CICC: Maintain Outperform rating for NTES-S (09999) with a target price of HK$275.

CICC released a research report, maintaining profit forecasts for NTES-S (09999, NTES.US). Current prices correspond to a Hong Kong stock P/E ratio of 16/15x, a US stock P/E ratio of 15/14x for 2025/2026 Non-GAAP P/E. Maintained outperform industry rating and a target price of HK$275/US$177 (Hong Kong stock P/E of 21/19x for 2025/2026 and US stock P/E of 20/19x Non-GAAP P/E), with an upside potential of 29% for Hong Kong stocks and 33% for US stocks. Key points from CICC: 3Q25 Performance The company's revenue in 3Q25 increased by 8% to 28.4 billion yuan, Non-GAAP net profit attributable to the parent company increased by 27% to 9.5 billion yuan, and the company declared a dividend of $0.114 per share in 3Q25 ($0.57 per ADS). It also announced the extension of the current buyback plan (up to $5 billion) to January 2029, with a total buyback of $2 billion by the end of 3Q25. In addition, the company achieved investment income of 1.38 billion yuan this quarter, offsetting the impact of increased marketing expenses on profit. Gaming and value-added service revenue increased by 12%, driven by multiple flagship products The company's 3Q25 performance of games such as "Fantasy Westward Journey" for PC and mobile, and "Egg Party" performed well during the summer, highlighting the company's ability to operate long-lasting games. The company also stated in its performance meeting that it will allocate more resources to long-lasting projects and provide more opportunities to innovative teams. Focus on global capabilities verification and new game pacing The new game "Fate: The Stars" was released in overseas and Chinese markets on August 28th and October 16th respectively, and the game was nominated for the best mobile game at the 2025 TGA Awards. The mobile games "Sixteen Sounds of Martial Arts" and "Against the Flow of Water" were released globally on November 14th and 7th respectively, with "Sixteen Sounds of Martial Arts" surpassing 2 million players on the first day and ranking in the Top 4 of Steam's global best-seller list. In terms of new games, the company announced that "Forgotten Sea" will be launched in 2026, and it also has reserved products such as "Infinite" and "Return to Tang Dynasty." The bank recommends focusing on the upgrade of Netease Inc Sponsored ADR's local team's global capabilities and the progress of key new games.