Investment Rating - The investment rating for the company is "Buy" (maintained) [1][4]. Core Insights - The company achieved a revenue of 105.3 billion yuan in 2024, with a year-on-year growth of 2.91%, and a net profit of 29.7 billion yuan, reflecting a year-on-year increase of 0.96% [4]. - In Q4 2024, the company reported a revenue of 26.7 billion yuan, a year-on-year decrease of 1.45% but a quarter-on-quarter increase of 2.05%, with a net profit of 8.8 billion yuan, showing a year-on-year growth of 33.18% and a quarter-on-quarter growth of 34.08% [4]. - The company is expected to benefit from new product cycles, with projected net profits for 2025, 2026, and 2027 at 34.2 billion yuan, 39 billion yuan, and 42.4 billion yuan respectively, corresponding to EPS of 10.7 yuan, 12.1 yuan, and 13.2 yuan [4]. Revenue and Profitability - The company's revenue from games and related value-added services in Q4 2024 was 21.2 billion yuan, with a year-on-year increase of 1.4% [4]. - The revenue from online music services in 2024 saw a 22% increase, with a gross margin of 33.7%, up by 7 percentage points year-on-year [6]. - The company’s operating profit for Youdao turned positive for the first time in 2024, driven by innovation and AI integration [6]. Product Performance - The game "Marvel Showdown" quickly topped the Steam global sales chart after its overseas launch, with over 10 million registered users within 72 hours, and currently surpassing 40 million [5]. - The game "Yanyun Sixteen Sounds" achieved over 3 million downloads within four days of its domestic launch, with total players exceeding 15 million within two weeks [5]. - The return of Blizzard games like "World of Warcraft" and "Hearthstone" has positively impacted the company's PC game revenue, with further growth expected from the recent return of "Overwatch" [5]. Financial Summary and Valuation Metrics - The company’s projected revenues for 2025, 2026, and 2027 are 120.97 billion yuan, 135.22 billion yuan, and 146.33 billion yuan respectively, with year-on-year growth rates of 14.9%, 11.8%, and 8.2% [7]. - The net profit projections for the same years are 34.23 billion yuan, 38.98 billion yuan, and 42.37 billion yuan, with corresponding year-on-year growth rates of 15.3%, 13.9%, and 8.7% [7]. - The company’s current price-to-earnings (P/E) ratios for 2025, 2026, and 2027 are 14.0, 12.3, and 11.3 respectively, indicating a favorable valuation outlook [7].

Investment Rating - The investment rating for the company is "Buy" (maintained) [1][4][12] Core Views - The company achieved a revenue of 105.3 billion CNY in 2024, with a year-on-year growth of 2.91%, and a net profit of 29.7 billion CNY, reflecting a year-on-year increase of 0.96% [4] - The fourth quarter of 2024 saw a revenue of 26.7 billion CNY, a year-on-year decrease of 1.45% but a quarter-on-quarter increase of 2.05%, with a net profit of 8.8 billion CNY, marking a year-on-year increase of 33.18% and a quarter-on-quarter increase of 34.08% [4] - The company is expected to benefit from new product cycles, with projected net profits for 2025, 2026, and 2027 at 34.2 billion CNY, 39 billion CNY, and 42.4 billion CNY respectively, corresponding to EPS of 10.7 CNY, 12.1 CNY, and 13.2 CNY [4] Revenue and Profitability - The company's revenue from games and related value-added services in Q4 2024 was 21.2 billion CNY, with a year-on-year growth of 1.4% [4] - The company’s online music service revenue grew rapidly, with a 22% increase in subscription revenue for cloud music in 2024, achieving a gross margin of 33.7% [6] - The company’s net profit margin for 2024 was 