Core Viewpoint - NetEase issued a statement addressing recent media and social media speculation regarding the former COO's new entrepreneurial ventures and related controversies, clarifying that these matters do not represent the company's position [1] Group 1: Company Background - The former COO, Zhan Zhonghui, joined NetEase in 1999, starting as a programmer and eventually becoming the COO before leaving the company in 2011 [1] - After leaving NetEase, Zhan founded JianYue, which was acquired by Alibaba in 2017, and later established Lingxi Interactive Entertainment in 2019, where he served as the head of game operations [1] Group 2: Recent Developments - In March 2024, Zhan announced via internal email that he would be stepping down from his position at Lingxi [1] - Following this, he indicated through social media that he would focus on developing content-driven single-player games [1] - On September 4, 2023, it was noted that Zhan was recruiting talent for his new single-player game project [1]

Core Viewpoint - NetEase issued a statement addressing recent media and social media rumors regarding the former COO's new venture and related disputes, clarifying that the individual left the company in 2011 and that any controversies are not representative of NetEase's position [1] Group 1 - The former COO, Zhan Zhonghui, joined NetEase in 1999 and held various positions, including Director of Online Gaming Division and COO, before leaving in 2011 to start his own company [1] - Zhan founded JianYue after leaving NetEase, which was acquired by Alibaba in 2017, and later established Lingxi Interactive Entertainment in 2019, where he has been a long-term head of gaming business [1] - In March 2024, Zhan announced via internal email that he would be stepping down from his position, and a year later, he expressed intentions to focus on content-driven single-player games [1] Group 2 - On September 4, a social media user discovered that Zhan was recruiting talent for his new single-player game project [1]

Investment Rating - The report indicates a positive investment outlook for the gaming sector, highlighting its strong performance compared to other sub-industries within the media and internet sectors [3][5]. Core Insights - The gaming industry is experiencing significant growth, with mobile game market size increasing by 16% year-on-year in the first half of 2025, while PC games show a 5% increase [3][14]. - The report emphasizes the high demand for entertainment consumption, particularly in gaming, music, and trendy toys, while long-form video content has reached a low point [3][8]. - Cloud computing and AI applications are accelerating, with notable revenue growth in cloud services, particularly from Alibaba Cloud and Kingsoft Cloud, which reported year-on-year growth of 26% and 24% respectively [3][8]. - The advertising sector shows resilience, particularly in short video platforms and elevator advertising, with initial signs of AI integration [3][8]. - The internet healthcare sector is witnessing an uplift in market conditions, indicating a positive trend [3][8]. Summary by Sections 1. Overview - The report summarizes the performance of the media and internet sectors, noting the standout performance of the gaming industry [3][4]. 2. Entertainment Consumption - The gaming, music, and trendy toy IPs are thriving, while long-form video content is struggling [3][4]. - The gaming sector's revenue growth is driven by regulatory easing, increased demand from younger users, and innovative overseas strategies [3][14]. 3. Cloud Computing and AI Applications - Cloud services are experiencing accelerated growth, with significant investments from major players like Alibaba and Tencent [3][8]. - AI applications are beginning to monetize effectively, particularly in emotional consumption and productivity tools [3][8]. 4. Advertising - The advertising sector remains robust, with short video platforms and elevator ads showing resilience [3][8]. 5. Internet Healthcare - The report notes an improvement in the internet healthcare sector's market conditions [3][8]. 6. Publishing - The publishing sector is experiencing flat revenue growth, but tax exemptions are helping to restore profit margins [3][8].

Group 1 - The core viewpoint of the reports indicates that Tencent Holdings is expected to maintain a stable growth in gaming revenue, with a projected annual growth rate of 16%, despite a decline in revenue from older games [1] - Tencent's domestic gaming revenue saw a year-on-year decrease of 2.2 billion yuan (10%), primarily due to the high base effect from "MDnF," although this was partially offset by new game launches [1] - Tencent's overseas gaming revenue increased by 470 million yuan (9%) year-on-year, driven by new game contributions that mitigated the high base effect from "Brawl Stars" [1] Group 2 - NetEase's mobile game revenue maintained a year-on-year increase of 200 million yuan (3%), with new games and "Party Animals" contributing to offset the high base effect from "Nirvana in Fire" [2] - "Party Animals" performed well, maintaining over 1 billion yuan in monthly revenue in August, boosted by a new anniversary version and summer operations [2] - New game highlights include Tencent's "Valorant: Source Action," which reached a peak of 4th on the domestic iOS game sales chart, with estimated first-month revenue of 500-700 million yuan [2]

Group 1 - Tencent's gaming revenue is expected to grow by 16% for the year, despite a decline in domestic game revenue due to high base effects from previous titles [1] - New game launches are expected to offset the decline in older game revenues, with a strong pipeline of upcoming titles [1] - Tencent's overseas revenue increased by 4.7 billion yuan, driven by games like "Clash Royale," which saw significant growth in both year-on-year and month-on-month comparisons [1] Group 2 - NetEase's mobile game revenue maintained a year-on-year increase of 2 billion yuan, supported by new titles and the performance of "Egg Party" [2] - The overseas revenue for NetEase grew by 0.5 billion yuan, benefiting from new game releases [2] - Upcoming new games include Tencent's "Valorant: Source Action," which is projected to generate 5-7 billion yuan in its first month, and NetEase's "Destiny: Stars," expected to exceed 1 billion yuan in its first month [2]

