Group 1 - The core point of the news is the retirement of Ding Yingfeng, the Executive Vice President and head of the gaming department at NetEase, effective December 31, with plans to continue as a consultant until 2026 [2] - Ding Yingfeng has been with NetEase for 23 years, joining in 2002 and playing a key role in the success of flagship games like "Fantasy Westward Journey" and "Dream of Red Mansions" [2] - Following Ding's retirement, Hu Zhipeng, who was promoted to Executive Vice President in March, is expected to take over as the sole Executive Vice President of NetEase [3] Group 2 - NetEase reported a stable development with Q3 net revenue of 28.4 billion yuan, an 8.2% year-on-year increase, and a net profit of 8.6 billion yuan, up 32% [3] - The gaming business remains a significant revenue contributor, with Q3 revenue from games and related services reaching 23.3 billion yuan, a year-on-year increase of 11.8%, accounting for 82% of total net revenue [4] - The online gaming segment contributed 97.6% of the gaming revenue, driven by self-developed games and several agency games, with "Fantasy Westward Journey" achieving a peak online user count of 3.58 million [4]

Investment Rating - The report maintains a "Strong Buy" investment rating for the company [3][6]. Core Views - The company reported a revenue of 28.4 billion yuan in Q3 2025, representing an 8.2% year-on-year increase, with a gross profit of 18.2 billion yuan, up 10.3% year-on-year, and a net profit attributable to shareholders of 8.6 billion yuan, which is a 31.8% increase year-on-year [1][2]. - The company has a strong cash position with net cash of 153.2 billion yuan and operating cash flow of 12.9 billion yuan in Q3 2025, reflecting a 21.7% year-on-year growth [1]. - The classic games segment performed well, contributing to a revenue of 23.3 billion yuan in Q3 2025, a year-on-year increase of 11.8%, driven by self-developed games and several agency games [6][8]. - The company has a rich pipeline of upcoming games, including titles that have already gained traction in both domestic and international markets [6][8]. - The report anticipates that the company's net profit attributable to shareholders will reach 35.1 billion yuan, 38.5 billion yuan, and 42.5 billion yuan for the years 2025, 2026, and 2027, respectively [6][8]. Financial Data and Valuation - The total revenue forecast for the company is projected to grow from 103.5 billion yuan in 2023 to 130.1 billion yuan in 2027, with a compound annual growth rate (CAGR) of approximately 7% [2][9]. - The net profit is expected to grow from 29.4 billion yuan in 2023 to 42.5 billion yuan in 2027, reflecting a CAGR of around 10% [2][9]. - The report highlights a decrease in the price-to-earnings (PE) ratio from 20.6 in 2023 to 14.2 in 2027, indicating an attractive valuation over the forecast period [2][9]. Shareholder Information - The company has a total share capital of 3.168 billion shares, with a market capitalization of 67.35 billion Hong Kong dollars [3][6]. - The major shareholder, Shining Globe International Limited, holds a 45.17% stake in the company [3].

Core Viewpoint - The company reported strong financial performance in Q3 2025, with revenue and net profit showing significant year-over-year growth, indicating resilience and growth potential across its business segments [1][2][3][4]. Financial Performance - In Q3 2025, the company achieved revenue of 28.359 billion yuan, representing a year-over-year increase of 8.2% and a quarter-over-quarter increase of 1.7% [1]. - The net profit attributable to shareholders was 8.616 billion yuan, reflecting a year-over-year growth of 31.8% and a quarter-over-quarter increase of 0.2% [1]. - Non-GAAP net profit was 9.502 billion yuan, with a year-over-year increase of 26.7% but a slight quarter-over-quarter decrease of 0.3% [1]. - Gross margin improved to 64.1%, up 2.0 percentage points year-over-year, while the sales expense ratio increased to 15.7%, up 8.3 percentage points year-over-year [1]. Gaming Business - The gaming and value-added services segment generated revenue of 22.3 billion yuan in Q3 2025, marking an 11.8% year-over-year increase and a 2.3% quarter-over-quarter increase [2]. - The company demonstrated strong operational capabilities with classic IPs performing well, including record-high concurrent players for "Dream of Dreams" [2]. - New game launches, such as "Fate: Stars" and upcoming titles like "The Sea of Forgotten," are expected to enhance global reach and player engagement [2]. NetEase Youdao - NetEase Youdao reported revenue of 1.6 billion yuan in Q3 2025, showing a year-over-year growth of 3.6% and a quarter-over-quarter growth of 14.9% [3]. - The AI-native strategy is yielding positive results, with collaborations enhancing resource integration and market demand targeting [3]. NetEase Cloud Music - NetEase Cloud Music achieved revenue of 2 billion yuan in Q3 2025, a slight year-over-year decline of 1.8% but stable quarter-over-quarter [4]. - The introduction of AI tuning features and award-winning recommendation models has improved user experience significantly [4]. Innovation and Other Businesses - Revenue from innovation and other businesses was 1.4 billion yuan, down 18.9% year-over-year and 15.3% quarter-over-quarter [4]. - The company is focusing on brand rejuvenation and leveraging AI technology to enhance content quality and community engagement [4]. Profit Forecast and Investment Rating - The company forecasts revenues of 114.8 billion yuan, 126.5 billion yuan, and 136.2 billion yuan for 2025-2027, with adjusted net profits of 39.1 billion yuan, 44.1 billion yuan, and 49.1 billion yuan respectively [4]. - The target price for 2026 is set at 265 HKD, maintaining a "Buy" rating based on the profitability and competitive landscape of different business segments [4].

