Guohai Securities·2024-03-02 16:00Investment Rating - The report maintains a "Buy" rating for the company [1] Core Views - The company demonstrated robust overall performance, with a strong release of quality new game products expected in 2024 [1][4] - The financial results for Q4 2023 showed a revenue of 27.14 billion yuan, a year-on-year increase of 7.0%, and a net profit of 6.582 billion yuan, reflecting a significant year-on-year growth of 66.5% [3][8] - The company is well-positioned for continued growth due to a solid pipeline of new games and improvements in various business segments [4][37] Financial Performance Summary - The company achieved a gross margin of 62.0% in Q4 2023, an increase of 9.8 percentage points year-on-year, with an adjusted net profit margin of 27.2% [8][19] - The gaming and value-added services revenue reached 20.921 billion yuan in Q4 2023, with a year-on-year growth of 9.6% [21][22] - The company’s total revenue projections for FY2024-2026 are 1147 billion, 1271 billion, and 1398 billion yuan, respectively, with adjusted net profits of 370 billion, 420 billion, and 473 billion yuan [37] Business Segment Analysis Gaming Business - The gaming segment saw a revenue increase of 9.6% year-on-year, with mobile game revenue growing by 28.7% [5][21] - The flagship games, such as "Nirvana in Fire" and "Party of Eggs," have attracted significant user engagement, with over 400 million active users during the Spring Festival [25] - The company has a strong lineup of new games scheduled for release in 2024, including "The Legend of the Condor Heroes" and "Eternal Return" [25][21] NetEase Youdao - NetEase Youdao reported a revenue of 1.5 billion yuan in Q4 2023, a year-on-year increase of 1.8%, with a focus on AI applications in education [26][29] - The online marketing services segment achieved a record high revenue of 470 million yuan, reflecting a growth of 96.9% [26] NetEase Cloud Music - NetEase Cloud Music generated 2 billion yuan in revenue in Q4 2023, marking its first annual profit, driven by increased subscription revenue [30][32] - The platform has expanded its music library significantly, with a focus on original music and partnerships with various artists [30] Innovation and Other Businesses - The innovation segment achieved a revenue of 2.8 billion yuan in Q4 2023, a year-on-year increase of 12.9% [35] - The company is exploring new monetization avenues through short dramas and enhanced e-commerce strategies [35][36]