NTES(09999) 海通证券·2024-03-09 16:00Investment Rating - The investment rating for the company is "Outperform the Market" and is maintained [1][7]. Core Insights - The company achieved a revenue of RMB 27.14 billion in Q4 2023, representing a year-on-year growth of 7.0%. The net profit attributable to shareholders was RMB 6.58 billion, a significant increase of 66.5% year-on-year. The Non-GAAP net profit was RMB 738 million, up 53.4% year-on-year. The gross margin improved by 9.8 percentage points to 62.0%, primarily due to the increased proportion of self-developed games and channel revenue [4][5]. - The gaming segment continues to perform well, with Q4 2023 game revenue reaching RMB 19.54 billion, a year-on-year increase of 11.5%. Mobile game revenue grew by 29% to RMB 14.99 billion. The company is expected to enter a new product cycle in Q1 2024, with key releases planned [4][5]. - The online music business maintained high growth, with Q4 2023 revenue of RMB 1.99 billion, despite a year-on-year decline of 16.4%. The annual revenue for 2023 was RMB 7.867 billion, down 12.5% year-on-year, but the Non-IFRS net profit turned positive at RMB 819 million [5][6]. - The company’s advertising business saw significant growth, becoming a TikTok advertising agent and connecting with over 1 million overseas influencers, covering more than 2 billion users across 75 countries [7]. Financial Summary - The company’s revenue for 2023 is projected at RMB 103.468 billion, with a year-on-year growth of 7.2%. The net profit is expected to be RMB 32.608 billion, reflecting a substantial increase of 43.0% year-on-year. The gross margin is anticipated to improve to 60.9% in 2024 [6][10]. - The forecast for net profit attributable to shareholders for 2024-2026 is RMB 33.889 billion, RMB 37.900 billion, and RMB 42.626 billion, respectively [7][10]. - The company’s valuation is estimated using a dynamic PE ratio of 18-20 times for 2024, resulting in a reasonable value range of HKD 208.14 to HKD 231.27 per share [7][9].