NetEase (NTES US): Buy: Resetting expectations

Research evidence excerpt

NetEase (NTES US): Buy: Resetting expectations

des at ROE (%) 25.0 23.4 23.4 23.6

14x 2026e PE vs 7% EPS growth. That said, we maintain a Buy rating, since (1) we

52-WEEK PRICE (USD)remain confident in Ananta’s revenue potential, which can drive a re-rating in mid-

2027, and for EPS to grow 14% y-o-y in 2027e vs 12x 2027e PE, (2) there are levers 170.00

to limit further earnings downside like rejuvenating legacy games (e.g., Eggy Party, 135.00

Justice, Identity V, FWJ) and cuts in sales and marketing amid the lack of new

100.00

launches, and (3) shareholder return plans (c4% in 2026-27e) could act as a buffer. 07/25 01/26 07/26

Target price: 150.00

Key games update: (1) SoR: User feedback on the PC launch in mainland China High: 159.34 Low: 109.26 Current: 129.55

remains fixed. Among comment on Taptap from 9-22 July, only 67% were positive vs Source: LSEG IBES, HSBC estimates

87% in the 30 days before launch (see First take on Sea of Remnants launch, 10 July Ritchie Sun*, CFA

2026). We do not expect the mobile launch 23 July to drive meaningful improvement, Analyst, Internet Research

The Hongkong and Shanghai Banking Corporation Limited

given better gameplay experience in PC over mobile. (2) FWJ PC, Mobile: PC ritchie.k.h.sun@hsbc.com.hk

continues to see impressive y-o-y pricing growth for characters in 2Q and July; +852 2822 4392

mobile iOS grossing rank continues to reach a high level, on top of strong DAU Charlene Liu*

growth. (3) Marvel Rivals: Grossing could return to growth y-o-y given successful Head of Internet and Gaming Research, Asia Pacific The Hongkong and Shanghai Banking Corporation Limited,

content updates and a low base in 2Q. (4) Eggy Party: It is topping the iOS grossing Singapore Branch

chart again with a successful four-year anniversary in July.