Mynd.ai following tariff policy implementation, with a target price of HKD 16 for 2025 [1] Group 1: Financial Performance - The company is expected to achieve a revenue of HKD 2.38 billion in mid-2025, with an adjusted net profit of HKD 280 million after excluding impairment losses and one-time employee severance compensation [1] - The gaming and application services segment is projected to generate revenue of HKD 1.74 billion in the first half of 2025, with a gross margin of 86.2% [1] - Sales, management, and R&D expenses have decreased by 4.6%, 14.0%, and 22.4% year-on-year, indicating significant optimization [1] Group 2: Earnings Forecast - Citic Securities forecasts EPS for 2025, 2026, and 2027 to be HKD 0.64, HKD 1.10, and HKD 1.82 respectively [2] - The gaming and application services business is expected to generate a net profit of HKD 690 million in 2025, with a valuation of HKD 6.19 billion based on a 9x PE ratio [2] - Mynd.ai is projected to have a revenue of HKD 1.72 billion in 2025, with a valuation of HKD 900 million based on a 0.7x PS ratio [2] Group 3: Strategic Developments - The company has made significant advancements in the technology and AI sectors, including a strategic partnership between its subsidiary Chuangqi and Zhongke Wenge to promote AI models and applications outside mainland China [3] - Recent investments in AI edge device companies have led to the successful launch of a new generation of AI glasses, marking a key breakthrough in the consumer market [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]

Investment Rating - The report maintains a "Buy" rating for the company with a target price of HKD 17.27, representing a potential upside of 55% from the current price of HKD 11.14 [6][7]. Core Insights - The company's gaming business shows stable growth, with a focus on cost reduction and efficiency improvements, while the education segment faces short-term challenges due to budget constraints [3][7]. - The company has a solid financial position with net cash of approximately RMB 1.5 billion and digital asset reserves including 12,000 Ethereum [7]. - The gaming segment's revenue for the first half of 2025 is projected to be RMB 1.74 billion, down 18% year-on-year, but showing signs of stabilization with a slight quarter-on-quarter decline [7]. - The education business, particularly Mynd.ai, reported revenue of RMB 640 million, impacted by tightening customer budgets, but the long-term digitalization trend in education remains intact [7]. Summary by Sections Financial Performance - Total revenue for the fiscal year ending December 31, 2023, was RMB 7.1 billion, with a projected decline of 19.13% in 2025 [7][8]. - Adjusted net profit for 2025 is estimated at RMB 480 million, reflecting a significant recovery of 105.28% compared to the previous year [7][8]. - The company plans to distribute an interim dividend of HKD 0.5 per share and aims to return at least HKD 600 million to shareholders through dividends and share buybacks over the next year [7]. Business Segments Gaming Business - The gaming segment's revenue is expected to stabilize, with MAU for "Magic Domain" increasing by 11% year-on-year, indicating improved user engagement [7]. - New game launches and expansions into overseas markets are anticipated to drive future growth [7]. Education Business - The education segment is under pressure due to reduced budgets in traditional markets, but the company is exploring emerging markets for growth opportunities [7]. - The long-term outlook for digital education remains positive despite short-term fluctuations [7].

Core Viewpoint - First Shanghai maintains a "buy" rating for NetDragon (00777), highlighting the stability of the company's gaming business and the potential of its education business market space [1] Group 1: 2025 Mid-Year Performance - NetDragon is projected to achieve revenue of 2.38 billion RMB in the first half of 2025, with a gross profit of 1.7 billion RMB, reflecting a gross margin increase of 2.9 percentage points to 69.5% year-on-year [2] - Operating expenses are expected to be 1.35 billion RMB, a decrease of 15.6% year-on-year, indicating the effectiveness of the company's cost optimization and efficiency improvement measures [2] - The company has a solid financial position with net cash of approximately 1.5 billion RMB and holds 12,000 Ethereum as digital asset reserves [2] - 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 [2] Group 2: Gaming Business - In the first half of 2025, the gaming and other businesses generated revenue of 1.74 billion RMB, showing signs of stabilization compared to the second half of 2024 [3] - 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 [3] - The operating profit margin for the gaming business has rebounded to 28.8%, nearing historical normal levels [3] - Upcoming product launches include "Code MY" which began small-scale testing in August, and plans to expand "Magic Domain" and "Code Alpha" into multiple overseas markets [3] Group 3: Education Business - The Mynd.ai business generated revenue of 640 million RMB in the first half of 2025 [4] - In response to challenges from reduced global education technology spending, the company will continue to pursue cost optimization [4] - Despite weak performance in traditional markets in Europe and the US, the company is actively exploring emerging markets for new growth opportunities [4] - While short-term pressures from fluctuations in overseas education budgets remain, the long-term logic of increasing global education digital penetration remains unchanged [4]

