NTES(09999) 广发证券·2024-11-21 03:37Investment 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].