Jinwu Financial News | Bank of Commerce International Development Research Report said that NetEase (09999)'s fourth quarter results fell short of expectations, mainly due to lower game revenue than expected, increased investment in game promotion, and “Egg Boy Party” coping with competition and increased launch before the competition was launched. Mobile game revenue for the fourth quarter was +29% year-on-year, which was lower than expected due to seasonal fluctuations and differences in revenue amortization cycles. “Egg Boy Party” widens the gap between sales and competitors, proving that marketing investment brings considerable returns. As a big DAU game, the expansion of the number of users is beneficial to revenue potential.

The bank fine-tuned revenue and profit forecasts and maintained a target price of 135/HK$206, corresponding to 18 times the price-earnings ratio of the 2024 game. Short-term investment in marketing expenses was exchanged for “Egg Boy Party” DAU reaching a record high, bridging the gap between turnover and competition. It is expected that marketing expenses will drop and maintain the purchase rating.

The bank expects mobile games to be stable month-on-month in the first quarter, with a 12% year-on-year increase, and a 14% increase in game revenue for the whole year. The bank expects the first-month turnover of “Conjuring” to reach 500 to 800 million yuan. “The 16 Voices of Yan Yun” and “Eternity Mobile Game” are all expected to reach > 800 million yuan. The games are differentiated in IP, gameplay, and graphics. Referring to the previous experience of “Mobile Game Against the Water Cold,” it is expected to expand new gamers for the company.