NTES(HK:09999) KAIYUAN SECURITIES·2024-05-24 06:02Investment Rating - The investment rating for the company is "Buy" (maintained) [2][6] Core Views - The company has shown steady growth in performance, with a continuous improvement in profitability. The first quarter of 2024 saw a revenue of 26.9 billion yuan, a year-on-year increase of 7.2% and a quarter-on-quarter decrease of 1.1%. The net profit attributable to shareholders was 7.6 billion yuan, reflecting a year-on-year increase of 13.0% and a quarter-on-quarter increase of 16.0% [6] - The company is expected to benefit from the launch of several blockbuster games, which will drive revenue growth. The forecast for net profit from 2024 to 2026 is 33.9 billion yuan, 37.3 billion yuan, and 40.4 billion yuan respectively, with corresponding EPS of 10.5, 11.6, and 12.6 yuan [6][9] - The company maintains a high level of R&D investment, with a focus on integrating AI models into various sectors, which is expected to enhance efficiency and quality across its entertainment, education, and industrial segments [8] Summary by Sections Financial Performance - In Q1 2024, the company achieved a revenue of 26.9 billion yuan, with a gross margin of 63.37%, up 3.89 percentage points year-on-year. The net margin was 28.43%, an increase of 1.46 percentage points year-on-year [6] - The company’s total revenue for 2022 was 96.5 billion yuan, increasing to 103.5 billion yuan in 2023, with projections of 118.1 billion yuan for 2024, reflecting a year-on-year growth of 14.2% [9] Game Development and Releases - The company has several successful games, including "Dream of the Westward Journey" and "Identity V," which have reached record revenues. New games like "World Beyond" and "Seven Days World" are also gaining traction [7] - The company plans to accelerate the global release of new self-developed games, with significant titles set to launch in the second half of 2024 [7] R&D and Innovation - The company has maintained a R&D investment intensity exceeding 15% for seven consecutive quarters, focusing on AI integration to enhance productivity and reduce costs across its business segments [8]