HANGZHOU, China, July 17, 2024 /PRNewswire/ -- Cloud Music Inc. (HKEX: 9899, "NetEase Cloud Music" or the "Company"), a leading interactive music streaming service provider in China, today announced that it has entered into a special partnership with Timbaland's Beatclub™ ("Beatclub") to unleash creativity and foster innovation across China's growing music scene. Under the collaboration, hundreds of signature, premium Beatclub beats will be introduced to NetEase Cloud Music's Beatsoul, China's premier beat ...

Investment Rating - The report maintains a Buy rating on NetEase Inc. (NTES/9999.HK) with a 12-month target price of US$125/HK$196 [7][38]. Core Insights - Improving fundamentals are noted, particularly with the confirmed release date of Naraka Bladepoint Mobile on July 25, 2024, and positive feedback from the second round of testing [2][38]. - The report highlights that the competition risk from Tencent's Honour of Fight is likely milder than expected, suggesting potential coexistence of both games within the same genre [3]. - The potential revamp of the publishing team for Where Wind Meet PC is mentioned, indicating a strategic move in response to market conditions [6][13]. Summary by Sections Game Launch and Market Response - Naraka Bladepoint Mobile's launch announcement led to a 6% increase in NetEase's share price on June 26, 2024, aligning with market expectations [2]. - Positive feedback from the second round of testing for Naraka Bladepoint Mobile indicates improved performance optimization [2][12]. Competitive Landscape - The report assesses Tencent's Honour of Fight, suggesting that its earlier stage of development may allow for coexistence with Naraka Bladepoint, despite both being in the action royale genre [3]. - The report notes that 88 out of 170+ FWJ PC servers are experiencing currency depreciation week-over-week, while some servers show early signs of improvement [3][13]. Valuation and Financial Metrics - The report indicates a total return potential of 34.4% based on the current share price of US$93.04 [17][39]. - Financial metrics include a projected revenue increase from Rmb 103,468.2 million in 2023 to Rmb 132,829.2 million by 2026, alongside an EBITDA growth from Rmb 33,966.2 million to Rmb 44,162.1 million in the same period [40].

Investment Rating - The report maintains a "Buy" rating for the company [4][21]. Core Views - The launch of the mobile game "Naraka: Bladepoint" on July 25 is expected to drive significant growth in the mobile gaming sector, with over 30 million pre-registrations [1]. - The company is projected to achieve mobile game revenues of 2 billion RMB in Q3 and 4.4 billion RMB in 2024, contributing 8% and 5% to total mobile revenue respectively [1]. - Despite a slowdown in mobile game growth and adjustments in PC games, the current stock price reflects these challenges, indicating potential for valuation recovery in the second half of 2024 [2]. - The anticipated recovery in PC game revenue and the new mobile game launch enhances the certainty of revenue growth [3]. Financial Projections - The company expects a 15% year-on-year increase in mobile game revenue for Q2, with a slight decline of 9% quarter-on-quarter due to seasonal factors [7]. - For the full year, mobile game revenue is projected to grow by 13% [7]. - Revenue forecasts for the upcoming years are as follows: - 2024: 110.16 billion RMB (6.5% growth) - 2025: 121.36 billion RMB (10.2% growth) - 2026: 132.49 billion RMB (9.2% growth) [8]. - Net profit is expected to reach 33.02 billion RMB in 2024, with a slight increase to 35.84 billion RMB in 2025 [8]. Market Performance - The company's stock closed at 96.74 USD, with a target price of 117.00 USD, indicating a potential upside of 20.9% [3][21]. - The stock has shown a year-to-date change of 3.84% [5]. Game Revenue Breakdown - The breakdown of game revenue for Q2 2024 is as follows: - Total revenue: 25.11 billion RMB - Mobile games: 14.54 billion RMB - PC games: 4.07 billion RMB [18]. Valuation Metrics - The report suggests that the current valuation is below the industry average, with a projected P/E ratio of 18 times for the gaming business in 2024 [2]. - The company’s market capitalization is approximately 120.26 billion USD [5]. Conclusion - The report emphasizes the positive outlook for the company driven by new game launches and expected recovery in revenue, supporting the "Buy" rating [2][3].

