Glonghui, May 14 | J.P. Morgan Chase released a report stating that NetEase will disclose first-quarter results next Thursday (23rd). The bank's revenue forecast is 26 billion yuan, up 4% year on year, down 4% from quarter to quarter, 2% lower than market expectations, mainly due to lack of new game launches during the season. However, non-GAAP net profit is predicted to be 8.8 billion yuan, an increase of 16% year-on-year and a quarter-on-quarter increase of 19%, which is 5% higher than market expectations due to the year-on-year expansion of its gross profit from online games. The bank's game revenue forecast for the first quarter of NetEase is relatively conservative. The total game revenue is estimated to be 19.5 billion yuan, an increase of 5% year-on-year, which is flat from quarter to quarter. This is due to the high base of the Spring Festival last year (“Egg Boy Party” was strong) and the lack of major game launches. The bank reiterated that NetEase is the first choice for mainland online game stocks. The target price is HK$200, and the rating is “increased”. The current price is equivalent to 14 times the predicted price-earnings ratio this year, close to the low of the past five years. It is discounted compared to Asian online game stocks, but believes that after the company launched a new game in the next three to six months, the predicted price-earnings ratio is expected to return to 20 times the level, similar to the valuation when the company successfully launched the “Against the Cold” mobile game in June last year.