The Zhitong Finance App learned that Guoxin Securities released a research report saying that maintaining the NetEase S (09999) “buy” rating, considering game production efficiency optimization and raising profit expectations, the adjusted net profit for 24-26 is estimated to be 360/386/41.2 billion yuan (margin +8%/+10% /-), respectively, with a target price of HK$201-233. The excellent performance of various new products is expected to catalyze an increase in stock prices. Driven by new products, the bank expects NetEase to enter a period of strong performance starting in 24Q2. “Egg Boy Party” will perform well under strong competition; “Peak and Speed” will continue to expand overseas; and there will be plenty of future reserve products.

According to the report, NetEase's 23Q4 revenue increased 7% year over year, and adjusted profit margin increased 8 pct year over year. 23Q4 achieved revenue of 27.1 billion yuan, an increase of 7% over the previous year. Revenue growth was mainly driven by the mobile game business, partially offset by a decline in revenue from PC games and cloud music. In 23Q4, the company's total operating rate was 37%, an increase of 2 pct over the previous year. Operating expenses increased year-on-year, mainly due to increased marketing expenses and personnel costs due to the launch of new games. The company increased its competitive marketing efforts for “Egg Boy Party” in 23Q4. Non-GAAP net profit was 7.4 billion yuan, up 53% year on year; non-GAAP net profit margin was 27%, up 8 pcts year over year.

The bank said that the company's online game business revenue was 19.54 billion yuan, an increase of 12% over the previous year. Among them, mobile game revenue was 15 billion yuan, an increase of 29% over the previous year, mainly due to the good performance of “Egg Boy Party” and “Peak Speed”. PC game revenue was 4.6 billion yuan, a decrease of 23% over the previous year. The bank estimates that total game turnover increased by about 16% this quarter. In 23Q4, the number of active users of “Against the Cold” reached 100 million; during the Spring Festival in '24, the DAU for “Egg Boy Party” exceeded 40 million. Looking ahead to 24 years, the company has abundant reserve products and sufficient potential for growth. Key products that the company has now received editions include the mobile games “16 Voices of Yan Yun”, “Conjuring”, and “Eternity”. The open world RPG game “Eagle Shoot” will launch on March 28 this year. According to the results conference guidelines, the “Eternity” mobile game is expected to be launched in the second quarter of this year. Currently, the number of reservations on the official website exceeds 13.14 million; the “Eternity” mobile game was launched in 2021, and the first-year mobile game volume was between 4 and 5 billion.