NetEase is scheduled to report its second-quarter results on Thursday. Here's what you need to know:
NET PROFIT FORECAST: The Chinese video game maker's net profit expected to rise 13% compared with the same period a year earlier to 9.72 billion yuan, equivalent to US$1.44 billion, according to a FactSet consensus estimate of nine analysts. Its adjusted net profit likely gained 7.3% to 10.23 billion yuan. Nomura analysts cautioned that the net profit could be lower than expected due to larger investment losses stemming from its holdings of Alibaba and PDD shares.
REVENUE FORECAST: Revenue likely rose 4.3% on year to 29.10 billion yuan, supported by the resilient performance of evergreen titles such as "Fantasy Westward Journey" and "Eggy Party."
NetEase's shares rose 19% in the second quarter in Hong Kong amid a broad tech rally. Despite the rebound in the second quarter, its shares are down around 5% so far this quarter as investors shifted their focus to AI supply chain names.
WHAT TO WATCH:
-- NetEase launched its highly anticipated game "Sea of Remnants" in July. While the title has experienced seen moderate demand so far, Citi noted that its developers could continue to optimize its in-game experience after receiving feedback from gamers. Nomura analysts still expect it to generate 200 million yuan-300 million yuan in gross billings per month and help accelerate NetEase's game revenue growth in the second half of the year.
-- According to Citi's tracking, there are 57 games in NetEase's pipeline currently, with 23 of them in the pipeline have already been approved for domestic launch. Any management updates on the new game release schedule--including "Ananta," "Blood Message" and "Floatopia"--could serve as incremental catalysts.
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