网易-S(09999.HK):游戏业务稳健增长 《蛋仔派对》持续畅销

NetEase -S (09999.HK): The game business is growing steadily, and “Egg Party” continues to sell well

東方證券 ·  03/10  · Researches

22Q4's operating revenue was 25.4 billion, up 4.0% from the same period last year and 3.8% from the previous month. The steady development of games and related value-added services as well as cloud music is the main source of incremental revenue for the company. 22Q4's gross profit margin was 52.24%, a year-on-year decrease of 0.76pp and a month-on-month decrease of 4.03pp. The company's Non-GAAP homing net profit was 4.81 billion, down 27.1% from the same period last year and 35.6% from the previous month.

Games and related value-added services: revenue of 19.086 billion yuan, up 9.7% from the same period last year, up 2.1% from the previous month. Of this total, mobile game revenue was 11.634 billion, down 2.1% from the same period last year and up 2.38% from the previous month, mainly driven by popular mobile games such as "endless Lagrange" and "egg party". The revenue from PC games was 5.887 billion, up 6.74% from the same period last year and 7.93% from the previous month, which was related to the steady performance of popular PC games such as "Dream Journey to the West" and "Forever robbery".

In the online game, "Hidden World record", "Peak Speed" and "A Chinese Odyssey: return" have won the version number. "against the current cold" launched in June 23, is expected to generate larger revenue in Q3.

Youdao: operating revenue was 1.402 billion, up 34.9% from the same period last year and 46.7% month-on-month. The main revenue growth comes from the improvement of the scale effect of the increase in net income from learning services and the increase in sales of smart hardware. In addition, STEAMcourses has made more progress in sustainable development and maintained a healthy track of development.

Cloud Music: revenue is 2.376 billion, up 25.78% from the same period last year, up 0.81% from the previous month. This is mainly due to the growth of revenue from social entertainment services. With the antitrust going on, the upstream copyright cost has been reduced, and the cloud music gross profit margin has continuously expanded, reaching 16.0% in the fourth quarter.

Innovation and other businesses: operating revenue was 2.438 billion, down 35.0% from the same period last year and up 23.9% from the previous month. It is mainly due to the increase in gross profit of NetEase, Inc's strict selection and advertising services.

The game business performed well, the stock games such as "Dream Journey to the West" and "Forever robbery" performed steadily, and the market response to the "egg party" was strong. 23 years of "endless robbery" mobile games, "against the cold" mobile games and other boutiques are expected to bring new increments one after another. Cloud music cost side optimization is significant, promoting the company's profit margin. We forecast that the company's annual return net profit in 23-24-25 will be 254xxx34.5 billion yuan (the original value of 23gam24 is 201gam231, due to the higher-than-expected net profit of Cloud Music and youdao), and the EPS is 7.75scarp 9.24pm 10.49. Using the SOTP valuation, the target price is 127.20 RMB / HK $137.80, maintaining the "buy" rating.

Risk hint

The performance of the new game is lower than expected; the approval of the version number is uncertain; the net interest rate of the game is volatile; and the competition for live broadcasting is intensified.

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