CM International: Slightly lowers NetEase's target price to $161.5 for US stocks, maintains "buy" rating.

Guotai Junan International published a research report stating that NetEase released its fourth-quarter results for last year, with total revenue increasing by 3% year-on-year to 27.5 billion RMB, which was 4% lower than market expectations due to slower-than-expected growth in game revenue and an extended game revenue recognition period. Operating profit increased by 6% year-on-year to 8.3 billion RMB, which was lower than the consensus of 6%. The bank still remains optimistic about the company's revenue growth prospects this year, mainly based on the strong growth of 34% in contract liabilities in the fourth quarter of last year; this year, multiple heavyweight new products are expected to be launched, including "The Sea of Forgetfulness". Taking into account the extended revenue recognition period, the bank slightly lowered the group's total revenue forecast for the next two years by 1% to 2%, and based on SOTP valuation, the target price for NetEase's US stock was revised slightly down from $164 to $161.5, maintaining a "buy" rating.