Core Viewpoint - The company, NetDragon, has announced a shareholder return plan of over HKD 600 million, instilling significant confidence in the market while continuing to create value for shareholders through its AI-driven strategies in both education and gaming sectors [1][6]. Financial Performance - For the first half of 2025, the company reported revenue of HKD 2.38 billion, with a gross profit of HKD 1.66 billion and a gross margin of 69.5%, reflecting a year-on-year increase of 2.9 percentage points [1]. - Operating expenses decreased by 15.6% year-on-year to HKD 1.35 billion, showcasing the effectiveness of AI in cost optimization and efficiency enhancement [1]. AI Strategy - The company is pursuing a dual strategy of "AI + Education" and "AI + Gaming," leveraging technological innovation and ecosystem collaboration to seize new growth opportunities globally [1][4]. - AI has significantly improved operational efficiency, with an estimated 15% enhancement in overall effectiveness within the gaming sector [1][2]. Gaming Sector Developments - The company has established AI production centers to enhance collaboration and content generation across different game teams, leading to the efficient launch of multilingual versions of flagship IPs like "Magic Domain" [2]. - Notable game products such as "Conquest" and "Spirit of the Heroes" have seen revenue growth of 2.1% and 18% year-on-year, respectively, while the core mobile game "Magic Domain" has experienced a MAU growth of over 30% [2]. Education Sector Initiatives - The company has made early investments in AI for education since 2017, developing AI-driven educational content and tools, and is now focusing on expanding its market share both domestically and internationally [3]. - Collaborations with educational institutions in Thailand and Cameroon aim to enhance digital education and improve educational equity and quality [3]. Industry Positioning - The company is strategically positioned to capitalize on the global AI technology landscape by integrating cutting-edge technologies and expanding its AI ecosystem [4][5]. - Future investments will focus on AI, XR, robotics, and blockchain technologies, reinforcing synergies with the company's core business [5]. Shareholder Returns - The company has a history of shareholder return plans, including a recent announcement of a plan to return up to HKD 600 million, which includes dividends and buybacks, reflecting a commitment to shareholder value [6][7]. - The proposed dividend of HKD 0.50 per share represents a year-on-year increase of 25%, with an annualized dividend yield exceeding 9%, making it one of the most attractive in the tech sector [6][7].

Core Insights - NetDragon emphasizes the dual-driven strategy of "AI + Education" and "AI + Gaming" to capture new growth opportunities globally [1][4] - The company reported a revenue of 2.381 billion RMB for the first half of 2025, with gaming and application services contributing 1.738 billion RMB and Mynd.ai contributing 641 million RMB [1][4] - The gaming business is expected to gradually stabilize, while the education market is anticipated to recover with clearer budgets and policies in regions like Germany and the USA [1][4] Gaming Business - The deployment of AI production centers led to a 26.7% reduction in R&D expenses, with AI enhancing overall efficiency by approximately 15% [2][3] - The flagship IP "Magic Domain" saw an 11.3% year-on-year increase in monthly active users (MAU), with several core mobile games experiencing MAU growth exceeding 30% [2][3] - The company is focusing on cross-industry collaborations to enhance IP cultural connotation and social impact [2][3] Mynd.ai Business - Mynd.ai's revenue declined due to budget cuts in the European and American education markets, but the gross margin rebounded to 31% in Q2 [3] - The company is implementing cost optimization and cash management strategies to navigate the industry adjustment period [3] - A recent acquisition of AI voice assistant technology is expected to enhance future sales in large-screen products [3] Future Outlook - Management is optimistic about performance in the second half of the year, with expectations for the gaming business to stabilize and the education market to recover [4] - The company plans to expand its global footprint, particularly in Southeast Asia, the Middle East, and Africa, while enhancing user experience through innovative products [4] - EBITDA for Mynd.ai is projected to approach breakeven in Q4, with expectations for profitability by 2026 [4] Cost Management - The company has successfully reduced overall sales and marketing expenses by 4.6%, administrative expenses by 14.0%, and R&D expenses by 22.4% [1] - Cost-saving measures are expected to continue yielding results in the second half of the year, with a focus on maintaining strategic objectives [14]