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NetEase Inc ADR NTES

Morningstar Rating
$92.15 −5.00 (5.15%)
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Company Report

NetEase’s R&D Strengths Are Key to Developing Next-Generation Blockbuster Games

NetEase started as a Chinese internet portal in the late 1990s but has now become the second-largest mobile game company in the world. The firm owns one of the most well-known massively multiplayer franchise in China—Fantasy Westward Journey. Over the past decade, NetEase has capitalized on the industry shift toward mobile gaming and now focuses on developing innovative, high-quality, and long-cycle games with a mobile-first approach. Over the past years, the firm has established iconic titles such as Onmyoji, Knives Out, and Identity V. Every year, the company publishes dozens of games across almost every genre and game play. In addition, NetEase is also collaborating with firms such as Blizzard, Marvel, and Microsoft to release games based on famous global intellectual property like Diablo, Harry Potter, and Lord of the Rings. Over the foreseeable future, we expect NetEase to continue to leverage its in-house research and development team and user data to develop next-generation games.

Price vs Fair Value

NTES is trading at a 42% discount.
Price
$92.13
Fair Value
$192.00
Uncertainty
High
1-Star Price
$185.50
5-Star Price
$62.70
Economic Moat
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Capital Allocation
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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

Trading Information

Previous Close Price
$97.15
Day Range
$92.0095.17
52-Week Range
$80.79118.90
Bid/Ask
$92.15 / $92.52
Market Cap
$59.43 Bil
Volume/Avg
2.7 Mil / 1.6 Mil

Key Statistics

Price/Earnings (Normalized)
15.78
Price/Sales
4.47
Dividend Yield (Trailing)
2.55%
Dividend Yield (Forward)
2.55%
Total Yield
3.71%

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
31,119

Competitors

Valuation

Metric
NTES
00302
TTWO
Price/Earnings (Normalized)
15.7826.3775.11
Price/Book Value
3.700.473.05
Price/Sales
4.471.034.78
Price/Cash Flow
13.259.8226.12
Price/Earnings
NTES
00302
TTWO

Financial Strength

Metric
NTES
00302
TTWO
Quick Ratio
2.671.540.62
Current Ratio
2.912.170.82
Interest Coverage
−3.05−19.85
Quick Ratio
NTES
00302
TTWO

Profitability

Metric
NTES
00302
TTWO
Return on Assets (Normalized)
17.40%3.93%−6.34%
Return on Equity (Normalized)
27.16%5.00%−11.18%
Return on Invested Capital (Normalized)
19.65%4.93%−7.46%
Return on Assets
NTES
00302
TTWO
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Electronic Gaming & Multimedia Industry Comparables

Ticker
Name
Morningstar Rating for Stocks
Capital Allocation
Economic Moat
Market Cap
NETTF
NetEase Inc Ordinary SharesQjcdyp$63.4 Bil
NTDOF
Nintendo Co LtdGvz$60.4 Bil
NTDOY
Nintendo Co Ltd ADRKndl$58.8 Bil
EA
Electronic Arts IncCsydnbrpGcvrbdn$34.2 Bil
TTWO
Take-Two Interactive Software IncGvxyvhvbDbjbg$25.1 Bil
RBLX
Roblox Corp Ordinary Shares - Class AKgltghbflLvlzpc$25.1 Bil
NEXOF
NEXON Co LtdSqsfblt$13.6 Bil
NEXOY
NEXON Co Ltd ADRKbrsqlr$13.6 Bil
BILI
Bilibili Inc ADRZzzrmqzkXmzg$5.0 Bil

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