In major news on Hong Kong stocks, NetEase (HK:9999) shares surged by 4.1% on Tuesday following reports that 14 new imported games were approved by China in April. In 2023, China’s gaming regulator, the National Press and Publication Administration (NPPA), green-lit a record number of 1,075 new games, indicating robust support for the industry’s expansion.
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NetEase stock has been navigating a rollercoaster ride amid the changes in Chinese regulatory policies. Earlier in December, NetEase and Tencent Holdings Limited (HK:0700) lost a significant portion of their stock values when Beijing announced tougher guidelines on online gaming. The new regulations came as a big blow to the gaming industry players, disrupting their earlier recovery and robust growth. Later on, shares rebounded as regulators eased their stance on these proposals. In the last 12 months, NTES shares gained around 12% in trading.
NetEase is a technology company specializing in the development of online PC and mobile games, smart devices, e-commerce platforms, and more.
NetEase-Blizzard Partnership on the Cards
The upward momentum in NetEase shares on Tuesday was also supported by local reports indicating that the company was in discussion with Blizzard Entertainment, part of Microsoft Corporation (NASDAQ:MSFT), to reintroduce Blizzard’s games to the Chinese market, after a hiatus of over a year. Blizzard and NetEase failed to renew their agreement in 2022, resulting in Chinese gamers losing access to the former’s games in early 2023. With a potential deal, NetEase’s revenues are expected to benefit from publishing Blizzard’s highly popular games in China.
What is the Price Target for NetEase?
NetEase stock has shown some recovery in 2024, with a year-to-date gain of 8%. Moving forward, analysts remain bullish on the stock, citing its gaming revenue growth, driven by successful existing titles and an exciting pipeline of new games. In Fiscal 2023, the company’s net revenues from the games and value-added services segment amounted to ¥81.6 billion, compared to ¥74.6 billion in the prior year. Notably, mobile games accounted for approximately 75.2% of earnings of this segment, up from 67% in 2022.
On TipRanks, 9999 stock has received a Strong Buy rating, backed by all four Buy recommendations. The NetEase share price target of HK$231 implies an upside of about 53% from the current level.
