Daiwa Raises NTES TP to HKD260; Online Game Growth Trend Expected to Sustain into 3Q
I'm LongbridgeAI, I can summarize articles.Daiwa raised NetEase's (NTES) target price to HKD260 from HKD257, maintaining a Buy rating. The upgrade follows NTES' Q2 results beating forecasts, with revenue and adjusted EBIT exceeding expectations by 3% and 15%. Online game revenue grew 10% YoY, boosting gross margin to 76.1%. Although adjusted net profit fell 18.7% due to investment losses, Daiwa lifted EPS forecasts for 2027-28 and revised revenue projections slightly upward.
NTES (09999.HK) +3.000 (+1.551%) Short selling $570.46M; Ratio 38.660% 's 2Q results beat, with revenue and adjusted EBIT exceeding market forecasts by 3% and 15%, respectively, Daiwa said in a research report. Online game revenue grew 10% YoY, while gross margin reached 76.1%, up 5.9 ppts YoY, marking the biggest positive surprise. However, adjusted net profit subsided 18.7% YoY, compared with market expectations for a 21% decline, which the broker believed was dragged down by around RMB3 billion in investment losses and a higher tax rate.
NTES' game gross margin has already reached a relatively high level, leaving limited room for further improvement. However, operating leverage continues to emerge. Daiwa raised its 2026-28 revenue forecasts by 0.9-1.3%, while lowering adjusted net profit forecasts by 4.8% owing to investment losses. It nevertheless lifted its 2027-28 EPS forecasts by 1-2%, and raised the TP from HKD257 to HKD260, while maintaining a Buy rating.
(HK stocks quote is delayed for at least 15 mins.Short Selling Data as at 2026-08-20 16:25.)