Daiwa Raises NTES-S Target Price to HKD263, Anticipates 75% Dividend Payout Ratio for 4Q
3Q25 Revenue Performance: NTES-S reported a 12.7% year-over-year growth in online game revenue for 3Q25, although it fell 3% short of market expectations.
Net Profit and Investment Gains: The company's net profit largely met market expectations, supported by investment gains, despite a quarterly revenue growth that did not meet forecasts.
Analyst Ratings and Forecasts: CICC maintained an "Outperform" rating for NTES-S, while Daiwa reduced its revenue forecasts for 2026-27 by 1% due to decreased live streaming revenue from NETEASE MUSIC.
Dividend Payout Expectations: The target price for NTES-S was raised from HKD260 to HKD263, with an estimated quarterly dividend payout ratio of 75% in 4Q25 to meet the annual target of 40%.
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Citi Projects Over 9% Year-Over-Year Growth in NTES-S (09999.HK) 4Q25 Online Game Revenue, Maintains Buy Rating
4Q25 Results Announcement: NTES-S (09999.HK) will announce its 4Q25 results on February 11, with expectations of performance in line with market consensus, driven by strong sales from its flagship game and other titles.
Revenue and Profit Forecasts: Citi Research predicts a 6.5% YoY revenue growth to RMB28.5 billion for NTES-S in 4Q25, with a non-GAAP net profit of RMB8.8 billion, slightly below market expectations.
1Q26 Projections: Looking ahead to 1Q26, total revenue is expected to increase by 3.3% to RMB29.8 billion, with online game revenue projected to grow by 2.8% YoY.
Target Price and Rating: Citi Research maintains a target price of US$161 for NTES-S' US stock and keeps its Buy rating unchanged, reflecting confidence in the company's earnings potential.
Daiwa Lowers NETEASE MUSIC's Target Price to HKD215; New Package Could Affect ARPU
Stock Performance: NETEASE MUSIC (09899.HK) experienced a decline of 6.400 (-3.412%) with significant short selling amounting to $49.87M and a ratio of 18.730%.
Family Membership Impact: The newly launched family membership package priced at RMB4.5 per user may negatively affect the average revenue per user (ARPU), according to a Daiwa research report.
Subscriber Growth vs. ARPU Pressure: While the family plan is expected to boost subscriber growth, Daiwa anticipates that ARPU will be under pressure this year due to changes in content structure.
Target Price Adjustment: Daiwa maintained an Outperform rating for NETEASE MUSIC but reduced its 12-month target price from HKD310 to HKD215, reflecting declining peer valuations and anticipated increased investments to tackle competition.
CICC Releases Investment Ratings and Target Prices for Chinese Online Platform Stocks (Table)
Stock Performance: Various Hong Kong stocks showed mixed performance, with Tencent and Kuaishou gaining slightly, while NetEase Music experienced a notable decline.
Short Selling Data: Short selling ratios varied across companies, with TME-SW having the highest ratio at 43.756%, indicating significant market skepticism.
CICC Research: Chinese Online Platform Stocks Gain Appeal; Top Picks Include TENCENT, KUAISHOU, NTES, and More
Market Sentiment and Valuation: The overall market sentiment has turned negative, leading to a correction in the sector, with valuations currently between the mean and the 25th percentile.
Fundamental Performance: Despite the negative sentiment, the sector shows solid fundamentals with healthy growth in advertising and gaming, particularly for companies like TENCENT, which continues to improve profit margins.
Investment Recommendations: CICC recommends TENCENT as a core investment, while also suggesting attention to KUAISHOU-W, NTES-S, NEWBORNTOWN, and BILIBILI-W, as they are entering a 'reasonable' range of projected PE ratios.
Valuation Insights: Most Chinese online platform companies are projected to have PE ratios of 15-20x by 2026, indicating potential for growth if results exceed expectations, although BILIBILI-W remains at a high valuation compared to others in the sector.
Daiwa Raises NTES-S Target Price to HKD263, Anticipates 75% Dividend Payout Ratio for 4Q
3Q25 Revenue Performance: NTES-S reported a 12.7% year-over-year growth in online game revenue for 3Q25, although it fell 3% short of market expectations.
Net Profit and Investment Gains: The company's net profit largely met market expectations, supported by investment gains, despite a quarterly revenue growth that did not meet forecasts.
Analyst Ratings and Forecasts: CICC maintained an "Outperform" rating for NTES-S, while Daiwa reduced its revenue forecasts for 2026-27 by 1% due to decreased live streaming revenue from NETEASE MUSIC.
Dividend Payout Expectations: The target price for NTES-S was raised from HKD260 to HKD263, with an estimated quarterly dividend payout ratio of 75% in 4Q25 to meet the annual target of 40%.
<Study>CLSA: Minimal Risk of Direct Competition Among Chinese Music Platforms
Stock Performance: NETEASE MUSIC (09899.HK) and TME-SW (01698.HK) experienced declines in share prices, with NETEASE down 2.83% and TME-SW down 11.75%, attributed to market concerns over competition from ByteDance's Soda Music.
Analyst Ratings: CLSA maintained an Outperform rating for both NETEASE MUSIC and TME-SW, suggesting that the risk of direct competition is low due to strategic positioning and product differentiation.
