Market Overview - The Shanghai Composite Index experienced a slight increase of 0.12%, while the Shenzhen Component rose by 0.81% and the ChiNext Index increased by 1.18% as of the close on February 12 [1] - Over 2,700 stocks in the market saw gains, indicating a broad-based rally [1] Sector Performance - The electric grid equipment sector showed strong performance, with companies like Siyi Electric and Sifang Co. reaching new highs, and stocks such as Wangbian Electric and Shun Sodium Co. hitting the daily limit [1] - Other notable sectors included: - Other power equipment: +4.40% [2] - Small metals: +3.23% [2] - Electric grid equipment: +3.02% [2] - Flexible DC transmission: +2.88% [2] - Liquid-cooled servers: +2.83% [2] - Optical fiber concept: +2.56% [2] Declining Sectors - The film and cinema sector faced significant declines, with companies like Huanrui Century and Hengdian Film experiencing limit-downs [2] - Other sectors that saw declines included: - Film and cinema: -5.54% [3] - Short drama games: -2.02% [3] - Cultural media: -1.91% [3] Hong Kong Market - The Hang Seng Index fell by 0.89%, with the Hang Seng Technology Index dropping by 1.68% [4] - Major tech stocks in Hong Kong, including Bilibili, NetEase, and Meituan, saw declines of approximately 4%, while Baidu and Tencent dropped around 3% [4][5]

Core Viewpoint - The A-share market shows positive momentum with significant gains in various sectors, particularly in the small metals, electric grid equipment, and semiconductor industries, while the film and gaming sectors are experiencing declines [3]. Market Performance - The Shanghai Composite Index rose by 0.12% to 4137.06, while the Shenzhen Component Index increased by 0.8% to 14274.93. The ChiNext Index saw a rise of 1.18% to 3323.56, and the STAR Market Index gained 0.93% to 1804.89 [4][12]. - Over 2700 stocks in the market experienced an increase by midday [3]. Sector Highlights - The electric grid equipment sector showed strong performance, with companies like Hailianxun rising over 18% and others reaching their daily limit [4]. - The shipping sector also performed well, with China Merchants Energy hitting its daily limit and achieving a historical high [5]. - The computing power leasing sector saw significant gains, with Yuke Technology hitting its daily limit and other companies like Dazhi Technology and Capital Online also rising [5]. Trading Volume - The total trading volume in the Shanghai and Shenzhen markets exceeded 1 trillion yuan [6]. Currency Movement - The offshore RMB against the US dollar broke the 6.9 yuan mark, indicating a strengthening of the currency [8]. Stock Movements - The film and cinema sector continued to adjust, with companies like Hengdian Film and Bona Film hitting their daily limit down [9]. - AI application stocks in the Hong Kong market showed strength, with Zhiyuan rising over 11% [10].

Core Viewpoint - UBS reports that NetEase's revenue and operating profit for Q4 2025 are projected to be 5% lower than market consensus, with adjusted net profit expected to be 23% below consensus due to investment losses [1] Group 1: Financial Performance - NetEase's deferred revenue shows strong growth of 34% [1] - The company's current price-to-earnings (P/E) ratio is projected at 13.5 times for the next 12 months, which is approximately 0.7 standard deviations below its historical average [1] - UBS believes that historically low P/E ratios often correspond to regulatory or product cycle troughs, but NetEase is not in a similar situation, indicating limited downside potential for the stock price [1] Group 2: Positive Catalysts - Future positive catalysts are expected from the official progress of the dual primary listing plan and the launch of the new game "Forgotten Sea" in Q3 2026 [1] - UBS slightly lowers the target price for NetEase's U.S. stock from $185 to $180 and adjusts the target price for its Hong Kong stock to HKD 280.8, which corresponds to a projected P/E of 21 times for 2026 [1] - UBS maintains a "Buy" rating for NetEase [1]

