HK Stock Market Move | NTES-S (09999) closed up nearly 4%, with second-quarter revenue exceeding expectations, and the game's gross profit margin reached a record high during the period.

NTES-S (09999) surged nearly 4% in the after-hours session, and as of the time of writing, it has risen 3.62% to HKD 200.4, with a trading volume of HKD 2.223 billion. In terms of news, NTES released its second-quarter performance. CICC noted that NTES's second-quarter revenue rose by 8% year-on-year to RMB 30.1 billion, slightly better than our expectations and market forecasts, mainly due to the strong performance of game and VAS revenues. Both gross profit and operating profit exceeded our expectations, which we attribute mainly to the continuous improvement in gross margin and enhanced operational efficiency. Goldman Sachs issued a research report stating that benefitting from a favorable mix of PC and mobile games, a decline in iOS/Android channel costs, and a shift to its own channels, NTES achieved a record high gross margin in gaming for the second quarter. Goldman Sachs believes that the margin expansion is structural, and with optimized operational efficiency, they expect high double-digit year-on-year growth in operating profit for the second half of the year.