CICC International: Maintain "buy" rating on NTES-S (09999) with target price raised to HKD 198

Bank of China International has released a research report stating that it maintains its first choice and "buy" rating for NTES-S (09999), and has raised the target prices for its US and Hong Kong stocks to $127 and HK$198 respectively. The bank believes that the market is still underestimating the growth trend of NetEase's computer games this year, and it is currently predicting that computer game revenue will increase by 42% year-on-year to RMB 30.6 billion by 2025. NetEase's growth in computer games is underestimated, enjoying the fruits of internationalization acceleration. The bank predicts that its core online game total revenue will increase by 6% year-on-year to RMB 20.7 billion, estimating that its performance in computer and mobile will continue to differentiate in the fourth quarter, with revenue increasing by 48% and decreasing by 7% respectively. In addition, it is expected that the gross profit margin and adjusted net profit margin will be 61.3% and 29.8% respectively. The bank also mentioned the successful launch of "Marvel Super War" overseas and the positive player feedback for "Yan Yun Sixteen Songs" in China, both of which demonstrate the company's solid core game development and operational capabilities. The bank believes that the company will gradually benefit from its steadfast game investment and strategy execution in internationalization acceleration.