Daiwa's outlook on NetEase's profit growth in the coming years is positive, with a target price raised to 260 yuan

Daiwa published a research report stating that NetEase (09999.HK)(NTES.US) had online game revenue of RMB 22.1 billion in the second quarter, slightly below market expectations by 1.4%. However, considering the strong performance of several games from July to August and the upcoming launch of new games, they remain optimistic about its profit growth from 2025 to 2027, anticipating a quarter-on-quarter improvement in game revenue for the third quarter, mainly driven by significant updates to flagship games such as "Naraka: Bladepoint," "Once Human," and "Identity V." Due to the low base in the second half of last year, Daiwa currently predicts that NetEase's game revenue growth rate in the third quarter will accelerate to 16.5%, raising the target price from RMB 235 to RMB 260, maintaining a "Buy" rating. (gc/)