Jinwu Financial News | According to CCB International Development Research Report, NetEase (09999)'s stock price has fallen 13% this quarter, underperforming the 14% increase in China Internet Index ETF (KWEB) and its main competitor Tencent (00700), mainly due to market concerns about the decline in revenue from NetEase's existing flagship games, adjustments to the profit model of old games, and uncertainty about when new games will be released. The bank believes that better-than-expected first-quarter gaming revenue and management comments during the first quarter earnings conference call have allayed market concerns and are largely reflected in current valuations.

The bank believes that the release of the mobile game version of “Eternity” from July to August and the launch of the PC version of “Against the Cold” in July will be a key catalyst for stock prices. The bank lowered its revenue/profit forecast for the 2024-2026 fiscal year by 4% to 6%, taking into account the mediocre performance of “Tianlong Eight” and management comments after the release of the first quarter of 2024 results. Meanwhile, based on the same 18-fold price-earnings ratio for FY2024, the bank lowered its target price from $135.10/HK$210.74 to $127.10/HK$198.22. Maintain an “outperform the market” rating.