Core Viewpoint - Morgan Stanley's research report indicates that NetEase's stock price has recently outperformed the Hang Seng Index, driven by strong performance of the free version of "Fantasy Westward Journey" and expectations of a shift to Hong Kong as the primary listing location [1] Group 1: Stock Performance and Market Sentiment - The strong performance of the third season of the free version of "Fantasy Westward Journey" is a key factor in the stock's recent success [1] - There is a strong market sentiment in the domestic online gaming industry, contributing to the positive outlook for NetEase [1] Group 2: Short-term Outlook and Ratings - The company is expected to maintain positive stock price momentum in the next 1 to 2 months due to the aforementioned factors [1] - Despite the optimistic short-term outlook, Morgan Stanley maintains a "neutral" rating on NetEase with a target price of 215 HKD, citing uncertainties in the company's fundamentals over the next 6 to 12 months [1] Group 3: Revenue Growth and Game Releases - Future revenue growth is expected to slow down due to high comparison bases from Activision Blizzard's domestic revenue and other games like "Yanyun Sixteen Sounds" and "Marvel: Duel" [1] - There is uncertainty regarding the release timing of new games, with no official confirmation on the launch dates for "Forgotten Sea" and "Infinity" [1]

Group 1 - The core viewpoint is that NetEase, Inc. (NASDAQ: NTES) is recommended for a "Buy" rating due to favorable regulatory changes and a positive Q3 preview [1] - The research service focuses on value investors looking for Asia-listed stocks with significant price and intrinsic value discrepancies, emphasizing deep value balance sheet bargains and wide moat stocks [1][2] - The author provides a range of watch lists with monthly updates for value investors, particularly targeting the Hong Kong market [2]

Group 1 - The Hang Seng Index increased by 0.3%, while the Hang Seng Tech Index rose by 0.57% [1] - NetEase saw a rise of over 3%, NIO and JD Group increased by over 2%, and Xpeng Motors grew by over 1% [1] - The major bank's technology company experienced a 36.36% increase on its first day of trading [1]

Group 1 - The China Golden Dragon Index has shown significant upward movement, with leading companies like Alibaba and NetEase performing exceptionally well, which has increased market attention [3][9] - Major component stocks such as Alibaba and NetEase have seen price recoveries due to steady progress in e-commerce, cloud computing, and stable growth in gaming and music sectors, respectively [3][7] - Other internet companies like JD.com, Pinduoduo, and Baidu have also recorded varying degrees of price increases, indicating a sector-wide positive effect [3][4] Group 2 - The improvement in the external macroeconomic environment is a key driver behind the recent index strength, including expectations of potential interest rate cuts by the Federal Reserve due to declining inflation and slowing job market growth [4][7] - The weakening of the US dollar has led to a reallocation of international funds towards emerging market assets, benefiting Chinese concept stocks [7] - Positive signals in US-China relations regarding trade and regulatory communication have reduced uncertainties, enhancing investment outlook [7] Group 3 - The recent inflow of overseas institutional funds into Chinese concept stocks indicates a recovery in market sentiment, with large asset management firms increasing their allocations [5][7] - The structural characteristics of this rally show that leading companies are driving the initial price increases, with smaller market cap companies likely to follow suit in subsequent market movements [6] Group 4 - Alibaba's steady development in e-commerce and ongoing advancements in cloud computing and artificial intelligence have bolstered market confidence, supported by improved corporate governance and share buyback plans [7] - NetEase maintains a stable growth trajectory through its gaming products and expansion of its music platform [7] - JD.com and Pinduoduo are strengthening their market positions through supply chain management and differentiated competition strategies [7] - Baidu continues to invest in artificial intelligence and autonomous driving, opening up long-term growth opportunities [7]

Group 1 - The Hong Kong stock market, represented by the Hang Seng Technology Index ETF (513180), opened strong on September 9, with significant gains in major holdings such as Alibaba Health, NetEase, Kuaishou, Alibaba, NIO, JD Group, and SMIC, with NetEase reaching a historical high of 230.8 HKD [1] - The game "Destiny: Rising," developed by NetEase and authorized by Bungie, launched overseas on August 28, achieving over 10 million pre-registrations within the first 10 days. It topped the free charts in seven iOS markets and reached the first position in the US iOS download chart [1] - NetEase's Blizzard games are resuming operations, and titles like "Egg Party" have performed well during the summer. New releases such as "Destiny: Rising" and "Diablo II" are expected to drive growth in Q3 [1] Group 2 - The Hang Seng Technology Index ETF (513180) is currently in a historically undervalued range. With continuous inflow of southbound funds and the potential start of a new interest rate cut cycle in the US, the Hong Kong market may experience a "catch-up" rally in September [2] - The ongoing anti-involution policies, combined with Alibaba's better-than-expected earnings report and rapid iterations in AI large models, suggest that the Hang Seng Technology Index may shift focus from "takeout involution" back to AI narratives, indicating potential for valuation reconstruction [2]