The Zhitong Finance App learned that Debon Securities released a research report stating that it maintains the “buy” rating of NetDragon (00777). Considering the business situation in the first half of the year, the net profit forecast for 2023-2025 was adjusted to 9/10.3/1.12 billion yuan, an increase of 8%/15%/8% over the previous year. In the 2023H1 financial report, the company achieved revenue of 3.7 billion yuan, an increase of 2% over the previous month; realized net profit of 500 million yuan, an increase of 86% over the previous month; the revenue and profit side all picked up compared to 22H2.

The bank mentioned that both the revenue and profit sides of the NetDragon game business have clearly rebounded. The flagship Magic Domain performed steadily. Mobile game revenue increased 10% year on year and 22% month on month in the first half of the year; mobile game revenue increased 10% year on year and 11% month on month. Furthermore, the MAU and paying users of the “Magic Domain Interactive Mobile Game” increased by 32%/16%, respectively, from month to month, and the user circle and activity level further increased. In terms of content updates, on the one hand, the company updated 4 videos in the first half of the year, and on the other hand, launched “Magic Domain Mobile Game 2” in March '23. Looking forward to the future, the company stocks products such as “Magic Domain Remastered” and “Magic Domain Mobile Game 2 Overseas Edition” in Pipeline, and is expected to launch it in 2024 to further prosper IP vitality. Driven by collaboration in the first half of the year, “Hero Blade” IP revenue increased 12% month-on-month and returned to a growth trajectory, and the IP sequel “Hero Blade 2.0” is also under development.

According to the report, the company launched ActivPanel LX, a mid-range interactive tablet product, in May 2023, and officially entered the low-end market. Due to the late launch, ActivPanel LX's revenue in the first half of the year was only 4% of Prometheus, and the bank believes its revenue is expected to be further released in the second half of the year. On the other hand, Prometheus's adjusted gross margin increased to 28.4%, mainly due to ActivPanel 7's inventory consumption in 2022, and the increase in the share of ActivPanel 9, which sold more in 2023, in shipment volume — the average price of the 23H1 Prometheus interactive tablet was 2,267 dollars, an increase of 6% over the previous month. Furthermore, the company plans to launch the first software subscription service combined with a Prometheus tablet by the end of the year, integrate AI capabilities, and achieve profit through a subscription system.