Goldman Sachs: NTES-S (09999) rated as "buy", target price raised to HK$181.

Goldman Sachs released a research report stating that it will maintain its non-GAAP net profit forecast for NTES-S (09999) at 31.72 billion yuan for last year; revenue and forecast for the next two years have been raised by 0.4% and 0.5% respectively, with non-GAAP net profit forecasts raised by 0.7% and 0.5% to 35.065 billion and 38.164 billion yuan, respectively. The target price has been raised from 169 Hong Kong dollars to 181 Hong Kong dollars, believing that the risk-return ratio is attractive, with a rating of "buy". The report stated that the third-person hero shooting game "Marvel Duel," developed and published through a collaboration between NetEase and Marvel, has performed strongly since the launch of the first season in December last year. It is predicted that the release of a new season in the near future can further drive player engagement. The introduction of season passes and new character equipment is also expected to increase monetization levels. It is estimated that this game can generate annual revenue of over 400 million US dollars this year with an estimated monthly active user base of 20 million, and the ARPU forecast for the first twelve months has been raised to 20 US dollars. In addition, the bank has correspondingly raised its forecast for NetEase's year-on-year growth in revenue from its PC gaming business to 26% for this year, expecting overall gaming revenue to increase by 9%. It points out that since mid last year, NetEase has been strengthening game development and distribution in the global market, which has already shown initial results. With renewed cooperation with Blizzard games, it is believed that NetEase's PC and console gaming revenue will increase by 30% to 40% in the fourth quarter of last year and the whole of this year.