China/Asia TMT

Shawn Yang

China growth and global non-US Internet equities

Blue Lotus Research Institute

Blue Lotus Research is a Hong Kong Type 4 Licensed investment advisory firm focusing on Chinese growth equities and global non-US Internet equities

Equity Bottom-Up

<ul>
<li>We estimate that NetEase's 1Q23 revenue/non-GAAP net income is 1.4%/9.4% vs cons; and 2023's is 7.5%/12.3% vs cons. We suggest that &lt;Eggy Party&gt; has a lot of similarities with &lt;Roblox&gt;.</li>
<li>Four things the market may underestimate about NetEase: 1) the life cycle of &lt;Eggy Party&gt;; 2) &lt;Eggy Party&gt;'s overseas launch; 3)&lt;Justice Mobile&gt;; and 4) AIGC.</li>
<li>We raise NetEase's TP from US$ 99 to US$ 106, and this remains to be one of our top BUY ideas in China internet.</li>
</ul>


We estimate that NetEase's 1Q23 revenue/non-GAAP net income is 1.4%/9.4% vs cons; and 2023's is 7.5%/12.3% vs cons. We suggest that &lt;Eggy Party&gt; has a lot of similarities with &lt;Roblox&gt;.
Four things the market may underestimate about NetEase: 1) the life cycle of &lt;Eggy Party&gt;; 2) &lt;Eggy Party&gt;'s overseas launch; 3)&lt;Justice Mobile&gt;; and 4) AIGC.
We raise NetEase's TP from US$ 99 to US$ 106, and this remains to be one of our top BUY ideas in China internet.


[NetEase (NTES US, BUY, US$106) TP Change]: Eggy Party Could Be Compared to Roblox

Thematic (Sector/Industry)

<ul>
<li>We suggest that AIGC will be a short-term driver for the major companies in the online gaming industry. It could assist the rise of small-to-mid-size companies in the long run.</li>
<li>In the next 1-2 years, we expect that Tencent and NetEase’s EPS may improve by 13%/24% because of AIGC.</li>
<li>By adding more AIGC functions, Unity may also increase customers’ retentions in the near term. Maintain BUY to Tencent, NetEase, and Unity.</li>
</ul>


We suggest that AIGC will be a short-term driver for the major companies in the online gaming industry. It could assist the rise of small-to-mid-size companies in the long run.
In the next 1-2 years, we expect that Tencent and NetEase’s EPS may improve by 13%/24% because of AIGC.
By adding more AIGC functions, Unity may also increase customers’ retentions in the near term. Maintain BUY to Tencent, NetEase, and Unity.


[Gaming Sector Update]: AIGC: Short-Term Catalyst, Long-Term Challenge

Overseas Chinese Equities, Aequitas Research

Ming Lu

Overseas Chinese Equities

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

<ul>
<li>Chinese Apps’ time on site decreased to 26.7 hours in 2022 from 28.5 hours in 2021.</li>
<li>The Press and Publication Administration approved 27 imported games in March.</li>
<li>Douyin launched a medium-duration video app, which can be Bilibili's competitor.</li>
</ul>


Chinese Apps’ time on site decreased to 26.7 hours in 2022 from 28.5 hours in 2021.
The Press and Publication Administration approved 27 imported games in March.
Douyin launched a medium-duration video app, which can be Bilibili's competitor.


China Internet Weekly (27Mar2023): Douyin, Bilibili, Tencent, NetEase, JD Health, Zhihu

<ul>
<li>BABA/ JD/ PDD/ VIPS: Tmall outlines upcoming changes to its platform (-/-/-/-)</li>
<li>LI: Li Auto CEO reveals six pure EVs in pipeline(+)</li>
<li>700HK/NTES/BILI/: Game industry in general:  Domestic game codes published by NPPA（+）</li>
</ul>


BABA/ JD/ PDD/ VIPS: Tmall outlines upcoming changes to its platform (-/-/-/-)
LI: Li Auto CEO reveals six pure EVs in pipeline(+)
700HK/NTES/BILI/: Game industry in general:  Domestic game codes published by NPPA（+）


China TMT Update (Mar.27) - BABA/JD/ PDD/VIPS/LI/700HK/NTES/BILI/ - Tmall Outlines Upcoming Changes

<ul>
<li>700HK/NTES/BILI/IQ/3659.JP: The latest Foreign game codes released by NPPA, positive to gaming companies(+)</li>
<li>BGNE/9995HK：Daiichi and Zymeworks end antibody pact after seven years (-)</li>
<li>ZLAB：ZaiLab's partner Karua's Schizophrenia drug obtained positive Phase 3 data (+)</li>
</ul>


700HK/NTES/BILI/IQ/3659.JP: The latest Foreign game codes released by NPPA, positive to gaming companies(+)
BGNE/9995HK：Daiichi and Zymeworks end antibody pact after seven years (-)
ZLAB：ZaiLab's partner Karua's Schizophrenia drug obtained positive Phase 3 data (+)


China TMT Update(Mar.22): 700HK/NTES/BILI/IQ/3659.JP /BGNE/9995HK/ZLAB - Foreign Game Codes(+)

China

NetEase, Inc. is an Internet technology company that develops applications, services and other Internet technologies in China. The Company's core businesses consist of email service, web portal and online entertainment, including online gaming services. NetEase also offers online advertising, search, mobile applications and e-commerce.

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NetEase Inc (NTES US)

[NetEase (NTES US, BUY, US$106) TP Change]: Eggy Party Could Be Compared to Roblox

Four things the market may underestimate about NetEase: 1) the life cycle of ; 2)Eggy Party 's overseas launch; 3) Justice Mobile; and 4) AIGC.

Blue Lotus Research Institute

[Gaming Sector Update]: AIGC: Short-Term Catalyst, Long-Term Challenge

We suggest that AIGC will be a short-term driver for the major companies in the online gaming industry. We expect that Tencent and NetEase’s EPS...

Blue Lotus Research Institute

China Internet Weekly (27Mar2023): Douyin, Bilibili, Tencent, NetEase, JD Health, Zhihu

Apps’ time on site decreased in 2022 in China. The authorities approved 27 imported games in March. Douyin launched a Bilibili-like app, Green Peach.

Ming Lu

China TMT Update (Mar.27) - BABA/JD/ PDD/VIPS/LI/700HK/NTES/BILI/ - Tmall Outlines Upcoming Changes

BABA/JD/PDD/VIPS: Tmall outlines upcoming changes(-/-/-/-); LI: Li Auto CEO reveals six pure EVs in pipeline(+); 700HK/NTES/BILI/game industry in...

Blue Lotus Research Institute

China TMT Update(Mar.22): 700HK/NTES/BILI/IQ/3659.JP /BGNE/9995HK/ZLAB - Foreign Game Codes(+)

700HK/NTES/BILI/IQ/3659.JP: The latest Foreign game codes; BGNE/9995HK：Daiichi and Zymeworks end antibody pact (-) ; ZLAB：ZaiLab's partner Karua's...

Blue Lotus Research Institute

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