NTES(09999) 西南证券·2024-08-26 13:43Investment Rating - The report maintains a "Buy" rating for the company [1][3]. Core Insights - The company achieved a revenue of 25.5 billion RMB in Q2 2024, representing a year-on-year growth of 6%. However, the Non-GAAP net profit decreased by 13% to 7.8 billion RMB, primarily due to reduced foreign exchange gains [2]. - The online gaming segment showed robust performance with revenues of 19.3 billion RMB, a 12% increase year-on-year, driven by successful new game launches and a strong pipeline of upcoming titles [2][3]. - Cloud music revenue grew by 4.7% to 2 billion RMB, with an improved gross margin of 32.1%, attributed to accelerated membership growth and better cost control [2]. - The AI-driven education platform, Youdao, reported a revenue of 1.3 billion RMB, up 9.5%, with significant growth in AI subscription services [2]. - The innovative segment remained stable with revenues of 2.1 billion RMB, maintaining its position in the market [2]. Summary by Sections Revenue and Profitability - Q2 2024 revenue was 25.5 billion RMB, up 6% year-on-year. Non-GAAP net profit was 7.8 billion RMB, down 13% [2]. - The gaming segment's revenue was 19.3 billion RMB, a 12% increase, with mobile games contributing 14.7 billion RMB, up 16% [2]. Future Projections - The company expects Non-GAAP net profits of 35.5 billion RMB, 38.3 billion RMB, and 41.3 billion RMB for 2024, 2025, and 2026 respectively, with corresponding EPS of 10.26 RMB, 11.09 RMB, and 11.95 RMB [3][11]. Business Segments - Cloud music revenue is projected to grow, with a focus on enhancing user experience and subscription services [8]. - Youdao's revenue is expected to continue its upward trend, driven by AI integration and educational services [8]. - The innovative segment is anticipated to maintain stable growth, focusing on product quality and market demand [8].