NetEase Inc is back ! NetEase Inc (9999-HK) recently launched | Rakuten Trade Ideas 🎯

NetEase Inc is back !

NetEase Inc (9999-HK) recently launched its latest blockbuster video game.

The company’s Justice Mobile, an AI-powered martial game, has ranked among the top three highest-grossing video games in the country. Along with Eggy Party and the Racing Master, they made up China’s three most downloaded video games on July 2.

2022 proved to be a turbulent year for the online gaming industry because the China government hit particularly hard. The online gaming industry is experiencing a lengthy hiatus on new game licenses and giving new restrictions on playtime to curb youth game addiction. The new policies hit operating revenue in the online gaming industry, except for Tencent Holdings Ltd (700-HK) and NetEase.

Meanwhile, the blockbuster hits are changing fortunes for NetEase with renewed optimism that see the firm’s 85% rally since an October low which have room more room to run. NetEase has edged out rivals Tencent and Bilibili Inc (9626-HK) to become one of the best performers on the Hang Seng Tech Index since the end of October.

Analysts expect the online gaming sector to be one of the best sectors across the whole Internet space. Investors should consider holding in long-term as NetEase will do better than most of these online gaming peers.

Goldman Sachs analysts had raised their target on the stock by about 5%. The analysts estimate the game revenue will increase by 1.3%-1.4% based on NetEase’s proven track record in expanding into previously untapped genres with new titles through innovative gameplay. The Harry Potter: Magic Awakened, which launched in Japan last week, also contributed to the company revenue and boosted the bottom line.

The share price of NetEase is up +35.46% year-to-date, and the last price was HKD155.10

Bloomberg consensus rating has 39 Buys, with a 12-month target price of HKD185.33

Sources: Bloomberg, SCMP

As at 9am, Hang Seng Index 19,110.38 (-1.57%).

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