Haitong International raised the target price for NetEase to $168, maintaining an "Outperform" rating

Haitong International published a report stating that NetEase (09999.HK) will slightly miss expectations for its Q3 2025 performance, with total revenue falling short by 3%; game revenue missing expectations by 2%; and operating profit margin lower than expected by 3 percentage points due to increased sales and marketing expenses. Non-GAAP net profit met expectations, mainly benefiting from better-than-expected investment income.

The report indicated that NetEase's overall profit margin trend is healthy. Due to the relatively low profit margin of "Yan Yun Shi Liu Sheng" on overseas PC and console platforms, the game's expansion in overseas markets may drag down the overall game gross margin. The gross margin of the music business is on the rise, while the gross margin of Youdao has declined due to changes in revenue structure. It is also expected that marketing expenses in Q4 will decrease quarter-on-quarter due to seasonal factors. The firm forecasts NetEase's adjusted net profits for Q4 FY2025, FY2025, and FY2026 to be RMB 9.6 billion, RMB 39.9 billion, and RMB 41.6 billion, respectively, remaining flat year-on-year, growing by 19%, and growing by 4%.

Haitong International raised the target price for NetEase (NTES.US) on the US stock market from $160 to $168, maintaining an "Outperform" rating