Core Viewpoint - In Q3 2025, NetEase's net revenue was 28.4 billion yuan, representing a year-over-year increase of 8.2%, but falling short of Bloomberg's consensus estimate of 29.2 billion yuan [1] Group 1: Financial Performance - Game and related value-added services net revenue was 23.3 billion yuan, up 11.8% year-over-year, but below the expected 23.9 billion yuan [1] - Youdao's net revenue reached 1.6 billion yuan, reflecting a year-over-year increase of 3.6% [1] - NetEase Cloud Music's net revenue was 2 billion yuan, down 1.8% year-over-year [1] - Innovative and other businesses generated net revenue of 1.4 billion yuan, a decline of 18.9% year-over-year [1] - Gross profit for Q3 was 18.2 billion yuan, up 10.3% year-over-year [1] - GaaP net profit was 8.6 billion yuan, with adjusted net profit at 9.5 billion yuan, aligning with consensus expectations [1] Group 2: Game Performance - The performance of games remained robust, with a strong pipeline for future development [2] - The peak concurrent player count for "Fantasy Westward Journey" PC version reached 3.58 million, setting a new record [2] - New games such as "Destiny: Stars," "Infinite," and "Yuan Yun Sixteen Sounds" have been launched, enriching the global product matrix [2] - The upcoming game "Forgotten Sea" is expected to launch in 2026, with preparations underway [2] Group 3: Youdao and Cloud Music - Youdao's profitability improved, with net revenue growth driven by increases in smart hardware and online marketing services [2] - NetEase Cloud Music continues to focus on high-quality development of its music-centric ecosystem, despite a slight revenue decline [2] Group 4: Innovation and Other Businesses - The innovative and other businesses segment saw a significant revenue decline, primarily due to reduced income from NetEase Yanxuan and increased internal transaction offsets [2]

长青游戏成为本季度驱动网易营收增长的主要力量。 20日，网易发布2025年第三季度财报。 在丁磊重回一线后，其工作室的调整持续进行，同时也不断有人员流动。 对此，丁磊在11月20日晚间的财报电话会议上表示，人员流动属正常组织调整，是在不影响公司日常游戏运营的前提下进行的 网易近一两年离职的事业部级高管不止一个，此前引发了外界讨论。 财报显示，网易Q3净收入284亿元，同比增加8.2%；归股净利润为86亿元，同比增长32%；非公认会计准则下归股净利润为95亿元，同比增长26.7%。 具体到本季度业务来看，Q3网易的营收支柱游戏及相关增值服务收入为233亿元，同比增加11.8%。 来自于在线游戏的净收入约占该分部净收入的97.6%。 长青游戏持续受到玩家欢迎，体现了网易游戏强劲的长线运营能力。 财报提到，在线游戏净收入同比增加来自经典IP《梦幻西游》电脑版、《蛋仔派对》，新上线的《燕云十六声》和《漫威争锋》等自研游戏，以及若干代理 游戏净收入增加。 网易提到，11月2日《梦幻西游》电脑版同时在线人数突破358万，这是自7月份畅玩服上线后，第四次在线人数创新高。 在电话会上，网易管理层回应了近一年高管离职的事件。 ...

