Among the prominent Hong Kong stocks, NetEase (HK:9999) (NASDAQ:NTES) continues to shine, riding on the back of its strong gaming growth. Analysts express strong optimism regarding the company’s gaming revenue, attributing it to both the company’s successful existing titles and the promising lineup of new games.
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The NetEase share price has surged 20% this year, despite a major blow faced by the company in December 2023.
NetEase is a technology company specializing in the development of online PC and mobile games, smart devices, e-commerce platforms, and more.
The Gaming Strength
For the Fiscal Year 2023, NetEase reported net revenues from games and value-added services of ¥81.6 billion, up from ¥74.6 billion in 2022. During this period, mobile games contributed around 75.2% of net revenues from online game operations, up from 67.0% in 2022.
The company’s lineup of upcoming games for 2024 includes She Diao in March 2024 and Naraka: Bladepoint Mobile in the second quarter of 2024. Along with these, the existing titles such as Eggy Party, Racing Master, and Dunk City Dynasty are expected to further contribute to the company’s revenue growth.
Bullish Outlook Prevails Among Analysts
Last week, analyst Tsz Wang from DBS reiterated a Buy rating on NetEase stock, predicting an upside o 54%. Wang expects the company to achieve a CAGR of more than 10% in its online gaming revenue from 2022 to 2025, surpassing the industry average.
Additionally, Wang anticipates that the company will generate a CAGR of 24% in its overseas game revenue from 2022 to 2025. The company is targeting a higher share in international markets by introducing major titles and partnering with global studios.
Similarly, Morgan Stanley’s analyst Alex Poon confirmed his Buy rating, forecasting an upside of 35.7% in the company’s U.S.-listed shares. Poon remains optimistic about the company’s game, Eggy Party, which achieved a significant milestone of 40 million daily active users during the Lunar new year holiday. This game has notably held its ground against competitors, further bolstering the positive outlook for the company.
Is NetEase a Good Investment?
On TipRanks, 9999 stock carries a Strong Buy consensus rating, backed by five unanimous Buy recommendations. The NetEase share price target of HK$216.40 implies an upside of 25.2% from the current level.
