【行业研究报告】网易-Solid mobile games and margin improvement support strong 1Q23 results

类型: 美股公司研究

机构: 招银国际

发表时间: 2023-05-29 00:00:00

更新时间: 2023-05-29 16:11:20

29May2023
CMBInternationalGlobalMarkets|EquityResearch|CompanyUpdate
Netease(NTESUS)
Solidmobilegamesandmarginimprovement
supportstrong1Q23results
NetEasereported1Q23resultson25May.Totalrevenueincreasedby6%YoY
toRMB25.0bnin1Q23,inlinewithour/consensusestimate.Non-GAAPnet
incomegrewby48%YoYtoRMB7.6bnin1Q23,beatingour/consensus
estimateby36/33%,mainlyattributabletothesolidgrossmarginimprovement
(+5pctYoY)andeffectivecontrolinmarketingexpenses.WeraiseFY23-25E
non-GAAPnetincomeforecastby8-10%mainlyonmorepositivegamesGPM
outlookandoperatingleverage.WenowforecastNetEasetodelivertotal
revenue/operatingincomeCAGRof7/15%overFY22-25Edespitemacro
uncertaintyandcompetition.OurSOTP-derivedTPisliftedtoUS$123.0
(previous:US$116.0).MaintainBUY.
Positivegamebusinessoutlookonasolidpipeline.Onlinegames
revenueincreasedby8%YoYtoRMB20.1bnin1Q23(4Q22/3Q22:+2/9%
revenueincreasedby8%YoYtoRMB20.1bnin1Q23(4Q22/3Q22:+2/9%
YoY).Mobilegamerevenuewasupby16%YoYtoRMB13.4bnin1Q23,
mainlydrivenbythestrongperformanceofEggyParty,whichtopped
China’siOSgamesdownloadchartin1Q23.PCgamesrevenuewasdown
by10%YoYtoRMB5.1bn,mainlyduetotheterminationofcertainlicensed
Blizzardgames.Lookingahead,severalhighly-anticipatedgamesare
scheduledforlaunchin2Q23,includingJusticeMobile(30Jun),Racing
Master(20Jun)andBadlanders(8Jun).NetEasecontinuedtoinvestinthe
overseasgamedevelopmentcapabilityandestablishedtwooverseas
studiosnamedAnchorPointandBadBrainin1Q23.NetEasenowalready
has10proprietaryoverseasgamestudios.
Drivingqualitygrowthofnon-gamebusiness.CloudMusicrevenue
declinedby5%YoYtoRMB2.0bnin1Q23(8%oftotalrevenue),asCloud
Musicenhancedriskcontrolandreducedrevenuesharingratio,whichled
todecreaseinsocialentertainmentrevenue.However,CloudMusicgross
profitgrewby75%YoYthankstoitsqualitygrowthstrategy,withgross
marginreaching22.4%in1Q23(1Q22:12.2%).Youdaorevenuedeclined
by3%YoYtoRMB1.2bn(5%oftotalrevenue)in1Q23,primarilydueto
decreasedrevenuefromadultandvocationalcourses.Innovative
businessesrevenuewasupby13%YoYtoRMB1.9bnin1Q23(7%oftotal
revenue),mainlydrivenbystrongsalesgrowthinYanxuan.
StrongGPMexpansionandoperatingleverage.OverallGPMimproved
by5pctYoYto59.5%in1Q23,thankstotheenhancedgames/musicGPM
(+4.5/10.2pctYoY).EnhancedgamesGPMwasmainlyduetofavourable
revenuemixshifttoself-developedgamesandoptimizationofchannel
costs.S&MexpenseswasflatYoY,whileR&Dgrewby10%YoYas
NetEaseinvestedinoverseasstudios.Non-GAAPNPMexpandedby8.5pct
YoYto30.2%in1Q23onimprovedGPMandoperatingleverage.Weare
upbeatonNetEase’smarginexpansioninFY23,supportedbysolidgrowth
ofgamingbusinessandmarginimprovementofnon-gamebusinesses.