报告名称：NetDragon(00777.HK)Online education business on track; maintain Buy with TP of H
报告类型：港股研究
报告日期：2016-01-27
研究机构：广发证券(香港)
股票名称：NETDRAGON,网龙
股票代码：08288Z,00777
页数：4
简介：What’s new? We met with management recently. The share price is down 13% YTD.
Strong commercialization progress for online education products NetDragon hasseen rapid progress in the commercialization of its strategic online education businessduring the first round of promotions in 2H15. With a solid nationwide sales networkcovering 20 provinces in China, its “101 series” of education solutions is now in 1,800classrooms and 150 schools in 10 provinces as of end-Nov 2015. The company signedRmb80m-worth of online education contracts in 2H15, which is likely to be booked in the1H16 results given its product delivery cycle. Management expect its “101 series” to be inover 5,000 classrooms in 2016, something that should drive significant growth in its onlineeducation sales during the year.
Strong synergy with Promethean The company completed its acquisition of the UKlistededucation company Promethean for Rmb799m in Nov 2015. Promethean providesintegrated classroom solutions including both hardware and software to over 2m teachersand 30m K-12 students, covering over 1.3m classrooms in around 100 countries. Itgenerated 56% and 10% of its 2014 sales from its core markets, North America and TheUK respectively, while only 3% came from China. Benefiting from Promethean’s powerfuleducation brand, global sales channels and strong technical capabilities, we believeNetDragon should be able to further solidify its competiveness in the domestic onlineeducation market and accelerate its global expansion over the next few years.
Stable growth in online games business The online games business is the company’ssteady cash cow, which gives it the flexibility needed to foster its emerging educationbusiness. Online games revenue posted stable growth of 9% YoY in 9M15, mainly drivenby sustainable growth momentum from its PC-based games, Calibur of Spirit (英魂之刃)and Conquer (征服). Its online game user base continued to expand with averageconcurrent users (ACU) up 13% QoQ and 60% YoY to 360,000 in 3Q15. Another popularPC client game, Tiger Knight (虎豹骑), is expected to begin beta testing in 1Q16, and maymake a substantial revenue contribution in FY16. Meanwhile, the company also plans tolaunch three new mobile games during the year. We believe the company could sustainstable growth momentum in the gaming business in FY16-17 given the heathyperformance of newly-launched games and its diversifying game portfolio.
Earnings forecasts cut For 2015, we now expect a net loss of Rmb56m (down from ourprevious forecast for a net profit of Rmb55m). We also cut our FY16/17 EPS forecasts by51%/25% to Rmb0.18/0.50, mainly due to increasing investment in the educationbusiness in the near term, while we leave our sales forecasts broadly unchanged.
Maintain Buy with TP of HK$19.71 As its online education business is on track, wemaintain our Buy rating. We add the value of Promethean and adjust the valuation methodfor its online education business from P/E to P/S, given the likely loss in this business inthe near term due to heavy initial investment. We fine tune our target price to HK$19.71(previously HK$19.75), based on separate valuations of HK$3.18bn, HK$2.85bn,HK$0.95bn, HK$0.38bn and HK$2.44bn for its online game, online education,Promethean, CherryPicks and net cash. Downside risks include worse-than-expectedperformance in online education product sales and new games.

下载地址：NetDragon(00777.HK)Online education business on track; maintain Buy with TP of H