CICC has released a research report maintaining its forecast for NetEase-S (09999)'s Non-GAAP net profit at RMB 42.6 billion and RMB 45.3 billion for 2026 and 2027, respectively. The current Hong Kong stock price implies 14x and 13x Non-GAAP P/E for 2026/2027, while the US-listed shares are at 14x and 13x. The firm reiterates its Outperform industry rating and target price of $177 / HK$275 (corresponding to 19x and 18x 2026/2027 P/E), implying an upside potential of 33% for both the Hong Kong and US listings. CICC's primary views are outlined below.
The institution forecasts 4Q25 revenue to increase 7% year-on-year. It is projected that the company's 4Q25 revenue will grow 7% year-on-year to RMB 28.5 billion, with a Non-GAAP net profit of RMB 8.25 billion, having factored in potential impacts from investment losses and foreign exchange losses.
Flagship product revenue streams are being steadily realized, while new overseas titles are demonstrating impressive performance. The institution anticipates the company's online game services revenue to grow 7% year-on-year in 4Q25. Specifically: 1) "Westward Journey" PC is expected to achieve significant year-on-year growth, benefiting from the continued recognition of deferred revenue from the "Changwan" server within the quarter. 2) "Westward Journey" mobile continues its positive trend; "Eggy Party" is expected to see a further recovery in user activity and revenue through ongoing festive and operational events. 3) Revenue from the domestic version of "Where Winds Meet" remains stable; the overseas version, launched in mid-to-late November, has shown strong performance, surpassing 15 million players in its first month and topping charts in multiple regions, which is seen as likely to gradually contribute incremental revenue. The ranking of "Marvel Rivals" on the Steam bestsellers list has been climbing steadily since November 2025, further validating the company's global capabilities.
The 2026 product pipeline is substantial, with key titles laying the foundation for growth. 1) "Lost Ocean" (an ocean adventure RPG) is scheduled for a new round of testing in February 2026, with the company indicating plans for a 2026 launch. 2) "Starry Friends Sunny Day" (a life simulation party game) has already obtained a publication license. 3) The open-world game "Once Human" has garnered significant market attention, and its innovative framework and commercialization design are highly anticipated. 4) The company also has multiple projects in development, including the auto-battler "Code Name: Yaoguai" and "Feng Hua Jue Zhan." The institution believes that a diversified portfolio of high-quality products will solidify the company's core R&D advantages and drive the implementation of its globalization and multi-platform strategy.
Shareholder returns are stable, with attention on the scale of the 4Q25 dividend. The company's dividend payout ratio for the first three quarters of 2025 was 30%, compared to 40% for the past two years (2023/2024). The institution expects the company may continue to implement a substantial dividend in 4Q25, potentially maintaining an attractive full-year dividend yield.
Risk warnings include a sluggish macroeconomic environment, tightening regulatory policies, potential delays in game launches or underperformance of game revenue, higher-than-expected cost expenditures, intensifying overseas competition, and foreign exchange rate fluctuations.
Comments