28.2%, with a projected net profit margin of 28.3% for 2025 [7] Product Performance - The game "Marvel Showdown" launched overseas on December 6, 2024, quickly topped the Steam global sales chart, with over 10 million registered users within 72 hours, and currently surpassing 40 million [5] - The game "Yanyun Sixteen Sounds" saw over 3 million downloads within four days of its domestic launch, with total players exceeding 15 million within two weeks [5] - The return of Blizzard games such as "World of Warcraft" and "Hearthstone" has positively impacted the company's revenue, with the recent return of "Overwatch" expected to further boost earnings [5] Financial Summary and Valuation Metrics - The company’s projected revenues for 2025, 2026, and 2027 are 120.97 billion CNY, 135.22 billion CNY, and 146.33 billion CNY respectively, with year-on-year growth rates of 14.9%, 11.8%, and 8.2% [7] - The projected P/E ratios for 2025, 2026, and 2027 are 14.0, 12.3, and 11.3 respectively, indicating a favorable valuation outlook [7]

Financial Performance - NetEase's net revenue for Q4 2024 was RMB 26.7 billion (USD 3.7 billion), a decrease of 1.4% year-over-year[7] - Youdao's net revenue was RMB 1.3 billion (USD 183.6 million), a decrease of 9.5% year-over-year[7] - NetEase Cloud Music's net revenue was RMB 1.9 billion (USD 257.6 million), a decrease of 5.3% year-over-year[7] - For the fiscal year 2024, total net revenue was RMB 105.3 billion (USD 14.4 billion), up from RMB 103.5 billion in 2023[24] - Total revenue for the fiscal year ended December 31, 2023, was RMB 103,468,159, compared to RMB 105,295,236 in the previous fiscal year[54] Profitability - Gross profit for Q4 2024 was RMB 16.3 billion (USD 2.2 billion), a decrease of 3.3% year-over-year[14] - The net profit attributable to shareholders was RMB 8.8 billion (USD 1.2 billion), with a non-GAAP net profit of RMB 9.7 billion (USD 1.3 billion)[9] - The net profit attributable to shareholders in Q4 2024 was RMB 8.8 billion (USD 1.2 billion), compared to RMB 6.5 billion and RMB 6.6 billion in the previous quarter and year-over-year[22] - The net income from Youdao in 2024 was RMB 5.6 billion (USD 770.7 million), an increase from RMB 5.4 billion in 2023[25] - The basic earnings per share for Q4 2024 was USD 0.38, compared to USD 0.28 in the previous quarter and year-over-year[22] Operating Expenses - Operating expenses totaled RMB 8.5 billion (USD 1.2 billion), a decrease of 15.1% year-over-year[7] - Total operating expenses in Q4 2024 were RMB 8.5 billion (USD 1.2 billion), a decrease from RMB 9.3 billion and RMB 10 billion in the previous quarter and year-over-year, respectively[19] - Research and development expenses for the year ended December 31, 2023, totaled RMB 16,484,910, compared to RMB 17,524,812 for the year ended December 31, 2024[49] Cash and Assets - As of December 31, 2024, the company's net cash balance was RMB 131.5 billion (USD 18 billion), up from RMB 110.9 billion at the end of 2023[34] - Cash and cash equivalents rose significantly from RMB 21,428,902 in 2023 to RMB 51,383,310 in 2024, marking an increase of about 140%[47] - Total assets increased from RMB 185,924,978 in 2023 to RMB 195,991,550 in 2024, reflecting a growth of approximately 5.74%[47] - The total current assets increased from RMB 142,692,585 in 2023 to RMB 153,324,656 in 2024, reflecting a growth of approximately 7.5%[47] Shareholder Returns - The company declared a quarterly dividend of USD 0.24405 per share, payable on March 17, 2025[35] - The company announced a share repurchase plan approved by the board on November 17, 2022, allowing for the