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NetEase Inc ADR NTES

Morningstar Rating
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Stock XNAS Rating as of
$94.74 −3.62 (3.68%)
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As of Delayed Price Pre-Open: $91.20 −3.50
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Company Report

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NetEase Earnings: Management Reassures as Growth Continues Amid Regulatory Stability

Ivan Su

Narrow-moat NetEase’s first-quarter earnings were in line with our expectations. Management clarified recent updates to its legacy title, Fantasy Westward Journey, confirming that these were not regulatory-driven, thereby providing reassurance to investors. With an impressive lineup of releases scheduled for this summer, NetEase is poised for a strong showing. We maintain our earnings estimates and keep fair value estimate at USD 158 per share (HKD 246). We continue to view shares as undervalued.

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Price vs Fair Value

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NTES is trading within a range we consider fairly valued.
Price
$94.74
Fair Value
$488.00
Uncertainty
High
1-Star Price
$133.50
5-Star Price
$16.30
Economic Moat
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Capital Allocation
Bknjnhmyk

Bulls Say, Bears Say

Bulls

NetEase’s expertise in asymmetric multiplayer (Identity V and Dead by Daylight) would allow it to capitalize on future opportunities in this genre.

Bears

Leadership changes at Activision Blizzard can further delay the launch of much anticipated Diablo Immortal.

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News

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Trading Information

Previous Close Price
$98.36
Day Range
$94.39–98.04
52-Week Range
$80.79–118.90
Bid/Ask
$91.16 / $91.20
Market Cap
$61.06 Bil
Volume/Avg
10,040 / 1.6 Mil

Key Statistics

Price/Earnings (Normalized)
13.39
Price/Sales
4.18
Dividend Yield (Trailing)
2.71%
Dividend Yield (Forward)
2.71%
Total Yield
3.75%

Company Profile

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).
Sector
Communication Services
Industry
Electronic Gaming & Multimedia
Stock Style Box
Large Core
Total Number of Employees
29,128
Website
https://ir.netease.com

Competitors

Valuation

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Metric
NTES
TTWO
00302
Price/Earnings (Normalized)
 13.3983.13542.19
Price/Book Value
 3.414.560.53
Price/Sales
 4.184.811.15
Price/Cash Flow
 12.4329.5712.47
Price/Earnings
NTES
TTWO
00302

Financial Strength

Metric
NTES
TTWO
00302
Quick Ratio
 2.530.641.24
Current Ratio
 2.650.941.71
Interest Coverage
 —−25.80−0.39
Quick Ratio
NTES
TTWO
00302

Profitability

Metric
NTES
TTWO
00302
Return on Assets (Normalized)
 18.60%−6.65%0.08%
Return on Equity (Normalized)
 28.51%−12.07%0.09%
Return on Invested Capital (Normalized)
 20.77%−7.92%0.21%
Return on Assets
NTES
TTWO
00302
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Electronic Gaming & Multimedia Industry Comparables

Screen in Investor
Ticker
Name
Morningstar Rating for Stocks
Capital Allocation
Economic Moat
Market Cap
NTDOF
Nintendo Co Ltd—Vpvf$61.5 Bil
NTDOY
Nintendo Co Ltd ADR—Stxl$61.5 Bil
NETTF
NetEase Inc Ordinary Shares—Jvmqfb$58.4 Bil
EA
Electronic Arts IncMmhwwndpnqGmjpfjx$35.8 Bil
TTWO
Take-Two Interactive Software IncNyzxnzqTfbwh$25.8 Bil
RBLX
Roblox Corp Ordinary Shares - Class AQctrlllcgTygsjq$20.5 Bil
NEXOF
NEXON Co Ltd—Zlj$14.2 Bil
NEXOY
NEXON Co Ltd ADR—Ydqsd$13.7 Bil
BILI
Bilibili Inc ADRTksqrfhZdnk$6.8 Bil

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