Core Viewpoint - NetEase-S reported a strong performance in Q3 2025, with significant year-on-year growth in net income and net profit, driven primarily by its gaming segment [1][2] Financial Performance - Net income for Q3 2025 reached RMB 28.4 billion (USD 4 billion), an increase of 8.2% year-on-year [1] - Gross profit was RMB 18.2 billion (USD 2.6 billion), reflecting a year-on-year growth of 10.3% [1] - Net profit attributable to shareholders was approximately RMB 8.616 billion (USD 1.2 billion), marking a year-on-year increase of 31.77% [1] - Basic earnings per share stood at USD 0.38, with a quarterly dividend of USD 0.1140 per share [1] Gaming Segment Performance - Net income from gaming and related value-added services was RMB 23.3 billion (USD 3.3 billion), compared to RMB 22.8 billion in the previous quarter and RMB 20.9 billion in the same quarter last year [1] - Online gaming revenue accounted for approximately 97.6% of the gaming segment's net income, up from 97.1% in the previous quarter and 96.8% year-on-year [1] - Growth in online gaming revenue was driven by self-developed games such as "Dream of Jianghu" PC and "Nirvana in Fire" mobile games, as well as several licensed games [1] Future Outlook - The company plans to allocate more resources to evergreen projects and provide opportunities for innovative teams [2] - Upcoming game "Forgotten Sea" is set to launch in 2026, with additional titles like "Infinite" and "Return to Tang" in the pipeline [2] - Focus on enhancing the global capabilities of local teams and monitoring the progress of key new games [2]

Investment Rating - The report maintains an "Accumulate" rating for the company [1][9] Core Insights - The company demonstrates strong long-term operational capabilities in the gaming sector, with a significant increase in deferred revenue laying a solid foundation for future performance releases [2][6] - The Q3 2025 financial results show revenue of 28.359 billion yuan, a year-on-year increase of 8.2% and a quarter-on-quarter increase of 1.7%. The net profit attributable to shareholders is 8.616 billion yuan, reflecting a year-on-year increase of 31.8% and a quarter-on-quarter increase of 0.2% [5][6] Financial Performance Summary - **Revenue and Profitability**: In Q3 2025, the company achieved revenue of 28.359 billion yuan (YoY +8.2%, QoQ +1.7%) and a net profit of 8.616 billion yuan (YoY +31.8%, QoQ +0.2%). The non-GAAP net profit was 9.502 billion yuan (YoY +26.7%, QoQ -0.3%) [5][6] - **Gross Margin**: The gross margin improved to 64.1% (YoY +2.0 percentage points, QoQ -1.0 percentage points) [6] - **Expense Ratios**: The sales expense ratio was 15.7% (YoY +8.3 percentage points, QoQ +22.5 percentage points), R&D expense ratio was 16.0% (YoY -5.1 percentage points, QoQ +2.5 percentage points), and management expense ratio was 4.1% (YoY -2.2 percentage points, QoQ +8.4 percentage points) [6] Business Segment Performance - **Gaming Business**: The gaming and value-added services generated revenue of 22.3 billion yuan (YoY +11.8%, QoQ +2.3%). The gaming sector shows strong resilience and growth momentum, with classic IPs performing well [6] - **Youdao**: In Q3 2025, Youdao achieved revenue of 1.6 billion yuan, a year-on-year increase of 3.6% and a quarter-on-quarter increase of 14.9% [6] - **NetEase Cloud Music**: Revenue for Q3 2025 was 2 billion yuan (YoY -1.8%, QoQ flat). The introduction of AI features has enhanced user experience significantly [6] - **Innovative and Other Businesses**: Revenue decreased to 1.4 billion yuan (YoY -18.9%, QoQ -15.3%). The company is focusing on brand rejuvenation and leveraging AI technology [6] Earnings Forecast and Valuation - The company is projected to achieve revenues of 114.8 billion yuan, 126.5 billion yuan, and 136.2 billion yuan for 2025, 2026, and 2027 respectively. Adjusted net profits are expected to be 39.1 billion yuan, 44.1 billion yuan, and 49.1 billion yuan for the same years [8][9] - The target price for 2026 is set at 265 HKD, maintaining the "Accumulate" rating [6][9]

Core Viewpoint - The company reported a revenue of 28.36 billion yuan in Q3 2025, showing a year-on-year growth of 8.2%, which was below Bloomberg's consensus estimate by 2.96% due to product launch timing and revenue recognition delays [4] Group 1: Financial Performance - The gross margin improved to 64.1%, an increase of 1.2 percentage points year-on-year [4] - Adjusted net profit reached 9.55 billion yuan, slightly exceeding consensus estimates by 0.43%, despite higher-than-expected marketing and management expenses, which were offset by adjustments in SBC expenses [4] Group 2: Deferred Revenue and Future Growth - The company's deferred revenue for Q3 2025 reached 19.47 billion yuan, a year-on-year increase of 25.3% and a quarter-on-quarter increase of 14.8%, significantly surpassing the consensus estimate by 41% [5] - Strong player recharge willingness during new game launches is expected to gradually confirm revenue, laying a solid foundation for revenue growth in Q4 2025 and Q1 2026 [5] Group 3: Game Business and Global Strategy - Revenue from games and related value-added services was 23.33 billion yuan, slightly below consensus estimates by 2.3%, with a year-on-year growth of 11.8% [6] - Domestic game revenue showed resilience, with "Dream of the Westward Journey" PC version setting a new peak concurrent user record of 3.58 million [6] - The company continues to release new game reserves, with titles like "Fate: Stars" driving overseas mobile game revenue growth [6] - The global strategy is being accelerated, with new game "Fate: Rise" topping iOS download charts in multiple regions [6] Group 4: Investment Strategy and Shareholder Value - Marketing expenses for Q3 2025 were 4.46 billion yuan, exceeding consensus estimates by 12.1%, primarily for new game promotions [7] - R&D expenses were 4.54 billion yuan, with a R&D expense ratio of 16%, down 0.9 percentage points year-on-year [7] - Operating cash flow was strong at 12.9 billion yuan, a year-on-year increase of 21.6%, with net cash reserves of 153.2 billion yuan [7] - The company announced an extension of its share repurchase plan of up to 5 billion USD until January 2029 [7]