repurchase of up to $5 billion of its American Depositary Shares and common stock over a period of 36 months[37] - As of December 31, 2024, the company has repurchased approximately 21.2 million American Depositary Shares for a total of about $1.9 billion under this plan[37] Business Development - The company launched several new games globally, including "Marvel's Contest of Champions," which quickly topped the Steam global sales chart[9] - Youdao achieved a 10.3% year-over-year increase in operating profit for Q4 2024, marking its first positive annual operating profit[12] - NetEase Cloud Music continues to expand its subscription base, driving its music-centric commercialization process[12] - The company plans to expand its market presence and invest in new product development to drive future growth[53] Research and Development - The company is focusing on enhancing its technological capabilities through ongoing research and development initiatives[53] - The company's self-developed team focuses on mobile, PC, and console game development, contributing to a rich product matrix and enhancing user engagement[41] Financial Metrics - The effective tax rate for Q4 2024 was 13.4%, down from 16.1% in the previous quarter and 13.8% year-over-year[21] - The company uses non-GAAP financial metrics, such as net profit attributable to shareholders, to assess operational performance and business planning[45] - Non-GAAP financial metrics exclude stock-based compensation expenses, providing a clearer view of operational performance[45] - The company acknowledges the limitations of non-GAAP financial metrics and encourages a comprehensive review of its financial information[46]

Investment Rating - The report maintains a "Buy" rating for the company with a target price of HKD 180.0, while the current price is HKD 153.8 [4]. Core Insights - The performance of new games such as "Marvel Showdown" and the recovery of "Yanyun Sixteen Sounds" are expected to drive the company's stock price higher. "Marvel Showdown" has shown strong user engagement and sales, with an estimated first-month revenue of RMB 400 million on Steam and a global first-month total revenue expected to reach RMB 1 billion [1][2]. - The company has adjusted its profit forecasts for 2024-2026, increasing the expected net profit to RMB 317.9 billion, RMB 355.0 billion, and RMB 383.0 billion respectively, reflecting a growth of 1.6%, 6.1%, and 7.9% compared to previous estimates [2]. Summary by Sections Game Performance - "Marvel Showdown" has achieved significant online player engagement, reaching 450,000 concurrent users on Steam and ranking high on various sales charts across platforms [1][7]. - "Yanyun Sixteen Sounds" has successfully launched on mobile, topping the iPhone role-playing game download charts and surpassing 10 million players within five days of its release [1]. - "Infinite" has received positive feedback from its closed beta testing, showcasing a variety of gameplay features and potential for expansion in the two-dimensional game market [1]. Financial Projections - The company’s revenue is projected to grow from RMB 96.5 billion in 2023 to RMB 125.0 billion by 2026, with a compound annual growth rate of approximately 7.2% [3][11]. - The Non-GAAP net profit is expected to increase from RMB 31.8 billion in 2024 to RMB 38.3 billion in 2026, indicating a steady growth trajectory [3][11]. Market Position - The report highlights the company's strong position in the gaming industry, with a focus on high-quality game production and successful IP utilization, which is expected to enhance long-term market confidence [1][2].