Market Sentiment: CLSA previously downgraded NETEASE MUSIC from High Conviction Outperform to Outperform due to high investor expectations, but now views the recent stock price decline as excessive.
Valuation Insights: NETEASE MUSIC is currently trading at a projected PE ratio of 1x for 2026, with a subscription model that offers resilience against economic cycles and potential for long-term profit, leading to a target price of $310.5.
Citi Projects Over 9% Year-Over-Year Growth in NTES-S (09999.HK) 4Q25 Online Game Revenue, Maintains Buy Rating
4Q25 Results Announcement: NTES-S (09999.HK) will announce its 4Q25 results on February 11, with expectations of performance in line with market consensus, driven by strong sales from its flagship game and other titles.
Revenue and Profit Forecasts: Citi Research predicts a 6.5% YoY revenue growth to RMB28.5 billion for NTES-S in 4Q25, with a non-GAAP net profit of RMB8.8 billion, slightly below market expectations.
1Q26 Projections: Looking ahead to 1Q26, total revenue is expected to increase by 3.3% to RMB29.8 billion, with online game revenue projected to grow by 2.8% YoY.
Target Price and Rating: Citi Research maintains a target price of US$161 for NTES-S' US stock and keeps its Buy rating unchanged, reflecting confidence in the company's earnings potential.
Daiwa Lowers NETEASE MUSIC's Target Price to HKD215; New Package Could Affect ARPU
Stock Performance: NETEASE MUSIC (09899.HK) experienced a decline of 6.400 (-3.412%) with significant short selling amounting to $49.87M and a ratio of 18.730%.
Family Membership Impact: The newly launched family membership package priced at RMB4.5 per user may negatively affect the average revenue per user (ARPU), according to a Daiwa research report.
Subscriber Growth vs. ARPU Pressure: While the family plan is expected to boost subscriber growth, Daiwa anticipates that ARPU will be under pressure this year due to changes in content structure.
Target Price Adjustment: Daiwa maintained an Outperform rating for NETEASE MUSIC but reduced its 12-month target price from HKD310 to HKD215, reflecting declining peer valuations and anticipated increased investments to tackle competition.
CICC Releases Investment Ratings and Target Prices for Chinese Online Platform Stocks (Table)
Stock Performance: Various Hong Kong stocks showed mixed performance, with Tencent and Kuaishou gaining slightly, while NetEase Music experienced a notable decline.
Short Selling Data: Short selling ratios varied across companies, with TME-SW having the highest ratio at 43.756%, indicating significant market skepticism.
CICC Research: Chinese Online Platform Stocks Gain Appeal; Top Picks Include TENCENT, KUAISHOU, NTES, and More
Market Sentiment and Valuation: The overall market sentiment has turned negative, leading to a correction in the sector, with valuations currently between the mean and the 25th percentile.
Fundamental Performance: Despite the negative sentiment, the sector shows solid fundamentals with healthy growth in advertising and gaming, particularly for companies like TENCENT, which continues to improve profit margins.
Investment Recommendations: CICC recommends TENCENT as a core investment, while also suggesting attention to KUAISHOU-W, NTES-S, NEWBORNTOWN, and BILIBILI-W, as they are entering a 'reasonable' range of projected PE ratios.
Valuation Insights: Most Chinese online platform companies are projected to have PE ratios of 15-20x by 2026, indicating potential for growth if results exceed expectations, although BILIBILI-W remains at a high valuation compared to others in the sector.
Daiwa Raises NTES-S Target Price to HKD263, Anticipates 75% Dividend Payout Ratio for 4Q
3Q25 Revenue Performance: NTES-S reported a 12.7% year-over-year growth in online game revenue for 3Q25, although it fell 3% short of market expectations.
Net Profit and Investment Gains: The company's net profit largely met market expectations, supported by investment gains, despite a quarterly revenue growth that did not meet forecasts.
Analyst Ratings and Forecasts: CICC maintained an "Outperform" rating for NTES-S, while Daiwa reduced its revenue forecasts for 2026-27 by 1% due to decreased live streaming revenue from NETEASE MUSIC.
Dividend Payout Expectations: The target price for NTES-S was raised from HKD260 to HKD263, with an estimated quarterly dividend payout ratio of 75% in 4Q25 to meet the annual target of 40%.
<Study>CLSA: Minimal Risk of Direct Competition Among Chinese Music Platforms
Stock Performance: NETEASE MUSIC (09899.HK) and TME-SW (01698.HK) experienced declines in share prices, with NETEASE down 2.83% and TME-SW down 11.75%, attributed to market concerns over competition from ByteDance's Soda Music.
Analyst Ratings: CLSA maintained an Outperform rating for both NETEASE MUSIC and TME-SW, suggesting that the risk of direct competition is low due to strategic positioning and product differentiation.
Market Sentiment: CLSA previously downgraded NETEASE MUSIC from High Conviction Outperform to Outperform due to high investor expectations, but now views the recent stock price decline as excessive.
Valuation Insights: NETEASE MUSIC is currently trading at a projected PE ratio of 1x for 2026, with a subscription model that offers resilience against economic cycles and potential for long-term profit, leading to a target price of $310.5.