Investment Rating - The report maintains an "OUTPERFORM" rating for the company with a target price of US$116 based on a 15x FY24E core NP valuation [3][27]. Core Insights - The adjustments made to the game "梦幻西游" (Dream of the West) are expected to extend its lifecycle, despite market concerns leading to a stock price decline of over 10% since May 21 [27]. - The negative impacts of these adjustments have already been reflected in Q1 2024, with signs of recovery observed in recent gaming performance [27]. - The company is anticipated to benefit from a rich pipeline of games set to launch in Q3 2024, which could provide significant revenue flexibility [21][42]. Summary by Sections - The economic system of "梦幻西游" has remained relatively stable over the past 20 years, with the average price of in-game currency (梦幻币) maintaining around 237 RMB [28]. - The game employs a unique monetization strategy that includes point cards, transaction commissions, and in-game purchases, with point card revenue being the largest contributor [8][30]. - Recent adjustments aimed at reducing random probability gameplay and item liquidity are intended to combat non-standard trading behaviors and enhance the core gaming experience [39][41]. - The adjustments have led to a recovery in gold prices in over 40% of the game servers, indicating a positive trend for player engagement and potential revenue recovery [32][39].

Investment Rating - The report maintains a "Buy" rating for the company [2][9][10] Core Insights - The company's Q1 2024 revenue reached 26.85 billion RMB, a year-on-year increase of 7%, which is in line with consensus expectations. Adjusted net profit was 8.51 billion RMB, up 12% year-on-year, slightly exceeding consensus by 2.2% [4][9] - The gross margin improved to 63.4%, surpassing consensus expectations by 1.6 percentage points. The gaming segment continues to show strong growth, with online gaming revenue at 20.4 billion RMB, a 10% year-on-year increase [4][5] Financial Performance - Q1 2024 revenue breakdown shows online gaming revenue at 20.4 billion RMB, with mobile gaming revenue at 16.1 billion RMB, up 19% year-on-year, marking a historical high [5][11] - The company has adjusted its revenue forecasts for 2024 and 2025 to 112.2 billion RMB and 122.5 billion RMB respectively, while also increasing the net profit forecasts for the same years to 34.1 billion RMB and 37.9 billion RMB [9][11] Business Segments - The gaming segment remains robust, with deferred revenue indicating a strong foundation for future growth. The upcoming FPS game "Firefly Assault" is set to launch on June 6, with other key titles expected in the summer [5][11] - Cloud music revenue grew by 4% year-on-year, with a gross margin of 38%, reflecting significant improvement in profitability. The main app has undergone a major revision to focus on music discovery [6][11] Shareholder Returns - The company announced a cash dividend of 0.495 USD per ADR in Q1, totaling 2.26 billion RMB, with a payout ratio of approximately 26.6%. The total shareholder return from dividends and buybacks in 2023 was about 2.3 billion USD, corresponding to a return ratio of nearly 4% [9][11]

