NetDragon Websoft Holdings (0777) AI Stock Analysis

• Market Cap: HK$5.83B
• Dividend Yield: 8.76%
• Average Volume (3M): 1.66M
• Price to Earnings (P/E): ―
• Beta (1Y): 0.96
• Revenue Growth: -23.86%
• EPS Growth: -113.19%
• Country: HK
• Employees: 4,593
• Sector: Consumer Goods
• Sector Strength: N/A
• Industry: Electronic Gaming & Multimedia
• EPS (TTM): N/A
• Shares Outstanding: 531,262,500
• 10 Day Avg. Volume: 1,373,497
• 30 Day Avg. Volume: 1,655,106
• PEG Ratio: -0.38
• Price to Book (P/B): 0.87
• Price to Sales (P/S): 0.84
• P/FCF Ratio: 5.75
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: HK$18.41
• Price Target Upside: ― Downside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 4
• EPS Forecast (FY): 6.29
• Revenue Forecast (FY): HK$37.98B

• Rating: 67 Neutral
• Price Target: HK$12.50

The score is primarily driven by solid margins, strong free cash flow growth, and a high dividend yield, tempered by declining revenue and mixed technical momentum (slightly negative MACD with elevated RSI/Stoch).

Positive Factors

High gross margin

A 65% gross margin indicates strong unit economics from digital products, implying durable pricing power and low incremental costs. This margin buffer helps sustain profitability and reinvestment even if top-line growth slows, supporting long-term cash generation and resilience.

Strong free cash flow growth

Robust FCF growth (+28.6%) and a high free cash flow to net income ratio (0.84) show improving cash conversion from operations. Reliable FCF supports dividends, product development and strategic investments without heavy reliance on external financing, improving long-term financial flexibility.

Diversified business model

Operating in both online gaming and edtech creates multiple revenue streams and reduces single-market exposure. Educational partnerships and software licensing underpin recurring institutional demand, while gaming IP delivers long-tail monetization, supporting steadier revenue mix over time.

Negative Factors

Declining revenue trend

A persistent revenue decline (-10% reported) undermines scalability and long-term growth potential. Even with healthy margins, shrinking sales reduce absolute profit dollars, constrain R&D and content investment, and heighten reliance on margin or one-off gains to sustain earnings.

Low return on equity

ROE around 5.3% signals limited efficiency in converting equity into profits. Over time, low ROE can indicate suboptimal capital allocation or underperforming assets, making it harder to deliver attractive shareholder returns and to justify equity-financed growth initiatives.

Negative EPS growth

Severely negative EPS growth suggests earnings volatility or one-off hits that materially reduce per-share profitability. Sustained EPS declines erode dividend sustainability and reinvestment capacity, and may limit the company's ability to fund strategic initiatives without external capital.

NetDragon Websoft Holdings Business Overview & Revenue Model

Company Description

NetDragon Websoft Holdings Limited, an investment holding company, develops online and mobile games in the People's Republic of China, the United States, the United Kingdom, and internationally. It engages in the games design, programming and graphics, and online and mobile games operation; online education and related application business; and mobile solution, products, and marketing businesses. The company's games for kids include JumpStart, School of Dragons, Neopets, World of Madagascar, and Math Blaster; and other games comprise Eudemons Online, Conquer Online, Way of the Five, Conquer Online and Adventure Navigation. It also licenses and services developed games; develops and provides products in augmented reality and computer vision with machine learning technology; sells education hardware and software products; and develops properties. The company was formerly known as NetDragon Websoft Inc. and changed its name to NetDragon Websoft Holdings Limited in June 2016. NetDragon Websoft Holdings Limited was founded in 1999 and is headquartered in Fuzhou, China.

How the Company Makes Money

NetDragon generates revenue primarily through its gaming segment, which includes the sale of virtual goods, subscription fees, and in-game purchases from its popular titles. The company also monetizes its educational technology solutions by offering software licenses, subscription services, and tailored educational content to institutions and individual users. Significant partnerships with educational institutions and technology providers enhance its reach and impact in the educational sector, further solidifying its revenue streams. Additionally, strategic investments in emerging technologies and content development contribute to its overall earnings.

NetDragon Websoft Holdings Financial Statement Overview

Summary

NetDragon Websoft Holdings shows a mixed financial performance. The company maintains strong profit margins and cash flow generation, but the declining revenue trend poses a risk to future growth. The balance sheet is stable with a manageable debt level, though the return on equity is relatively low.

