UBS: NTES-S (09999) may achieve dual primary listings on the Hong Kong Stock Exchange in early 2027, reiterating a "buy" rating.
UBS reiterates its "buy" rating on NetEase and maintains the target price of HK$288.6.
UBS released a research report stating that NTES-S (09999) is expected to meet the dual primary listing criteria of the Hong Kong Stock Exchange. According to Wind data, as of December 25th, the trading volume of NetEase Hong Kong-listed shares has accounted for 57% of its global (Hong Kong + ADR) trading volume, surpassing the 55% threshold required by the Hong Kong Stock Exchange for the dual primary listing transfer test. UBS reiterated its "buy" rating on NetEase and maintained a target price of HKD 288.6.
Based on their understanding of the rules of the Hong Kong Stock Exchange, and assuming that there will be no significant increase in trading volume in the US market for NetEase for the remaining trading days of 2025, the bank believes that NetEase is likely to advance its compliance work for the dual primary listing qualification of the Hong Kong Stock Exchange in 2026, and is expected to achieve dual primary listing in early 2027.
If NetEase successfully obtains dual primary listing status as expected by the bank, the key benefit will be eligibility for inclusion in the Shanghai-Hong Kong Stock Connect. However, NetEase does not currently meet the "fast track rule" for Southbound Connect inclusion (currently requiring the top 10 constituents of the Hang Seng Index), so the expected inclusion time is around September 2027.
The report states that Southbound investors have a strong interest in NetEase, mainly due to its strong fundamentals in the online gaming sector and its more attractive valuation levels compared to A-share gaming companies. The bank believes that if NetEase announces the initiation of the dual primary listing process, it will also serve as a short-term positive catalyst. Using BILIBILI-W (09626) as an example, after announcing the initiation of preparations for a dual primary listing, its stock price outperformed the MSCI China Index by 12 percentage points within a week.
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