网易2025年第一季度业绩速评

China (PRC) | InternetNetEase Quick Take: NetEase 1Q25 Results NetEase reported 1Q results: total revenue came ahead of consensus andour estimate with a better than expected online games performance. Bysegment, revenue from games & related value-added services increasedby 12.1% YoY, among which online games revenue grew by about 14.8%YoY (vs consensus and our estimate of a 9.6% and 4% YoY increase,respectively). GAAP operating profit and Non-GAAP net income beatconsensus and our estimate. NetEase 1Q25 results highlights.Total net revenue increased by 7.4% YoY to RMB28.8bn,1% and 2.5% above consensus and our estimate, respectively. Revenue from games andrelated value-added services, including online game operations and other ancillary services,increased by 12.1% YoY to RMB24bn. Online game operations represented 97.5%/95.2% ofsegment revenue in 1Q25/1Q24, implying about a 14.8% YoY increase (vs consensus and ourestimate of 9.6% and 4% YoY increase). As for the non-games business, Youdao net revenuedeclined by 6.7% YoY to RMB1.3bn. Gross profit increased by 8.6% YoY to RMB18.5bn (4.9%and 3.6% above consensus and our estimate, respectively). GAAP operating profit increased37% to RMB10.4bn (23% and 31% above consensus and our estimate). Non-GAAP net incomereached RMB11.2bn, vs consensus and our estimate at RMB9bn and RMB8.5bn, respectively. Share repurchase and dividends.As of 31 Mar 2025, NTES repurchased about USD1.9bn. Theboard of directors approved a dividend of US$0.135 per share (US$0.675 per ADS) in 1Q25.The payment date is expected to be 10 Jun. Key points of focus for upcoming earnings conference call:(1) Online games sectorcompetitive landscape and how NetEase intends to stand out from competition; (2) long- termtarget in overseas gaming revenue contribution and overseas strategies to capture gamerpreferences in different geographies; (3) allocation of R&D resources in China vs overseasmarkets; (4) strategies on new games release on s global basis; (4) feedback on Marvel Rivalsand Where Winds Meet in PC and mobile; (5) core competence in the development of high-quality titles on a consistent basis; (6) Competition for gaming talent in the China market; (7)implications of DeepSeek for the sector and NetEase's AI strategies; (8) Trend in operatingexpenses; (9) use of cash and returns for shareholders. Dial-in details.NetEasewill host a teleconference call on 15 May 2025 at 8pm HKT (8amEST). Dial-in number:1-914-202-3258; Conference ID: 10046898. Thomas Chong * | Equity Analyst852 3743 8016 | thomas.chong@jefferies.comZoey Zong * | Equity Analyst852 3743 8163 | zoey.zong@jefferies.com We would like to thank Fiona Fan, employee of Evalueserve Inc., for providing research support services to our preparation of this report.We would like to thank Han Wang, employee of Evalueserve Inc., for providing research support services to our preparation of this report. Company Description NetEase Founded in 1997, NetEase is a major online provider of Chinese content and services through online games, news portal, e-mail, e-Commerce andother services. The company generates revenue mainly from fees charged to players of online games, advertisements on NetEase websites andmobile news app, as well as e-Commerce through Yanxuan. NetEase is currently the no.2 player in both PC and mobile game markets in China. Company Valuation/Risks NetEase We have a Buy rating and SOTP PT at USD120/HKD188. Key risks include (1) decline in popularity of flagship titles; (2) heavier-than-expectedinvestments in new areas of development; (3) regulatory risk in game license approval. Analyst Certification: I, Thomas Chong, certify that all of the views expressed in this research report accurately reflect my personal views about the subject security(ies) andsubject company(ies). I also certify that no part of my compensation was, is, or will be, directly or indirectly, related to the specific recommendations orviews expressed in this research report. I, Zoey Zong, certify that all of the views expressed in this research report accurately reflect my personal views about the subject security(ies) and subjectcompany(ies). I also certify that no part of my compensation was, is, or will be, directly or indirectly, related to the specific recommendations or viewsexpressed in this research report. Registration of non-US analysts:Thomas Chong is employed by Jefferies Hong Kong Limited, a non-US affiliate of Jefferies LLC and is not registered/qualified as a research analyst with FINRA. This analyst(s) may not be an associated person of Jefferies LLC, a FINRA member firm, and therefore maynot be subject to the FINRA Rule 2241 and restrictions on communications with a subject company, public appearances and trading securities held bya research analyst. Registration of non-US analysts:Zoey Zong is employed by Jefferies Hong Kong Limited, a non-US affiliate of Jefferies LLC and is not registered/qualifiedas a research analyst with FINRA.