Citigroup's research reports indicate that Netease (09999.HK) recorded a 3.9% year-on-year decrease in net income to 26.2 billion RMB in the third quarter, in line with the bank's forecast, but 1.4% lower than the market's general expectation of 26.6 billion RMB. Non-GAAP net profit was 7.5 billion RMB, with a profit margin of 28.6%, lower by 9.3% than Citigroup's forecast of 8.27 billion RMB, and also 5.9% lower than the market's expectation of 7.97 billion RMB.

The bank believes that the positive factors seen in the third quarter performance include a faster year-on-year growth in PC gaming revenue at 29%, but on the other hand, mobile game revenue did not meet expectations. They will closely monitor management's expectations for the upcoming release of "Yan Yun Sixteen Sound" and recent changes in the gaming team personnel. Citigroup has a "buy" rating on Netease (NTES.US) with a target price of $108 in the U.S. stock market.