First Read: NetEase "Strong Q1 high quality beat on margins; focus on H2..."

研报英文原文证据摘录

First Read: NetEase "Strong Q1 high quality beat on margins; focus on H2..."

77.86 9 69.06

progressing steadily toward a Q3 launch. Ananta should be a bigger driver for 2027, in 12/28E 78.18 85.28 9 75.03

our view. Other titles incl. Planet Party Time (PC soft launch in Apr), Shan Hai Qi Lv, Wan

Min Chang Ge: Three Kingdoms and Blood Message are also in the pipeline, with launch Kenneth Fong

timing TBD. 3) Margin expansion was a major positive surprise. We continue to see Analyst

structural GPM upside from lower iOS commission rates, increasingly cross-platform kenneth-kc.fong@ubs.com

+852-3712 3890

portfolio exposure, and ongoing optimisation in game operations. 4) Overseas

potential: Mgmt. continued to strike a constructive tone on overseas expansion and Jenny Yuan

highlighted the company’s growing experience in global live-service operations. NetEase Analyst

will continue to allocate resources into WWM, incl. enhancing cross device compatibility S1460525030004

jenny-za.yuan@ubs.comand localisation and publishing capabilities, to make it another franchise title in its global

+86-21-3866 8912

portfolio.

Wei Xiong

What to do with the stock? Analyst

S1460518100005

We consider this a robust set of results, supported by : 1) Sustainable GPM margin wei.xiong@ubs.com

expansion, which is likely to drive EPS upgrades as several favorable industry +86-21-3866 8883

dynamics persist. These include multi-channel distribution, reduced iOS channel fees

beginning in March, and stronger performance of self-developed IPs. 2) Solid game

performance despite a lighter content pipeline in 1Q, which enhances earnings

visibility and supports valuation multiples. We estimate that game gross receipts

still increased in 1Q26 despite the lighter content release and a high base in 1Q,