Guotai Haitong: Stabilize game business foundation, invest extensively in diversified empowerment, first give NETDRAGON (00777) a "buy" rating, with a target price of HK$16.7.

date
11:39 20/10/2025
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GMT Eight
The company is expected to have operating revenue of 48.6/53.1/58.4 billion yuan and a net profit of 4.5/6.5/8.3 billion yuan in 2025-2027.
Top Chinese brokerage Guotai Haitong released a research report stating that NETDRAGON (00777) game business is showing steady growth. The "Magic Domain" IP series products have strong long-term operational capabilities, and the AI production center helps reduce costs, increase efficiency, and improve gaming experience. The company is leading in education technology and has made multiple successful investments, positioning itself well in the group broadcast track. The brokerage firm predicts that the company's operating revenue for 2025-2027 will be 4.86/5.31/5.84 billion yuan, with a net profit of 450/650/830 million yuan. Based on comparable company valuations, the firm gives a 2025 target price of 16.70 Hong Kong dollars and initiates coverage with a "hold" rating. The firm mentioned that the company's core game business focuses on the MMORPG track, with three long-standing IP (Magic Domain, Conquest, and Blade of the Spirits) contributing to stable cash flow. Among them, Magic Domain is a 100% original IP of the company, with steady MAU growth surpassing 2.5 million. Conquest is driving the company's overseas gaming strategy, while Blade of the Spirits is driven by "content + events", with MAU exceeding 800,000 each. The strategic layout of "AI + gaming" continues to deepen, with significant cost reduction and efficiency improvement effects. R&D expenses for the gaming and application services segment in 25H1 decreased by 27% year-on-year. The report mentioned that the company has strategically invested in AI technology and the pan-entertainment field. 1) In 2025, NETDRAGON's Hong Kong subsidiary, Chusih, introduced strategic investment from Zhongke Wenge, where they will conduct exclusive cooperation and jointly develop and promote multiple AI models and applications outside the mainland. 2) In 2023, NETDRAGON invested 20 million US dollars in Rokid and signed a five-year strategic cooperation agreement to promote high-quality education and interact with Rokid's hardware ecosystem in the gaming business. 3) NETDRAGON has a forward-looking layout in the group broadcast track, holding a 46% stake in Hangzhou Shuaike Network Technology Company. Shuaike is an internationally leading MCN institution with contracted anchors from dozens of countries and over 700 million fans, with over 80 billion Douyin sound waves and over 3 billion monthly sound waves. As a pioneer in the track, Shuaike has platform traffic support, talent reserves, and content production experience, and has great development potential.