CICC released a research report stating that considering netease (09999.HK) had slightly lower-than-expected performance in some new games in the third quarter, the group's quarterly revenue is expected to decrease by 6% year-on-year, to 25.7 billion RMB, while non-GAAP net profit is expected to drop by 18% to 7.1 billion RMB. The bank recommends investors to pay attention to the progress of new games and upcoming regulations.
CICC predicts that netease's third-quarter online gaming revenue will decline by 7% year-on-year, with mobile gaming dropping by 11%. This is mainly due to the high base number impact from new game launches such as "Revelation Mobile", "Top Speed", and "All-Star Streetball Party" during the same period last year. In terms of sales expenses, the bank expects the sales expense ratio to be 13.5% during the period, maintaining overall stability.
Considering weaker-than-expected performance of some games within the group, uncertainties in the progress of upcoming product launches, and potential negative impact of exchange gains and losses on profits within the quarter, the bank has downgraded the company's net profit forecast for the next two years by 5% and 6%, to 31.1 billion and 34.2 billion RMB, respectively, maintaining an 'outperform the industry' rating, and lowering the target price by 16% to 173 RMB.