NTES(US:NTES) BOCOM International·2025-05-08 12:32Industry Investment Rating - The report rates the internet industry as "Leading" for the period ending May 2025, indicating an expectation of attractive performance relative to the benchmark index [45]. Core Insights - Domestic mobile game revenue showed a slight increase of 8 million CNY or 8% year-on-year, primarily driven by the game "MDnF" [1]. - Tencent's new game "Delta Action" ranked 6th on the iOS game sales chart as of May 6, 2025, with April revenue exceeding 350 million CNY [1]. - NetEase experienced a year-on-year decline of 5% or 20 million CNY in domestic revenue, mainly due to high base effects from "Nirvana in Fire" [1]. - The report highlights the potential for double-digit growth in overseas mobile game revenue in Q2, despite a 19% decline in Tencent's overseas revenue due to high base effects from "Brawl Stars" [1][21]. Summary by Sections Domestic Mobile Game Performance - In April 2025, the total revenue of tracked top mobile games increased by 4% year-on-year and 2% month-on-month, with a cumulative increase of 5% from January to April 2025 [4][6]. - Tencent's domestic mobile game revenue increased by 8 million CNY or 8% year-on-year, while NetEase's revenue decreased by 5% or 20 million CNY [15][18]. New Game Launches - Tencent's "Delta Action" mobile game launched on April 22, 2025, is estimated to generate 30-40 million CNY in its first month [5]. - NetEase's "Seven Days World" mobile game launched on April 24, 2025, is projected to generate 60-80 million CNY in its first month [5]. Overseas Mobile Game Revenue - Tencent's overseas revenue decreased by 5.3 billion CNY or 19% year-on-year, while NetEase's overseas revenue increased by 70 million CNY or 23% [21]. - The report anticipates that new game contributions will help maintain double-digit growth in overseas mobile game revenue in Q2 2025 [21]. Market Trends and Valuation - The report indicates that the gaming industry is experiencing a normalization in license issuance, which is beneficial for healthy industry development [32]. - The average price-to-earnings ratio for key gaming companies is projected at 18.0 for 2025, with Tencent and NetEase having P/E ratios of 17.1 and 14.3, respectively [43].