Core Viewpoint - Morgan Stanley's report indicates that NetEase's management emphasizes the company's role as a pioneer and beneficiary of artificial intelligence technology in the gaming sector, rather than being challenged by AI world models [1] Group 1: Company Developments - NetEase is in communication with regulatory authorities regarding its dual primary listing, having met the trading volume threshold with over 55% of its trading volume on the Hong Kong Stock Exchange last year [1] - The management believes that a clear timeline for the dual listing is not yet established, but they consider it a matter of time [1] Group 2: Industry Environment - The gaming industry is currently in a favorable regulatory environment, with no preliminary discussions on imposing a consumption tax on games or altering the preferential income tax rates for high-tech companies based on R&D intensity [1] - Morgan Stanley notes that a longer deferred revenue cycle is a structural trend driven by increased user engagement [1] Group 3: Product Launch and Financial Outlook - The target launch date for the key game "Forgotten Sea" is set for the third quarter of this year [1] - Morgan Stanley sets a price target of $168 for NetEase's U.S. stock and maintains an "Overweight" rating [1]

Group 1 - Major tech stocks in Hong Kong experienced a decline, with notable drops of approximately 4% for companies such as NetEase, Meituan, Bilibili, and Trip.com, while Baidu and Tencent fell over 3% [1][2] - The Hang Seng Index saw a broader market downturn, with a decline of 1% and the Hang Seng Tech Index dropping by 1.87% [2] - Specific stock performance included Kingdee International down by 4.98%, NetEase down by 4.15%, and Meituan down by 4.11%, among others [3]

Group 1 - The core viewpoint of the report indicates that NetEase's revenue for Q4 2025 is expected to grow by 3% year-on-year to 27.5 billion yuan, which is in line with the firm's expectations but falls short of market expectations by 4% [1] - The non-GAAP operating profit margin is projected to increase by 0.6 percentage points year-on-year to 33.3%, which is 0.6 percentage points higher than the firm's expectations, primarily due to lower-than-expected growth in marketing expenses and a greater-than-expected decline in general and administrative expenses [1] - Non-GAAP operating profit is expected to rise by 5% year-on-year, exceeding the firm's expectations by 1% [1] Group 2 - The firm has set a target price of $160 for NetEase's U.S. stock and maintains a "Buy" rating [1]

Core Insights - NetEase reported a robust financial performance for the fourth quarter and the entire year of 2025, achieving a revenue of 112.6 billion yuan, with its core gaming business demonstrating resilience, particularly with "Dream of the Red Chamber" achieving a quarterly revenue record after 23 years of operation [1] AI Strategy - The management emphasized that while generative AI lowers the entry barrier for game development, it raises the success threshold for top-tier products, shifting the competitive barrier from production capacity to integration capability [3][4] - High-quality private data is deemed more important than computational power, and the application of AI in specific business scenarios is prioritized over the scale of parameters [4] - By 2025, NetEase plans to deploy its AI-native pipeline across various stages of game development, achieving efficiency improvements of up to 300% in certain areas [4] Globalization and Product Success - "Yan Yun Sixteen Sounds," an open-world game, achieved significant global success, ranking second on Steam's global sales chart and topping the iOS download charts in over 60 markets, with over 80 million global users [5] - The success is attributed to the maturity of "Chinese stories, international expression," showcasing that localized cultural content can compete globally if the expression resonates with contemporary player aesthetics [5] Evergreen Game Strategy - "Dream of the Red Chamber" has defied typical industry trends by achieving a quarterly revenue high after 23 years, demonstrating a "counter-cyclical" growth strategy [6] - The management detailed a strategy for revitalizing classic gameplay while optimizing user experience and economic systems to engage both new and existing players [6] New Category Innovations - NetEase is advancing in new game categories, with anticipated releases like "Infinite" and "Forgotten Sea," the latter expected to launch in Q3 2026 [7] - The company is also exploring the auto-chess genre with a unique cultural angle based on Chinese mythology, aiming to differentiate itself in a crowded market [7]