Investment Rating - The report maintains a "Buy" rating for the company, with a target price of HKD 163, indicating a potential upside of 20.2% from the current price of HKD 137.5 [1][5][11] Core Insights - The company's third-quarter performance has reached a bottom, and the launch of new games is expected to reverse the trend. Revenue for Q3 2024 was CNY 26.21 billion, a decline of 3.9% year-over-year, with net profit attributable to shareholders at CNY 6.5 billion, down 16.7% from the previous year [3][8] - The gaming segment showed resilience, with game revenue at CNY 20.2 billion, a quarter-over-quarter increase of 5%, and a year-over-year increase of 29% for PC games [3][8] - The company has a rich pipeline of new games, including "Yanyun Sixteen Sounds," which achieved 3 million downloads within five days of its PC launch, and several other titles expected to launch in 2025 [4][9] Financial Projections - Revenue projections for 2024-2026 are CNY 105.9 billion, CNY 112.4 billion, and CNY 119.4 billion, with year-over-year growth rates of 2.41%, 6.10%, and 6.20% respectively. Net profits are expected to be CNY 26.7 billion, CNY 30.7 billion, and CNY 36.3 billion for the same period [5][11] - The report employs a segmented valuation approach, assigning a PE ratio of 15x for the gaming business and 5x PS for other segments, leading to a target PE of 16x for 2025 [5][11] Business Segment Performance - NetEase Youdao reported revenue of CNY 1.6 billion in Q3 2024, a year-over-year increase of 2.2%, marking its first profitable third quarter [3][10] - NetEase Cloud Music generated revenue of CNY 2 billion, up 1.3% year-over-year, with a significant increase in subscription revenue contributing to overall growth [10]

Investment Rating - The investment rating for the company is "Buy" (maintained) [6]. Core Insights - The company has received approval for its self-developed game "Infinite" across mobile, client, and console platforms, alongside other titles such as "Top Pursuit" and "Legion War" [9]. - "Infinite" is characterized as a high-freedom, open-world RPG set in a two-dimensional urban environment, featuring diverse activities and modes that enhance user engagement and social interaction [9]. - The global pre-registration for "Infinite" has exceeded 8 million, indicating strong market interest and potential revenue growth post-launch [9]. - The company is also set to launch its martial arts open-world game "Yanyun Sixteen Sounds" for PC on December 27 [9]. Financial Summary - Current stock price is HKD 140.20, with a market capitalization of HKD 4,668.05 billion and a circulating market value of HKD 4,517.90 billion [6]. - The company’s projected financial performance includes revenue growth from HKD 103,468 million in 2023 to HKD 107,781 million in 2024, with a net profit forecast of HKD 29,290 million for 2024 [26]. - The expected EPS for 2024 is HKD 9.1, with a corresponding P/E ratio of 14.5 [26].

Investment Rating - The report maintains a "Buy" rating for NetEase-S (9999 HK) with a target price of HKD 180 0 [1][2] Core Views - NetEase's product cycle has bottomed out with key new games such as *Marvel Rivals* and *Yanyun Sixteen Sounds* set to launch in December 2024 and *Infinity* expected in 2025 [1] - The company's game pipeline is robust with a focus on international IPs and innovative gameplay which could drive future growth [1][18] - Despite short-term revenue pressure due to high base effects in Q3 2024 NetEase's毛利率 exceeded expectations at 62 9% [1] Product Line Summary Key New Games - *Marvel Rivals* a 6v6 hero tactical shooter based on the Marvel IP is set to launch on December 6 2024 with strong pre-registration data indicating potential for significant overseas player acquisition and long-term monetization [1][18] - *Yanyun Sixteen Sounds* an open-world martial arts game is expected to launch on PC by the end of December 2024 with mobile optimization ongoing The game has undergone significant tuning to address earlier concerns and could exceed market expectations [1][25] - *Infinity* an innovative open-world二次元 game is set to begin testing in December 2024 with unique art and gameplay mechanics