强劲一季度由持续关键游戏驱动；关注三季度《残响之海》

Forecast Change AsiaChina Key releases to propel 2H growth Valuation & Risks Leo Chiang, CFAResearch Analyst+852-220-36240 Solid 1Q driven by sustained key titles; eyes on "Sea of Remnants” in 3Q NetEase delivered solid 1Q results, with revenue and adjusted net incomeexceeding consensus by 4% and 13%, respectively. Gaming revenue accelerated to+7% YoY, driven by sustained performance from existing key titles such as "FantasyWestward Journey" and "Where Winds Meet." GPM also expanded both YoY andQoQ due to channel cost optimization. Looking ahead, the key spotlight will be onthe anticipated title "Sea of Remnants," scheduled to launch in Q3. Managementshared positive feedback from the latest testing round, and preparations are in finalstages. Additionally, "Where Winds Meet" continues to gain traction in overseasmarkets, with the company focused on unlocking its international potential.Regarding "Ananta," NetEase prioritizes content quality and broad audienceappeal over rushing its launch. Overall, we remain confident in NetEase's growthtrajectory for 2026. We lift our FY26E revenue and adjusted net income forecasts by1%/1% and raise our target price to HK$272. We maintain our Buy rating. Key titles demonstrate sustained momentum NetEase's key titles continue to show robust performance: 1) “Fantasy WestwardJourney Online” achieved another record of 3.9mn peak concurrent users in Q1; 2)“Where Winds Meet” maintains strong momentum across both overseas anddomestic markets; 3) “Marvel Rivals” continues to expand its reach among globalhero shooter audiences, supported by consistent seasonal updates and high-quality content; 4) Eggy Party holds its position as China's leading party game, withSpring Festival events now a significant annual tradition; and 5) Blizzard titlesmaintains stable operations in China with a steady rollout of localized content. “Sea of Remnants" - positive test feedback and target Q3 launch Following a successful technical test in February that provided valuable playerfeedback, NetEase is now preparing for the "Dawnbreaker" test for "Sea ofRemnants." This next phase aims to reveal a larger in-game world and richergameplay, with a Q3 launch targeted. The game's commercialization strategyemphasizes characters and cosmetic monetization as a natural extension ofgameplay, designed to offer a rich yet low-burden gaming experience. 25 May 2026Software & ServicesNetEase "Where Winds Meet" - strong global momentum and expanded overseaspotential "Where Winds Meet" has achieved strong global momentum, evidenced by a 78%positive rating on Steam and consistent top 2 global seller rankings during majorupdates. This success underscores global players' appreciation for its immersivemartial arts and their receptiveness to its free-to-play, high-quality, and no pay-to-win monetization model. NetEase plans to further unlock the game's overseasgrowth potential by enhancing cross-device compatibility, strengthening globalpublishing, expanding to more platforms, and deepening localization efforts,aiming for long-term sustainable success worldwide. "Ananta" - differentiated urban open-world with focus on immersive daily life Despite the crowded open-world game market, "Ananta" aims for differentiationthroughan urban open-world concept centered on immersive daily livingexperiences, rather than traditional RPG or anime-style action. Its competitive edgelies in allowing players to truly "live" in the virtual city via activities such as shopping,social interactions, exploration, and running businesses. The team prioritizesrefining content quality, believing success hinges on distinctive and polishedexperiences. Management believes its distinctive positioning, commitment toquality, and broad audience vision are key differentiators. 1Q26 Key TakeawaysNetEase reported total revenue of RMB30.6bn, up 6.1% YoY. Games and nrelated VAS revenue grew 6.9% YoY to RMB25.7bn, driven by strongperformance from established titles like the Fantasy Westward Journeyfranchise, Eggy Party, and Where Winds Meet. This is supported by high-cadence content updates and gameplay innovation. Meanwhile, NetEase’slicensed Blizzard titles maintained stable operations in China with a steadyrollout of localized content. nFornew games, NetEase maintained a strong pipeline: Sea of Remnants istargeted launch in Q3 window; Ananta aims for differentiation in thecompetitiveopen-world category with immersing daily city livingexperience and achieve genre breakthrough instead of thinking as atraditional anime-style game. Management mentioned monetization isdesigned as a natural extension of gameplay, with characters and cosmeticcustomization at its core. nNetEase is advancing itsglobal expansionthrough key titles. Where WindsMeet and the newly launched Marvel Rivals are noted for amplifying theirinternationalreach and deepening player engagement.Meanwhile,NetEase’s licensed Blizzard titles maintained stable operations in Chinawith a steady