NTES(09999) 光大证券·2024-12-05 00:31Investment 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]