Investment Rating - The investment rating for the company is "Outperform the Market" [3][24][13] Core Insights - In Q1 2024, the company achieved a revenue of 26.9 billion yuan, representing a year-on-year growth of 7%. The growth was primarily driven by mobile gaming and Youdao, partially offset by a decline in PC gaming revenue [22][29] - The company's overall gross margin improved to 63%, up by 4 percentage points year-on-year, with gaming and value-added services gross margin at 69.5%, an increase of 3 percentage points [22][27] - Non-GAAP net profit for Q1 2024 was 8.5 billion yuan, a 12% increase year-on-year, with a Non-GAAP net profit margin of 32%, up by 1 percentage point [22][29] Summary by Sections Gaming Business - Online gaming revenue reached 20.43 billion yuan, a 10% increase year-on-year, with mobile gaming revenue at 16.1 billion yuan, growing by 19% due to strong performances from titles like "Party of Eggs" and "Identity V" [22][30] - PC gaming revenue decreased by 15% to 4.4 billion yuan, mainly due to the suspension of Blizzard games. The company has renewed its distribution agreement with Blizzard to reintroduce their games to the Chinese market [22][30] - The company plans to complete adjustments to "Fantasy Westward Journey" in the first half of this year to enhance long-term player engagement [22][31] Youdao - Youdao's net revenue for Q1 2024 was 1.4 billion yuan, a 20% increase year-on-year, with advertising revenue doubling to 490 million yuan, marking a historical high [22][32] - The strategic focus on digital content services and AI-driven subscription services has led to profitability over two consecutive quarters [22][32] Cloud Music - Cloud Music reported a net revenue of 2 billion yuan in Q1 2024, a 4% increase year-on-year, with a gross margin of 37.97%, up by 15.5 percentage points due to improved cost control [23][33] Financial Forecast - The company maintains a robust product pipeline with expected releases such as "Eternal Return" and "Yanyun Sixteen Sounds" in the second half of the year. The adjusted net profit forecasts for 2024-2026 are 36 billion, 38.6 billion, and 41.2 billion yuan respectively [22][13][26]

Investment Rating - The report maintains a "Buy" rating for the company with a target price of USD 117.00, indicating a potential upside of 23.5% from the current closing price of USD 94.74 [2][15][21]. Core Insights - The company's Q1 performance met expectations, with revenue increasing by 7% year-on-year to RMB 26.9 billion, aligning with Bloomberg's forecast. Adjusted net profit rose by 12% year-on-year to RMB 8.5 billion, exceeding Bloomberg's expectations by 2% [2][4]. - The gaming segment showed varied performance, with mobile game revenue increasing by 19% year-on-year, while PC game revenue decreased by 15%. The overall gaming gross margin improved by 2.8 percentage points to 69.5% [2][3][4]. - The company has several new game launches planned for the summer, which are expected to drive further growth in mobile game revenue [3][13]. Summary by Sections Financial Performance - Q1 revenue was RMB 26.9 billion, a 7% increase year-on-year, with adjusted net profit at RMB 8.5 billion, a 12% increase [2][6]. - Marketing expenses rose by 38% to RMB 4 billion, accounting for 15% of revenue [2][6]. - Game revenue breakdown: mobile games up 19%, PC games down 15%, and console games up 10% [2][6]. Future Outlook - The company expects a 10% increase in gaming revenue for 2024, despite a 2% downward adjustment in overall revenue forecasts due to short-term adjustments in PC gaming [4][6]. - The target price was adjusted from USD 127 to USD 117, maintaining the "Buy" rating based on a 2024 gaming business P/E ratio of 18x [4][21]. Game Development and Releases - The company has announced over 10 new games and updates across various genres, including MMO and action games, with several titles set to launch in the summer of 2024 [13][3].