Core Viewpoint - Morgan Stanley's report indicates that NetEase's revenue for Q4 2025 is expected to rise only 3% year-on-year to 27.5 billion yuan, with online gaming revenue increasing by 4% to 21.3 billion yuan, which is 6% lower than the bank's expectations due to slower revenue recognition [1] Group 1: Revenue and Growth - Total game revenue is estimated to grow by 10% year-on-year, indicating a healthy growth level [1] - Deferred revenue is projected to increase by 34% year-on-year to 20.5 billion yuan, reaching a new high [1] Group 2: Profitability - Non-GAAP net profit is expected to decline by 27% to 7.1 billion yuan, which is 25% lower than the bank's expectations, attributed to delayed revenue recognition and losses from equity investments marked to market [1] Group 3: Shareholder Returns - The company declared a dividend of $1.16 per ADS, with a payout ratio of 84%, exceeding the typical payout ratio of 30%, aimed at compensating for limited share buybacks during 2025 [1] - Morgan Stanley has set a target price of $168 for NetEase's U.S. stock and maintains an "Overweight" rating [1]

证券研究报告 网易 (NTES US) 4Q 收入低于预期，游戏递延周期增长 2026 年 2 月 12 日│美国 互联网 网易 4Q25 总营收同比+3%至 275 亿元，低于 VA 一致预期（下同）5%， 主因游戏收入递延周期增加。递延收入超预期 21%，环比提升 10 亿元。经 调整归母净利润同比下降 27%至 71 亿元，低于预期 23%，主因投资损益影 响，拼多多等股票投资减值金额较大。我们预计网易 1H 流水有望边际改善： ①《燕云》全球累计用户达 8000 万，26 年海外全端流水有望达到 20-30 亿元；②《遗忘之海》管理层表示 3Q 有望上线，2 月测试反馈优秀，题材 和美术风格具备差异化优势，我们预计 12 个月流水有望达 25-50 亿元；③ 其他重点储备：《无限大》1 月封闭测试符合预期，中式妖鬼题材自走棋《妖 妖棋》1 月获版号，ARPG 端游《归唐》关注度较高。当前网易估值尚处低 位，我们看好 26 年收入和利润释放，重申"买入"评级。 《燕云》海外放量在即，《遗忘之海》打开 26 年增量空间 4Q 游戏和增值服务收入同增 3%至 220 亿元，其中游戏收入同增 4%至 213 ...

Core Viewpoint - The report from CICC maintains the Non-GAAP net profit forecast for NetEase-S (09999) for 2027, with a target price of HKD 265 / USD 171, indicating an upside potential of 36% / 38% for Hong Kong and US stocks respectively [2][8]. Revenue and Growth - Deferred revenue showed significant growth, with a net increase of CNY 1.04 billion in Q4 2025, exceeding market expectations, suggesting potential revenue release in the future [3][9]. - Game and related value-added service revenue increased by 3% year-on-year in Q4 2025, driven by stable operations of long-standing IPs like "Dream of the Red Chamber" and contributions from "Yanyun Sixteen Sounds" and "Marvel Showdown" [3][9]. - Youdao's revenue grew by 17%, reflecting the effective implementation of its AI-driven strategy, while Cloud Music revenue increased steadily by 5% [3][9]. Profitability and Cost Management - The gross margin improved to 64.2% in Q4 2025, indicating strong cost control capabilities [4][9]. - The absolute amount of operating expenses met expectations, with the sales expense ratio rising to 14%, aligning with the overall marketing investment strategy [4][9]. Shareholder Returns - The dividend for Q4 2025 was USD 1.16 per ADS, with a payout ratio of 83%, maintaining an annual dividend ratio of around 40% [5][9]. - The company has extended its share repurchase program (up to USD 5 billion) until January 2029, having repurchased approximately USD 2 billion by the end of 2025 [5][9].