Citi reported that netease-S (NTES.US) third-quarter performance met the firm's expectations. Total revenue was 26.2 billion yuan, a 4% decrease compared to the same period last year; adjusted EBIT was 8.1 billion yuan, a 3% decrease year-on-year, both approximately 1% higher than the firm's forecast. Gaming revenue was relatively weak, down 1% year-on-year due to a 10% decline in mobile game revenue compared to the same period last year, with significant revenue drops for "Nights of the Wind" and "Egg Party". However, PC gaming revenue exceeded expectations, rising 29% year-on-year, thanks to the return of Blizzard titles which generated greater popularity than before.

Citi expects netease's gaming revenue in the fourth quarter to grow approximately 6% year-on-year, with even higher growth anticipated in the first half of next year, benefiting from Blizzard's contributions and a lower base. The PC version of "The Sixteen Sounds of Yan Yun" will be launched in December first; its successful mobile version will help sustain growth momentum into the second half of next year. The recommendation for US stocks remains "outperform".