NTES(HK:09999) Orient Securities·2024-08-29 12:14Investment Rating - The report maintains a "Buy" rating for the company with a target price of HKD 136.96 [2][5] Core Insights - The company's Q2 revenue reached HKD 25.49 billion, showing a year-over-year increase of 6.1% but a quarter-over-quarter decrease of 5.1%. The growth is primarily attributed to increased mobile game revenue [4][5] - The gross margin for Q2 was 62.95%, up 3.1 percentage points year-over-year, mainly driven by growth in the gross margin of cloud music [4][5] - The company expects new game launches to drive future growth, with projected net profits for 2024, 2025, and 2026 at HKD 29.62 billion, HKD 35.21 billion, and HKD 39.62 billion respectively [5][6] Financial Summary - The company's revenue for 2022 was HKD 96.496 billion, with a year-over-year growth of 10.15%. For 2023, the revenue is projected to be HKD 103.468 billion, reflecting a growth rate of 7.23% [4][6] - The net profit attributable to the parent company for 2022 was HKD 20.338 billion, with a year-over-year growth of 20.65%. The projected net profit for 2023 is HKD 29.417 billion, indicating a growth of 44.64% [4][6] - The earnings per share (EPS) for 2022 was HKD 6.33, expected to rise to HKD 9.16 in 2023 [4][6] Business Segments - Revenue from games and related value-added services in Q2 was HKD 20.06 billion, with a gross margin of 70%, reflecting a year-over-year increase of 2.61 percentage points [5][6] - Cloud music revenue for Q2 was HKD 2.04 billion, with a gross margin of 32.1%, up 5.1 percentage points year-over-year [5][6] - The education segment, represented by Youdao, generated revenue of HKD 1.322 billion in Q2, with a gross margin of 48.2% [5][6]