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.

Equity Bottom-Up

<ul><li>NetEase reported 1Q23 results on 25 May. Total revenue increased by 6% YoY to RMB25.0bn in 1Q23, in line with our/consensus estimate.</li><li>Non-GAAP net income grew by 48% YoY to RMB7.6bn in 1Q23, beating our/consensus estimate by 36/33%, mainly attributable to the solid gross margin improvement (+5pct YoY) and effective control in marketing expenses.</li><li>We raise FY23-25E non-GAAP net income forecast by 8-10% mainly on more positive games GPM outlook and operating leverage. </li></ul>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 reported 1Q23 results on 25 May. Total revenue increased by 6% YoY to RMB25.0bn in 1Q23, in line with our/consensus estimate.Non-GAAP net income grew by 48% YoY to RMB7.6bn in 1Q23, beating our/consensus estimate by 36/33%, mainly attributable to the solid gross margin improvement (+5pct YoY) and effective control in marketing expenses.We raise FY23-25E non-GAAP net income forecast by 8-10% mainly on more positive games GPM outlook and operating leverage. 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 (NTES US) – Solid mobile games and margin improvement support strong 1Q23 results

Thematic (Sector/Industry)

<ul><li>China’s online game market revenue was RMB22.5bn in Apr 2023, down by 2% YoY but up by 3% MoM, according to CNG.</li><li>The online game market revenue declined at a slower rate in April compared to 1Q23 (-15% YoY), mainly due to the launch of several highly-anticipated mobile games and the resilient performance of PC game market.</li><li>With the normalization of game license approval, more quality new game supply resumed in 4M23, which shall support China’s domestic online game market recovery to positive territory from 2Q23E onwards. </li></ul>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’s online game market revenue was RMB22.5bn in Apr 2023, down by 2% YoY but up by 3% MoM, according to CNG.The online game market revenue declined at a slower rate in April compared to 1Q23 (-15% YoY), mainly due to the launch of several highly-anticipated mobile games and the resilient performance of PC game market.With the normalization of game license approval, more quality new game supply resumed in 4M23, which shall support China’s domestic online game market recovery to positive territory from 2Q23E onwards. 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 – April online game market recap

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

<ul>
<li>NetEase reported in-line revenue for 1Q23, while non-GAAP net income exceeded our estimate by 22%. </li>
<li>&lt;Justice Mobile&gt; is set to launch by the end of June. We anticipate that investors may need to wait for some time after June for NetEase's next potential hit title. </li>
<li>Maintain a BUY with TP unchanged, implying 18X PE in 2023.</li>
</ul>


NetEase reported in-line revenue for 1Q23, while non-GAAP net income exceeded our estimate by 22%. 
&lt;Justice Mobile&gt; is set to launch by the end of June. We anticipate that investors may need to wait for some time after June for NetEase's next potential hit title. 
Maintain a BUY with TP unchanged, implying 18X PE in 2023.


NetEase (NTES US, BUY, TP US$106) Earnings Review: Justice Mobile Is the Next Catalyst

<ul>
<li>700.HK/NTES/BILI: Tencent, NetEase and Bilibili receive game code approvals (+)</li>
<li>ZLAB：First generic version of Olaparib approved in China but impact on Nariparib should be small（/）</li>
<li>MNSO: Miniso opened its global flagship store in NY Times Square with 78k sales in first day</li>
</ul>


700.HK/NTES/BILI: Tencent, NetEase and Bilibili receive game code approvals (+)
ZLAB：First generic version of Olaparib approved in China but impact on Nariparib should be small（/）
MNSO: Miniso opened its global flagship store in NY Times Square with 78k sales in first day


China TMT Update(May 24) - 700.HK/NTES/BILI/ZLAB/MNSO: Tencent, NetEase, Bilibili Receive Game Code

<ul>
<li>In the evening of May 20th, NetEase held an online conference where it announced release dates for games...</li>
<li>...that It has Previously Announced, and Unveiled New Titles that Will Be Launched in the Future.</li>
<li>Overall, June Will Be the Peak Month for Newly Launched Titles from NetEase, with One Big Game (Justice Mobile) And Two Smaller Games (Badlanders and Racing Mobile)</li>
</ul>


In the evening of May 20th, NetEase held an online conference where it announced release dates for games...
...that It has Previously Announced, and Unveiled New Titles that Will Be Launched in the Future.
Overall, June Will Be the Peak Month for Newly Launched Titles from NetEase, with One Big Game (Justice Mobile) And Two Smaller Games (Badlanders and Racing Mobile)


NTES.US: NetEase Holds Annual Game Conference, Announced New Game Pipelines, and Our Estimations(+)

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) – Solid mobile games and margin improvement support strong 1Q23 results

NetEase reported 1Q23 results on 25 May. Total revenue increased by 6% YoY to RMB25.0bn in 1Q23, in line with our/consensus estimate.

CMB International

China Internet – April online game market recap

The online game market revenue declined at a slower rate in April compared to 1Q23 (-15% YoY), mainly due to the launch of several highly...

CMB International

NetEase (NTES US, BUY, TP US$106) Earnings Review: Justice Mobile Is the Next Catalyst

The upcoming key title, Justice Mobile , is set to launch by the end of June. We anticipate that investors may need to wait for some time after...

Blue Lotus Research Institute

China TMT Update(May 24) - 700.HK/NTES/BILI/ZLAB/MNSO: Tencent, NetEase, Bilibili Receive Game Code

700.HK/NTES/BILI: Tencent, NetEase and Bilibili receive game code (+)；ZLAB：First generic version of Olaparib approved in China（/）；MNSO: Miniso...

Blue Lotus Research Institute

NTES.US: NetEase Holds Annual Game Conference, Announced New Game Pipelines, and Our Estimations(+)

In the evening of May 20th, NetEase held an online conference where it announced release dates for games that it has previously announced, and...

Blue Lotus Research Institute

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