Income Statement

NetDragon Websoft Holdings has shown a decline in revenue over the past year, with a revenue growth rate of -10.03%. Despite this, the company maintains a healthy gross profit margin of 65.19% and a net profit margin of 5.14%. The EBIT and EBITDA margins are also solid at 12.27% and 16.77%, respectively. However, the declining revenue trend is a concern for future profitability.

Balance Sheet

The company's balance sheet reflects a moderate debt-to-equity ratio of 0.44, indicating a manageable level of debt. The return on equity stands at 5.34%, which is relatively low, suggesting limited efficiency in generating profits from shareholders' equity. The equity ratio is strong, indicating a solid capital structure with a significant portion of assets financed by equity.

Cash Flow

NetDragon Websoft Holdings has demonstrated strong free cash flow growth of 28.59%, indicating improved cash generation capabilities. The operating cash flow to net income ratio is 0.24, and the free cash flow to net income ratio is 0.84, both suggesting efficient cash flow management. The positive cash flow trends are a strong point for the company's financial health.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	5.13B	6.05B	7.10B	7.87B	7.04B	6.14B
Gross Profit	3.40B	3.94B	4.40B	4.32B	4.52B	4.17B
EBITDA	740.00M	1.01B	1.32B	1.55B	1.79B	1.57B
Net Income	-59.00M	311.00M	550.00M	834.00M	1.06B	953.50M
Balance Sheet
Total Assets	10.22B	10.43B	10.38B	11.03B	10.88B	9.99B
Cash, Cash Equivalents and Short-Term Investments	2.42B	2.90B	2.61B	3.99B	4.35B	4.15B
Total Debt	2.77B	2.55B	1.77B	2.19B	1.65B	1.51B
Total Liabilities	4.64B	4.57B	4.21B	4.43B	3.81B	3.34B
Stockholders Equity	5.62B	5.83B	5.89B	6.90B	7.32B	6.81B
Cash Flow
Free Cash Flow	575.00M	886.00M	493.00M	901.00M	883.00M	1.07B
Operating Cash Flow	730.00M	1.05B	1.11B	1.07B	1.03B	1.33B
Investing Cash Flow	-1.52B	-875.00M	-915.00M	-106.00M	-839.00M	-631.96M
Financing Cash Flow	182.00M	130.00M	-1.70B	-1.02B	-544.00M	1.32B

NetDragon Websoft Holdings Technical Analysis

• Last Price: ―

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For HK:0777, the sentiment is undefined. The current price of undefined is equal to the 20-day moving average (MA) of ―, equal to the 50-day MA of ―, and equal to the 200-day MA of ―, indicating a neutral trend. The MACD of ― indicates undefined momentum. The RSI at ― is undefined, neither overbought nor oversold. The STOCH value of ― is undefined, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a undefined sentiment for HK:0777.

NetDragon Websoft Holdings Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
Sector *	57 Neutral	$3.13B	9.23	-34.32%	3.14%	-25.56%	-353.61%

NetDragon Websoft Holdings Corporate Events

NetDragon Websoft Updates Share Schemes in 2024 Annual Report

NetDragon Websoft Holdings Limited has issued a supplemental announcement regarding its 2024 Annual Report, specifically providing additional details about its Share Schemes. The company has clarified that the total number of shares available under the Existing Share Schemes will not exceed 53,126,253, which represents 10% of the total shares as of the report date. This announcement aims to align the share awards with the purpose of rewarding eligible participants who contribute to the company’s growth, potentially impacting stakeholder engagement and employee motivation.

The most recent analyst rating on (HK:0777) stock is a Hold with a HK$13.00 price target. To see the full list of analyst forecasts on NetDragon Websoft Holdings stock, see the HK:0777 Stock Forecast page.

NetDragon Websoft Enhances Transparency in Executive Compensation Reporting

NetDragon Websoft Holdings Limited has issued a supplemental announcement regarding its annual reports for the years ending 2022, 2023, and 2024. The company provides a detailed breakdown of directors’ and executives’ emoluments, with figures now rounded to the nearest thousand RMB instead of million, although the underlying data remains unchanged. This move aims to enhance transparency in financial reporting, potentially impacting stakeholders’ understanding of the company’s executive compensation structure.

The most recent analyst rating on (HK:0777) stock is a Hold with a HK$13.00 price target. To see the full list of analyst forecasts on NetDragon Websoft Holdings stock, see the HK:0777 Stock Forecast page.