External broker reports(aggregated public sources), CMB International

CMB International

External broker reports(aggregated public sources)

Incorporated in Hong Kong, supported by the mainland and targeting in global market, CMB International Capital Corporation Limited (“CMBI”) is an integrated financial institution providing comprehensive and professional services. As a wholly-owned subsidiary of China Merchants Bank ("CMB"), by leveraging on the Group’s synergy and coordination in domestic and overseas markets, as well as CMB’s strong resources and outstanding social reputation, CMBI and its subsidiaries have been actively implementing diversified business strategies and set up an overall layout of main business segments including Corporate Finance, Asset Management, Wealth Management, Global Markets and Structured Finance, etc. Adhering to the philosophy of “being clients oriented and increasing our own values by the way of creating value for clients”, CMBI endeavors to provide quality and integrated financial services to institutional, corporate and individual customers both domestic and overseas including Hong Kong IPO sponsorship and underwriting, share placement and rights issue for listed companies, financial advisors, bonds issuance services, asset management, direct investment, wealth management, equity sales and trading, etc.

Thematic (Sector/Industry)

<ul><li>The NPPA released this year’s first batch of domestic game licenses on 17 January.</li><li>88 new games were approved and 24 legacy games received approval for changes of operation.</li><li>This is the highest number of domestic game license approved since the resumption of license approval in Apr 2022, showing further normalizing trend for game licenses approval. </li></ul><p><em>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.</em></p>

The NPPA released this year’s first batch of domestic game licenses on 17 January.88 new games were approved and 24 legacy games received approval for changes of operation.This is the highest number of domestic game license approved since the resumption of license approval in Apr 2022, showing further normalizing trend for game licenses approval. Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

China Internet – Game license approval further normalises

<ul><li>China online game market revenue decreased by 10% YoY to RMB266bn in 2022 (2021: +6% YoY), as per CNG.</li><li>Apart from high base impact, the main causes were the suspension of game license approval and strengthening minor protection.</li><li>4Q22 China online gaming revenue continued to decline by 2% QoQ and 19% YoY to RMB58bn (3Q22: -19% YoY). </li></ul><p><em>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.</em></p>

China online game market revenue decreased by 10% YoY to RMB266bn in 2022 (2021: +6% YoY), as per CNG.Apart from high base impact, the main causes were the suspension of game license approval and strengthening minor protection.4Q22 China online gaming revenue continued to decline by 2% QoQ and 19% YoY to RMB58bn (3Q22: -19% YoY). Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

China Internet – 2022 online game market recap

Equity Bottom-Up

<ul><li>NetEase announced its 3Q22 results on 17 Nov. Total revenue grew by 10% YoY to RMB24.4bn in 3Q22, in line with our &amp; consensus estimates of RMB24.4bn.</li><li>Driven by resilient performance of legacy titles and launch of new titles like Diablo Immortal, total revenue was up 13% YoY in 9M22.</li><li>Non-GAAP net income in 3Q22 grew by 23% YoY to RMB4.7bn (excl. RMB2.7bn extraordinary gains like investment income and FX gain), which is largely in line with our/consensus estimates of RMB5.0/4.9bn.</li></ul><p><em>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.</em></p>

NetEase announced its 3Q22 results on 17 Nov. Total revenue grew by 10% YoY to RMB24.4bn in 3Q22, in line with our &amp; consensus estimates of RMB24.4bn.Driven by resilient performance of legacy titles and launch of new titles like Diablo Immortal, total revenue was up 13% YoY in 9M22.Non-GAAP net income in 3Q22 grew by 23% YoY to RMB4.7bn (excl. RMB2.7bn extraordinary gains like investment income and FX gain), which is largely in line with our/consensus estimates of RMB5.0/4.9bn.Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

NetEase Inc. (NTES US) – Preparing for next strong product cycle

<ul><li>For 3Q22E, social entertainment platforms still face intensifying competition and macro challenges that can weigh on their revenue growth and margin expansion.</li><li>Social entertainment platforms need to innovate their monetization methods and enhance operating efficiency in order to fend off competition and macro headwind, in our view.</li><li>Platforms with concentrated revenue exposure to ad business like Weibo and loss-making platforms like BiliBili (Bili) might be more sensitive to the competition and macro environment.</li></ul><p><em>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.</em></p>

For 3Q22E, social entertainment platforms still face intensifying competition and macro challenges that can weigh on their revenue growth and margin expansion.Social entertainment platforms need to innovate their monetization methods and enhance operating efficiency in order to fend off competition and macro headwind, in our view.Platforms with concentrated revenue exposure to ad business like Weibo and loss-making platforms like BiliBili (Bili) might be more sensitive to the competition and macro environment.Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

China Internet– Social Entertainment 3Q22 Preview: Remains Under Pressure

<div><div><div><div><ul><li>Consumption sentiment and offline activities’ recovery pace continued to weigh on internet sector’s 3Q financials performance.</li><li>Looking into 4Q and 2023, business model robustness, operating leverage improvement, and ability to expand into new revenue streams will be the key stock alpha drivers, while the heavily under-owned China Internet sector will remain sensitive to policies and other sentiment related beta drivers.</li><li>We expect leading technology companies will play vital role in building digital infrastructure and empowering enterprise digital transformation. </li></ul></div></div></div></div><p><em>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.</em></p>

Consumption sentiment and offline activities’ recovery pace continued to weigh on internet sector’s 3Q financials performance.Looking into 4Q and 2023, business model robustness, operating leverage improvement, and ability to expand into new revenue streams will be the key stock alpha drivers, while the heavily under-owned China Internet sector will remain sensitive to policies and other sentiment related beta drivers.We expect leading technology companies will play vital role in building digital infrastructure and empowering enterprise digital transformation. Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

China Internet Sector – 3Q22 preview: near term bumpy recovery

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)

China Internet – Game license approval further normalises

The NPPA released this year’s first batch of domestic game licenses on 17 January. 88 new games were approved and 24 legacy games received approval...

CMB International

China Internet – 2022 online game market recap

China online game market revenue decreased by 10% YoY to RMB266bn in 2022 (2021: +6% YoY), as per CNG. Apart from high base impact, the main causes...

CMB International