GTHT Securities has issued a research report stating that NETDRAGON (00777) has achieved key progress in its AI-native transformation, with organizational efficiency improvements materializing, gaming business repair stabilizing, and Mynd.ai significantly reducing losses. The firm assigns a 13x P/E ratio for 2026, sets a target price of HK$10.4, and maintains its "Accumulate" rating. GTHT Securities' main viewpoints are as follows:

Profit resilience stands out, shareholder returns continue to be delivered

In 26H1, NETDRAGON generated revenue of RMB 2.09 billion, with a gross margin of 69.9%, up 0.4 percentage points year-over-year. The company has deepened cost control and organizational efficiency improvements, achieving an operating profit of RMB 140 million in 26H1, up 24.1% year-over-year, and a net profit attributable to shareholders of RMB 40 million, up 20.0% year-over-year. The board has approved an interim dividend of HK$0.50 per share and committed to a total distribution of no less than HK$600 million within the 12-month period starting March 26, 2026. As of the end of June, net cash and liquid investment reserves were close to RMB 1.8 billion.

Gaming revenue repairs and stabilizes, Mynd.ai opens a new growth track

In 26H1, revenue from gaming and application services reached RMB 1.59 billion, up 3.1% quarter-over-quarter, with a gross margin of 83.3% and an operating profit of RMB 460 million, up 10.3% quarter-over-quarter. Among this, gaming revenue increased 2.3% quarter-over-quarter, with flagship evergreen IPs demonstrating robust operational resilience: the MAU of the "MOYU" IP surpassed 3 million, up 24.1% year-over-year and 15.8% quarter-over-quarter, driving a 3.7% quarter-over-quarter revenue increase. Overseas revenue for the "ZHENGFU" IP (in USD terms) and client-game revenue for the "Hero Soul" IP grew 19.3% and 4.4% year-over-year, respectively, and increased 6.5% and 2.3% quarter-over-quarter. The "gaming + cultural tourism" strategy continues to deepen. The AI employee matrix has improved efficiency across R&D, operations, and maintenance, with AI employees now accounting for 35-40% of total workload. In the application services segment, Mynd.ai was officially launched and began global testing, with systematic tuning focused on content creation and educational scenarios. Hong Kong subsidiary Chuangqisi has deepened strategic cooperation with Zhongke Wenge to expand the enterprise-level AI market in Hong Kong and Macau, jointly developing the scientific research large model "Panshi" and the enterprise-grade security Agent platform "Longgong International Edition".

Mynd.ai operational transformation yields results, losses narrow significantly

In 26H1, Mynd.ai generated revenue of RMB 510 million with a gross margin of 27.7%, up 2.3 percentage points year-over-year. Operating expenses fell 29.6% year-over-year to RMB 250 million. The net loss narrowed substantially by 30.8% year-over-year to RMB 160 million, while the adjusted EBITDA loss improved 53.7% year-over-year to RMB 60 million. Revenue structure continues to optimize, with services and SaaS revenue growing year-over-year, reinforcing recurring revenue momentum.