Nomura's research reports indicate that Netease (09999.HK) had weaker-than-expected performance in the third quarter of this year. Revenue for the period decreased by 4% year-on-year, lower than the market's consensus by 1%; non-GAAP profit decreased by 13% year-on-year, lower than the market's expectations by 6%, but 4% higher than the bank's forecast.

Nomura mentioned that Netease's performance in the third quarter in PC and mobile gaming business showed differentiation. Specifically, mobile game revenue decreased by 10% year-on-year, compared to the bank's forecast of an 8% decline; PC game revenue increased by 29% year-on-year, while the bank expected a 7% increase; deferred game revenue turned positive, rising by 17% for the quarter, exceeding the bank's 5% expectation.

Nomura believes that the above performance bodes well for Netease's fourth-quarter performance outlook, with online gaming business expected to recover in the 2025 fiscal year. In addition, Netease is expected to launch the games "Yanyun Sixteen Sounds" and "Marvel Fighting" in the fourth quarter. The bank thinks that these initiatives will strengthen Netease's gaming portfolio, particularly in the PC gaming business in the fourth quarter.

Nomura has raised Netease's H share target price from 157 yuan to 159 yuan, maintaining a "buy" rating.

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