Summary of NetEase, Inc. Conference Call Company Overview - Company: NetEase, Inc (NTES.O) - Industry: China Internet and Other Services - Current Price Target: Increased from US$151.00 to US$170.00, representing a 14% upside from the current stock price of US$149.59 as of October 7, 2025 [1][7][32] Key Titles and Growth Potential - Key Titles in Pipeline: - Ananta: An ACG urban-theme open-world RPG game - Sea of Remnants (SOR): An ocean adventure RPG game - Growth Strategy: Focus on fewer but larger titles, with Ananta and SOR being the top two in the pipeline according to management expectations [2][3] Revenue Scenarios for New Titles - Projected Grossing for Ananta: - Low Case: Rmb5 billion - Middle Case: Rmb10 billion - High Case: Rmb15 billion - Projected Grossing for Sea of Remnants: - Low Case: Rmb3 billion - Middle Case: Rmb5 billion - High Case: Rmb8 billion - Comparison with Peers: - Genshin Impact: ~Rmb30 billion - FWJ: ~Rmb18-20 billion - Where Winds Meet: ~Rmb7 billion - Base Case Expectation: Both titles reaching the middle level could imply an additional Rmb15 billion in game revenue by 2027 compared to 2025 [3][11] Launch Timing and Market Impact - Launch Timing: One title expected before summer 2026 and the other in late 2026, with potential staggered launches for PC and mobile versions [4] - Impact of Delays: 1-2 quarters of delay could significantly affect 2026 growth but may not impact long-term value [4] Financial Projections and Adjustments - Revenue Revisions: - 2026-27 game revenue revised up by 3-7% due to new title contributions and FWJ PC performance - Non-GAAP profit forecasts increased by 1.5% and 6.4% for 2026 and 2027, respectively [5][30] - Earnings Estimates: - Adjusted EPS for 2026-27 increased by 1.5% and 6.4% [30] - Revenue for 2026 projected at Rmb122,269 million, up from Rmb115,477 million in 2025 [7][31] Valuation and Market Position - Valuation Method: Sum of the Parts (SOTP) valuation leading to a new price target of US$170, driven by earnings estimate revisions and an increased game P/E to 16x [32][34] - Market Capitalization: Approximately US$95.93 billion with 641 million shares outstanding [7] Additional Insights - Peer Comparison: NetEase's P/E ratio is 14.2 for 2025E, compared to Tencent's 22.8 and Bili Bili's 42.9, indicating a relatively attractive valuation [22] - Revenue Growth: Expected CAGR of 8% from 2025 to 2027 based on the base case scenario for new titles [11] This summary encapsulates the key points from the conference call, focusing on NetEase's strategic direction, financial projections, and market positioning.
网易:在研两款核心产品的情景分析