Group 1 - The company's revenue increased by 8.2% year-on-year to 28.36 billion yuan, which was 3% lower than Bloomberg's expectations [1] - Gross margin was 64.1%, exceeding Bloomberg's expectations by 0.1 percentage points [1] - Adjusted net profit margin reached 33.5%, surpassing Bloomberg's expectations by 0.8 percentage points, with adjusted net profit growing by 26.7% year-on-year to 9.5 billion yuan, slightly below Bloomberg's expectations by 0.6% [1] Group 2 - Self-developed games performed well, generating revenue of 23.33 billion yuan, which was 2.3% lower than Bloomberg's expectations, with a year-on-year growth of 11.8% [1] - The revenue growth was driven by titles such as "Dream of the Red Chamber" PC version, "Egg Party," and new releases like "Yanyun Sixteen Sounds" and "Marvel Showdown" [1] - The gross margin for the gaming segment was 69.3%, exceeding Bloomberg's expectations by 0.6 percentage points, with a year-on-year increase of 0.5 percentage points [1] Group 3 - Cloud Music achieved revenue of 1.96 billion yuan, which was 3.0% lower than Bloomberg's expectations, with a year-on-year decline of 1.8% [2] - Gross margin for Cloud Music was 35.4%, falling short of Bloomberg's expectations by 0.6 percentage points, but showed a year-on-year increase of 2.6 percentage points [2] - Youdao reported revenue of 1.63 billion yuan, which was 1.7% lower than Bloomberg's expectations, with a year-on-year growth of 3.6% [2] Group 4 - The company expects adjusted net profit growth of 18.4%, 8.8%, and 8.6% for 2025-2027, reaching 39.7 billion, 43.2 billion, and 46.2 billion yuan respectively [2] - Corresponding PE ratios for 2025-2027 are projected to be 14.9, 13.7, and 12.6 [2]

Investment Rating - The investment rating for the company is "Buy" (maintained) [2] Core Views - The company has shown a revenue growth of 8.2% year-on-year, reaching 28.36 billion yuan, which is slightly below Bloomberg's expectations by 3% [7] - The adjusted net profit margin reached 33.5%, exceeding Bloomberg's expectations by 0.8% [7] - The company is expected to see adjusted net profit growth of 18.4%, 8.8%, and 8.6% for the years 2025 to 2027, with corresponding PE ratios of 14.9, 13.7, and 12.6 [7] Financial Performance - Revenue projections for the company are as follows: - 2023A: 103.468 billion yuan - 2024A: 105.295 billion yuan - 2025E: 115.426 billion yuan - 2026E: 125.700 billion yuan - 2027E: 134.863 billion yuan - The net profit for the years is projected as: - 2023A: 29.417 billion yuan - 2024A: 29.698 billion yuan - 2025E: 36.339 billion yuan - 2026E: 39.555 billion yuan - 2027E: 43.252 billion yuan [6][7] Business Segments - The self-developed games segment generated revenue of 23.33 billion yuan, reflecting a year-on-year growth of 11.8% [7] - The cloud music segment reported revenue of 1.96 billion yuan, a decrease of 1.8% year-on-year [7] - The Youdao segment achieved revenue of 1.63 billion yuan, with a year-on-year increase of 3.6% [7] Valuation Metrics - The company’s EPS for the upcoming years is projected as follows: - 2023A: 9.05 yuan - 2024A: 9.28 yuan - 2025E: 11.47 yuan - 2026E: 12.49 yuan - 2027E: 13.65 yuan - The P/E ratios are projected to be: - 2023A: 15.54 - 2024A: 14.91 - 2025E: 18.53 - 2026E: 17.03 - 2027E: 15.57 [6][8]