Investment Rating - The report maintains a "Buy" rating for the company [4]. Core Views - The company reported Q1 2024 revenue of 26.852 billion RMB, a year-over-year increase of 7.21%. The gross profit for Q1 was 17 billion RMB, with a gross margin of 63.37% [2][8]. - Mobile gaming showed steady growth, while PC gaming experienced a decline. Q1 gaming and related value-added services revenue was 21.46 billion RMB, up 7% year-over-year, with mobile games accounting for 78.6% of online gaming revenue [2][19]. - The company has a strong pipeline of self-developed games, with several titles set to launch in the coming months, which is expected to bolster future performance [2][19]. Summary by Sections Financial Performance - Q1 2024 revenue was 26.852 billion RMB, with a gross profit of 17 billion RMB and a gross margin of 63.37%. Sales expenses were 4.022 billion RMB, while R&D expenses were 4.175 billion RMB, representing 15.55% of revenue [2][8][19]. - The company reported a GAAP net profit of 7.634 billion RMB and a Non-GAAP net profit of 8.511 billion RMB, with Non-GAAP net profit margin at 31.70% [2][19]. Gaming Business - The gaming segment generated 21.46 billion RMB in revenue, with online gaming revenue at 20.43 billion RMB, reflecting a 9.84% increase year-over-year. Mobile games contributed 16.058 billion RMB, up 19.41%, while PC games saw a 15.15% decline [2][19]. - New game launches such as "射雕" and "世界之外" had limited impact, but existing titles like "逆水寒" and "蛋仔派对" performed well during the Spring Festival [2][19]. Future Outlook - The company expects to gradually recover from the impact of PC gaming adjustments, with Blizzard's return to the Chinese market expected to support this segment [2][19]. - Revenue projections for 2024-2026 are set at 111.9 billion RMB, 126.7 billion RMB, and 138.9 billion RMB, respectively, with Non-GAAP net profits expected to be 34.5 billion RMB, 38.7 billion RMB, and 42.4 billion RMB [2][19][25].

Investment Rating - The report maintains a "Buy" rating for the company with a target price adjusted to HKD 173 / USD 111, reflecting a potential upside of 22% from the current price of HKD 141.5 / USD 94.74 [3][4][12] Core Insights - The company's Q1 2024 revenue reached RMB 26.9 billion, a year-on-year increase of 7.2%, slightly above market expectations. The adjusted net profit was RMB 8.5 billion, up 31.7% year-on-year, also exceeding market forecasts [3][6] - The gaming segment continues to show strong growth, with game revenue at RMB 20.4 billion, a 10% increase year-on-year, driven by popular titles such as "逆水寒" and "蛋仔派对" [3][6] - The company is set to launch several new games in Q3, which are expected to act as catalysts for growth despite recent adjustments to existing games [3][6] Financial Performance Summary - Revenue projections for FY24E have been slightly adjusted downwards by 1% to RMB 111.6 billion, with adjusted net profit forecasted at RMB 33.6 billion [3][6] - The company’s gross margin improved to 63.4%, up 3.9 percentage points year-on-year, while the adjusted net margin increased to 31.7%, up 1.5 percentage points [3][6] - The report outlines a steady growth trajectory with revenue expected to reach RMB 130.1 billion by FY26E, with a compound annual growth rate (CAGR) of 6.5% [6][10]

Investment Rating - The report maintains a "Buy" rating for the company [4] Core Insights - In Q1 2024, the company reported revenue of 26.85 billion (yoy +7.2%, qoq -1.1%), with a decline attributed to reduced income from Youdao, while year-on-year growth was driven by increased mobile game net revenue [1] - The gross margin for Q1 was 63.4% (yoy +3.9pp, qoq +1.4pp), primarily boosted by growth in cloud music [1] - Non-GAAP net profit attributable to the parent company was 8.51 billion (yoy +12.5%, qoq +15.3%), while GAAP net profit was 7.63 billion (yoy +13%, qoq +16%) [1] - The total revenue from games and related value-added services was 21.46 billion (yoy +6.9%, qoq +2.6%), with growth driven by new game releases and continuous content innovation [1] - The company has a rich product pipeline, with several new games expected to launch in 2024, which are anticipated to drive revenue growth [2] Financial Summary - The company forecasts net profit attributable to the parent company for 2024-2026 to be 33.6 billion, 38.5 billion, and 41.7 billion respectively [2] - The target price is set at 164.63 HKD / 148.82 CNY, based on a sum-of-the-parts (SOTP) valuation [2] - The company’s revenue is projected to grow from 117.6 billion in 2024 to 146.6 billion in 2026, with a compound annual growth rate (CAGR) of 7.63% [6][9]