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NetEase Inc ADR NTES Stock Quote

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Morningstar‘s Stock Analysis NTES

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Is it the right time to buy or sell?

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NetEase Reports Solid Earnings; Breakup With Blizzard Has Negligible Impact; Shares Very Undervalued

Ivan Su Senior Equity Analyst

Analyst Note

| Ivan Su |

We retain our fair value estimate of USD 139 (HKD 216) for narrow-moat NetEase after it reported third-quarter earnings. While regulatory approvals remain a constraint to near-term growth, we continue to see long-term revenue opportunities outside China. As for the reported breakup with Blizzard Entertainment, we believe the two will eventually reach a deal to keep Blizzard's games live in China, but a re-engagement might only happen after Microsoft's takeover of Activision Blizzard. Blizzard's games only contribute about 2% of NetEase's earnings, so we think the market could have overreacted to the headlines. We view NetEase's shares as undervalued, trading at 50% discount to our fair value. We would treat volatility in the stock as an opportunistic entry point.

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Key Statistics NTES

Company Profile NTES

Business Description

NetEase, which started on an internet portal service in 1997, is a leading online services provider in China. Its key services include online/mobile games, cloud music, media, advertising, email, live streaming, online education, and e-commerce. The company develops and operates some of the China’s most popular PC client and mobile games, and it partners with global leading game developers, such as Blizzard Entertainment and Mojang (a Microsoft subsidiary).

No. 599 Wangshang Road, NetEase Building
Hangzhou, 310052, China, People's Republic of
T +86 57189853378
Industry Electronic Gaming & Multimedia
Most Recent Earnings Sep 30, 2022
Fiscal Year End Dec 31, 2022
Employees 32,064

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