China’s NetDragon eyes return to profit on strong mobile games, online learning businesses

NetDragon Websoft, the Hong Kong-listed operator of China’s top online gaming portal, is targeting a return to operating profitability this year, rebounding from two consecutive annual losses.

The growth drivers for NetDragon would be its sharpened focus on mobile games and fast-developing online learning business, company vice-chairman Simon Leung Lim-kin told the South China Morning Post.

“We plan to invest more in mobile games, and have a strong pipeline of new games to be launched this year,” Leung said. “We’ll continue building online communities to expand our online learning business ... and work closely with the education authorities in China and around the world.”

Headquartered in Fujian province, NetDragon reported on Thursday a wider net loss of 202.7 million yuan (US$29.4 million) last year, from 142.9 million yuan in 2015, on higher selling and marketing, administrative and development, as well as a 77.8 million yuan provision for product impairment.

Its revenue, however, more than doubled to 2.8 billion yuan from 1.3 billion yuan a year earlier.

That increase was on the back of a 22.8 per cent year-on-year rise in games business to 1.2 billion yuan, led by its Eudemons Online and Eudemons Online Pocket Version titles.

Leung said NetDragon will push for the development of new games with virtual and augmented reality technologies.

In addition, revenue from its online learning business jumped 78.3 per cent to 374 million yuan.

NetDragon has boosted its activities in the global online learning market after acquiring Promethean World, a company with strong operations in the US and Britain, for US$130 million in 2015.

The total number of users of ClassFlow, the cloud-based interactive software from Promethean, has increased to more than 2.6 million, including 1.7 million teachers, at the end of December, according to NetDragon.

Earlier this month, the company’s interactive flat panel displays were selected by the city of Moscow to be installed in more 7,600 classrooms.

“ We aim to expand our online education business from K-12 (kindergarten-to-grade 12) to the professional market”, supported by advances in augmented reality.

Shares of NetDragon shed 0.40 per cent to close at HK$24.60 at the end of trading on Thursday.