Daily Brief TMT/Internet: Netdragon Websoft, Tekscend Photomask and more

• Netdragon Websoft (777 HK) stock has begun to rerate on the back of its deal with with Zhongke Wenge to integrate and launch AI applications outside of China.
• NetDragon will integrate Wenge’s LLM, YaYi, with its education products.  In August 2025, Cherrypicks and Wenge jointly launched AI applications, including social listening and multimodal content creation tools globally.
• NetDragon has consistently enhanced shareholder returns through substantial dividends and since its earnings announcement in August has begun buying back shares in the market.

• Netdragon is a prominent player in China’s online gaming and mobile internet sectors, with a growing international presence in the education technology market.
• The company is strategically pivoting towards the integration of Artificial Intelligence (AI) in both its gaming and education segments, aiming to enhance user experience and operational efficiency.
• Despite recent revenue declines and market volatility, Netdragon maintains a strong dividend yield and has an active share buyback program, signaling management’s confidence in its long-term strategy.

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• Scarce exposure to EUV photomasks – one of only three global leaders (with Hoya, DNP) in a concentrated oligopoly.
• IPO at ¥250–400 bn (Oct 16, 2025) implies ~12–16× EV/EBITDA, offering rare pure-play access.
• Execution risks – capex intensity turns FCF negative; overhang from Integral (~14% post-IPO) may weigh.