The article "Post-Performance" summarizes the latest target prices and views of major institutions on NetEase's performance announcement (table)

NetEase-S (09999.HK) (NTES.US) announced first-quarter results that exceeded expectations, opening up 10.9% this morning and continuing to rise, reaching a high of HKD 195.2 during the session, a jump of 16.1%. It is currently reported at HKD 191.1, up 13.7%, with a trading volume of nearly HKD 1.69 billion. Goldman Sachs indicated that the company's first-quarter performance was broadly better than expected, increasing growth visibility for this year, reaffirming its "Buy" rating and raising the target price from HKD 193 to HKD 219, noting that its forecasted price-to-earnings ratio for this year is just over 14 times, which is a discount compared to peers' valuations and its historical average.

HSBC Global Research stated that NetEase's first-quarter gaming revenue and profits significantly exceeded expectations, with profits surpassing expectations by 25%, gaming revenue exceeding expectations by 5%, and deferred revenue exceeding expectations by 11%. The strong growth in deferred revenue boosts the outlook for 2025. The bank raised its 2025 earnings per share growth forecast to an annual increase of 18% based on stronger gaming prospects and savings in sales and marketing, increasing the target price from HKD 187 to HKD 203.

NetEase announced its first-quarter results after the market closed yesterday (14th), with net profit rising 35% year-on-year to RMB 10.301 billion, exceeding the upper limit of RMB 8.111 billion predicted by a composite of four brokerages. The earnings per share was RMB 3.25, and the net profit per American Depositary Share was RMB 11.88. Non-GAAP net profit rose 32% year-on-year to RMB 11.236 billion, also exceeding the upper limit of RMB 9.314 billion predicted by a composite of nine brokerages, with non-GAAP earnings per share and net profit per American Depositary Share at RMB 3.54 and RMB 17.7, respectively. The quarterly dividend was USD 0.135 per share, or USD 0.675 per American Depositary Share.

Quarterly net revenue increased 7.4% year-on-year to RMB 28.83 billion, surpassing the median forecast of RMB 28.229 billion from a composite of ten brokerages. During the period, net revenue from games and related value-added services rose 12.1% year-on-year to RMB 24 billion. Youdao (DAO.US) saw net revenue decline 6.7% year-on-year to RMB 1.3 billion, while NetEase Cloud Music (09899.HK) experienced a year-on-year decline of 8.4% to RMB 1.9 billion. Net revenue from innovation and other businesses fell 17.6% year-on-year to RMB 1.6 billion.

【Strong PC Games, Results Far Exceed Expectations】

Daiwa published a report stating that NetEase's first-quarter net profit was a strong 29% higher than the bank's original expectations, driven by 1) better-than-expected growth in PC and console game revenue; 2) lower operating expenses. Considering the success of new games, the bank holds a more optimistic view on the profit potential of its upcoming games. PC and console games performed impressively in the first quarter of 2025, with revenue growing an astonishing 84% year-on-year, accounting for 34% of online gaming revenue. This strong growth was primarily driven by two new games, "Marvel Showdown" and "The Wind Rises in Longxi," launched in December 2024, as well as the return of Blizzard's "Overwatch 2." Management stated that "Once Human Mobile," set to launch in April, will help boost player spending on the PC platform, which contributed over 50% of gaming revenue in the first quarter of 2025 In comparison, mobile game revenue decreased by 4% year-on-year. The bank indicated that due to game revenue potentially exceeding expectations and lower operating expense expectations, it raised the target price from the original HKD 180 to HKD 210.

Morgan Stanley stated that NetEase's first-quarter performance significantly exceeded expectations, with a gross margin of 64.1%, higher than market expectations (previously expected to be 60.5%, and the actual for Q4 2024 was 60.8%). Although the gross margin of "Marvel Duel" is relatively low, the increase in gross margin this time is mainly attributed to the good contribution from domestic PC games, as well as a significant decrease in the proportion of NetEase Youdao, music, and innovative businesses. The net profit under non-GAAP was RMB 11.2 billion, a year-on-year increase of 32%, exceeding market expectations by 23%. Sales and marketing expenses decreased by 33% year-on-year, and general and administrative expenses decreased by 20% year-on-year, showing significant cost control effectiveness. Morgan Stanley estimates that NetEase's total game revenue (grossing) in the first quarter grew by 30% quarter-on-quarter and 17% year-on-year, far exceeding market expectations. The bank believes the main drivers are the outstanding performance of "Marvel Duel" and "The Wind Rises in Longxi."

-------------------------------------------------------

The table below lists the investment ratings and target prices for NetEase (09999.HK) from 5 brokerages:

Brokerage│Investment Rating│Target Price (HKD)

Goldman Sachs│Buy│193 HKD->219 HKD

Daiwa│Buy│180 HKD->210 HKD

Jefferies│Buy│188 HKD->205 HKD

HSBC Global Research│Buy│187 HKD->203 HKD

JP Morgan│Overweight│185 HKD

The table below lists the investment ratings and target prices for NetEase (NTES.US) from 9 brokerages:

Brokerage│Investment Rating│Target Price

UBS│Buy│133 USD->152 USD

Citi│Outperform│129 USD->140 USD

Goldman Sachs│Buy│123 USD->140 USD

Daiwa│Buy│115 USD->135 USD

Jefferies│Buy│120 USD->131 USD

HSBC Global Research│Buy│120 USD->130 USD

JP Morgan│Overweight│120 USD

Citi│Buy│118 USD

Morgan Stanley│Overweight│117 USD

Brokerage│Viewpoint

Citi│Strong growth in online game revenue in the first quarter, continuous growth in cloud music revenue

Daiwa│Strong growth in mobile game revenue, upcoming new game as a recent catalyst

UBS│Solid growth in first-quarter performance, game revenue and gross margin growth both exceed expectations

Jefferies│Overall first-quarter performance exceeds expectations, expecting new game launches to achieve steady profit growth

HSBC Global Research│First-quarter game revenue and profit both exceed expectations, continuous new game launches bring constructive growth to profits

Goldman Sachs│In the first quarter, both game revenue and gross margin exceeded expectations, accelerating strong revenue growth this season JP Morgan │ Upgrade │ First quarter performance overall exceeded expectations, strong growth in gaming revenue

Citigroup │ First quarter total revenue, profit, and gaming revenue all exceeded expectations

Morgan Stanley │ First quarter total revenue, gaming revenue, and gross profit all exceeded expectations