that could expand NetEase's presence in the二次元 genre [1][31] Classic Games - Flagship games like *Fantasy Westward Journey* and *Justice* showed some year-over-year pressure in Q3 2024 but are expected to stabilize quarter-over-quarter *Fantasy Westward Journey*手游 continues to attract younger users with lighter gameplay [1][39] - *Justice*手游 saw a decline in Q3 2024 due to high base effects but its high user stickiness and回流率 are expected to support its lifecycle [1][51] Other Notable Games - *Eggy Party* saw a decline in third-party rankings partly due to the shift to官网付费 but is expected to maintain its lead over competitors like *DreamStar* [1][52][54] Financial Performance - NetEase's Q3 2024 revenue was RMB 26 21 billion down 3 9% YoY below Bloomberg consensus due to high base effects from games like *Justice* [1][61] - Game and related value-added services revenue declined 4 2% YoY to RMB 20 86 billion while毛利率 improved to 62 9% exceeding expectations [1][62] - Adjusted net profit attributable to母公司 was RMB 7 5 billion down 13 3% YoY [1][62] Valuation and Forecast - The report下调s NetEase's adjusted net profit forecasts for 2024-2026 to RMB 31 29 billion RMB 33 47 billion and RMB 35 51 billion respectively reflecting the impact of high base effects in Q3 2024 [1][88] - The SOTP valuation assigns an 18x PE to the online游戏业务 for 2025 with target price下调 to HKD 180 0 [1][88]

Investment Rating - The report maintains a "Buy" rating for the company, indicating a strong expectation of performance exceeding the market by over 20% [7][10]. Core Insights - The company's performance and valuation are at a low point, with expectations for a turning point approaching. The Q3 pipeline was weak, but Q4 is anticipated to show improvement with new game releases contributing positively [7]. - The company is expected to see revenue growth in 2025, driven by new game launches and a recovering gaming market. The adjusted revenue forecasts for 2024-2026 are 105.6 billion, 116.7 billion, and 122.6 billion respectively [7][9]. - Shareholder returns are expected to be attractive, with significant cash dividends and share buybacks accelerating. The total shareholder return for the year is projected to reach 2.61 billion USD, resulting in a return rate of 4.7% [8]. Summary by Sections Market Data - Closing price is 133.60 HKD, with a market capitalization of 428.96 billion HKD. The stock has a 52-week high of 180.50 HKD and a low of 116.00 HKD [3]. Financial Performance - For Q3 2024, the company reported revenue of 26.21 billion, a year-over-year decrease of 4%. The adjusted net profit was 7.50 billion, down 13% year-over-year [10]. - The company’s revenue and net profit forecasts for 2024-2026 are adjusted to reflect a more conservative outlook, with net profits expected to be 32.08 billion, 35.56 billion, and 37.91 billion respectively [9][10]. Game Segment Performance - The online gaming segment saw a slight decline, while the PC gaming segment experienced significant growth, with a 29% year-over-year increase in Q3 [12]. - The company is launching several new games, including "Fragpunk" and "Marvel: Secret Wars," which are expected to drive growth in 2025 [7]. Shareholder Returns - The company has accelerated its share buyback program, with Q3 buybacks totaling 500 million USD, contributing to a total of 9.6 billion USD in buybacks for the first three quarters of 2024 [8].

Investment Rating - Buy rating with a target price of $108.00 USD / HK$168.05, implying a 26.05% / 24.39% upside potential for the US and HK markets respectively [2] Core Views - Blizzard games' return drives PC gaming revenue growth, with new product cycle expected in 2025 [2] - Q3 2024 revenue of RMB 26.21 billion, down 3.9% YoY, below Bloomberg consensus of RMB 26.59 billion [2] - GAAP net profit of RMB 6.54 billion, down 16.6% YoY, while Non-GAAP net profit of RMB 7.50 billion, down 13.3% YoY [2] - Mobile gaming revenue under pressure due to lack of new titles, while PC gaming revenue grows 29.0% YoY [2] - Youdao achieves record operating profit in Q3, driven by smart hardware and advertising business growth [2] - Cloud Music enters Hong Kong Stock