20240301-招银国际-Solid_pipeline_to_fuel_FY24_revenue_growth_7页_1mb

报告摘要

Revenue: NetEase reported 4Q23 revenue of RMB27.1bn (7% YoY growth, below consensus), with FY23 revenue up 7% YoY to RMB103.5bn.
Profitability: Non-GAAP net income for 4Q23 was RMB7.4bn (53% YoY growth, missing consensus by 7%), driven by game performance despite higher marketing expenses (+24% YoY). FY23 non-GAAP net income grew 43% YoY.
Key metrics:
- Gross Profit Margin: Improved to 60.9% in FY23, 61.5% in 4Q23.
- Operating Profit Margin: 28.4% in 4Q23, GaA)
- Earnings Growth (+1.9%/2024E): Revenue expected 9% YoY growth in FY24, driven by strong mobile games.

Game Segment: Revenue growth slower than expected due to PC game weakness and competition, contributing 77.1% of total revenue in 4Q23. Mobile games strong, with games like Eggy Party achieving 40mn DAUs in 2024 CNY. Expect 9% YoY revenue growth in FY24.
Non-Gaming: Revenue from innovative businesses (+13% YoY in 4Q23 to RMB2.8bn), cloud music (-16% YoY to RMB2.0bn), and Youdao (+2% YoY to RMB1.5bn). Margin improvements, with cloud music GPM elevated to 30.3%.

Target Price: Down to US$130.5 (previous US$132.5), reflecting slight revenue cuts for FY24-FY25E.
Buy Recommendation: Maintain; upbeat on game pipeline and market share gains; stable growth outlook.
Financial Metrics: Higher gross and operating margins expected due to revenue mix shift.

Risks: Dependency on key games, M competition pressure, potential revenue deceleration.
Future Outlook: Expectations for continued performance driven by game development and non-gaming expansion; FY24 guidance anticipates steady growth with margin improvements.

Peer Comparisons: Valuation multiples aligned with industry averages; revenue growth comparisons lagging for some peers.
Disclosures: Risks involved in trading securities; report based on publicly available data; not personalized advice.

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