NetEase delivered a mediocre set of results for the last quarter as it failed to meet market expectations with respect to net revenues. The company’s legacy titles, including the Westward Journey Online series and Fantasy Westward Journey Online did perform well and helped deliver an earnings beat. The company’s new game, the Egg Party, hit the Chinese market by storm this quarter. Its award-winning adventure game, Sky also delivered a strong performance. With an excellent Halloween update in the quarter, it surged to the top position on China’s iOS top growth chart. While experiencing some significant progress in the causal games, NetEase has also maintained its strong preference for the hard-core genre. Youdou achieved strong revenues for the first time ever. Also, it launched the Youdou Smart Learning Pad X10, which has an improved learning dashboard. The STEAM courses delivered strong growth in the quarter. The company recently received license approvals for several exciting titles like Badlanders, Racing Master, and Justice mobile games. In its efforts to expand globally, NetEase acquired Canada-based SkyBox Labs. The company also announced the establishment of a new global game studio, Spliced. We give NetEase a ‘Hold’ rating with a revised target price.
Our Report Structure:
⦁ Company Overview
⦁ Investment Thesis
⦁ Key Drivers
⦁ Historical Quarterly Statement Analysis – Income Statement & Cash Flows
⦁ Historical Quarterly Balance Sheet Analysis
⦁ Historical Annual Financial Statement Analysis
⦁ Analysis Of Key Financial Ratios
⦁ Financial Forecasts For 3 Years
⦁ Forecasting The Capital Structure & Net Debt
⦁ Discounted Cash Flow Valuation
⦁ Trading Multiples
⦁ Key Risks
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