Connect, with Q3 revenue of RMB 2.0 billion, up 1.3% YoY [2] Financial Performance Revenue - Q3 2024 total revenue: RMB 26.21 billion, down 3.9% YoY [2] - Gaming and value-added services revenue: RMB 20.86 billion, down 4.2% YoY [2] - Mobile gaming revenue: RMB 14.3 billion, down 9.7% YoY [2] - PC gaming revenue: RMB 4.55 billion, up 29.0% YoY [2] - Youdao revenue: RMB 1.57 billion, up 2.2% YoY [2] - Cloud Music revenue: RMB 2.0 billion, up 1.3% YoY [2] Profitability - Operating profit margin: 27.3%, down 40bps YoY [2] - GAAP net profit: RMB 6.54 billion, down 16.6% YoY [2] - Non-GAAP net profit: RMB 7.50 billion, down 13.3% YoY [2] - Youdao operating profit: RMB 110 million, up 186% YoY [2] Future Projections - 2024-2026 revenue CAGR: 10.5% [2] - 2024-2026 Non-GAAP net profit CAGR: 8.5% [2] - 2025 PC gaming revenue expected to decline 12% to RMB 21.6 billion [2] - 2025 mobile gaming revenue expected to grow 5.4% to RMB 60.0 billion [2] Business Segments Gaming - Blizzard games' return drives PC gaming growth, with World of Warcraft and Hearthstone contributing to revenue increase [2] - New titles expected in 2025, including Marvel Rivals and Yan Yun Shi Liu Sheng [2] - Pipeline includes Code: Infinity, Marvel Rampage, and Destiny: Rise [2] Youdao - Smart hardware revenue grows 25.2% YoY to RMB 320 million, driven by X7Pro dictionary pen sales [2] - Online marketing revenue grows 45.6% YoY to RMB 490 million, supported by AI optimization [2] Cloud Music - DAU/MAU ratio remains above 30%, with 24.4% paying user ratio [2] - ARPU reaches RMB 6.2 per month, with 730,000 independent musicians on the platform [2] Valuation - Target price of $108.00 USD / HK$168.05, based on 14.9x 2025 PE [2] - Gaming business valued at 1.2x PEG, with 12x PE for Non-GAAP net profit [2] - Youdao and Cloud Music valued based on NetEase's shareholding, with 5% discount applied to group valuation [2]

Investment Rating - The report maintains a "Buy" rating for the company [6][34]. Core Insights - The company reported Q3 2024 revenue of 26.21 billion yuan, a year-over-year decrease of 4% but a quarter-over-quarter increase of 3%. The gross margin for Q3 was 62.9%, down by 0.09 percentage points [2][13]. - Blizzard's return has driven growth in PC games, while mobile games have declined primarily due to a high base from the previous year. Q3 gaming and related services revenue was 20.864 billion yuan, down 4.2% year-over-year [3][21]. - The company has a strong pipeline of new games, including "Marvel: Contest of Champions" and "Yanyun Sixteen Sounds," expected to launch within the year, indicating robust game development capabilities [4][26]. Financial Summary - Q3 2024 GAAP net profit was 6.538 billion yuan, a decrease of 16.57% year-over-year, while Non-GAAP net profit was 7.499 billion yuan, down 13.26% year-over-year [2][13]. - The company forecasts total revenues of 107.2 billion yuan, 120.3 billion yuan, and 125.6 billion yuan for 2024, 2025, and 2026, respectively, with Non-GAAP net profits of 32.8 billion yuan, 35.6 billion yuan, and 37.4 billion yuan for the same years [4][26]. - The estimated fair value per share is 114.61 USD for ADS and 178.44 HKD for H-shares [6][30]. Business Segment Performance - The gaming and related services segment generated 20.864 billion yuan in Q3 2024, with online game revenue at 20.196 billion yuan, a slight decrease of 1.04% year-over-year. Mobile game revenue accounted for 70.8% of online game revenue, totaling 14.299 billion yuan, down 9.71% year-over-year [3][25]. - The education segment, Youdao, achieved revenue of 1.573 billion yuan in Q3 2024, reflecting a year-over-year growth of 2.19% [24]. - Cloud music revenue was 1.999 billion yuan in Q3 2024, with a gross margin of 33%, up 5.58 percentage points year-over-year [24][25]. Future Outlook - The company is expected to benefit from the return of Blizzard games, which has positively impacted PC game revenue. The mobile segment is anticipated to recover with new game launches [4][26]. - The report highlights the company's strong R&D capabilities and the potential for continued success in game development, with a focus on high-quality game output [4][26].