NTES(HK:09999) Guoxin Securities·2024-08-23 11:39Investment Rating - The investment rating for the company is "Outperform the Market" [4][21]. Core Views - The company reported a revenue growth of 6% year-on-year in Q2 2024, with total revenue reaching 25.5 billion yuan. The growth was primarily driven by mobile gaming and Youdao [1][7]. - The company's Non-GAAP net profit for Q2 2024 was 7.8 billion yuan, a decrease of 13% year-on-year, with a Non-GAAP net profit margin of 31%, down 7 percentage points [1][7]. - The online gaming business generated revenue of 19.27 billion yuan, a 12% increase year-on-year, with mobile game revenue growing by 16% to 14.7 billion yuan [12][14]. - The company has a strong game pipeline, with several new titles expected to launch soon, including "Eternal Return Mobile" and "Yanyun Sixteen Sounds" [14][21]. Financial Summary - For 2024, the company is projected to achieve a revenue of 117.5 billion yuan, representing a 13.2% increase from 2023. The Non-GAAP net profit is expected to be 36.03 billion yuan, a 10.5% increase [3][23]. - The company's gross margin for Q2 2024 was 63%, an increase of 3 percentage points year-on-year, with the gaming and value-added services gross margin at 70% [1][8]. - The total operating expense ratio for Q2 2024 was 36%, up 1 percentage point year-on-year, with a sales expense ratio of 13.7% [1][8]. Business Segment Performance - Youdao's revenue for Q2 2024 was 1.3 billion yuan, a 10% increase year-on-year, with advertising service revenue doubling to 510 million yuan, a 68% increase [15][21]. - NetEase Cloud Music reported a revenue of 2 billion yuan in Q2 2024, a 5% increase year-on-year, with a gross margin of 32.1%, up 5.1 percentage points [18][21].