Daily Investment Strategy
Daily focus：NetEase（9999）
NetEase's Marvel Rivals, launched overseas on December 16, has seen considerable success. Meanwhile the current version has potential for future character additions. Many characters have different appearances in the comics, suggesting a continuous monetization path. The NetEase team has experience in online game monetization and will continue to focus on content updates and optimizing game operations. Recently, Sensor Tower released the global revenue ranking of Chinese mobile game publishers in January 2025. NetEase firmly holds the runner-up position in the developer revenue list. As NetEase's highest-grossing mobile game, "Identity V" reached another peak in global revenue in January, with an increase of up to 123%. The game's growth mainly comes from the opening of the "Call of the Abyss VIII" event and the Spring Festival event "窯火除歲彩夢賀新," as well as the launch of Essence 3 of the 36th season. The market predicts that NetEase's revenue in 4Q24 to be at RMB27.2bn, roughly flat yoy, and the EPS expected to increase by 10.8% yoy. Looking ahead to the 2025 results, the market expects NetEase's online game revenue to accelerate again in 2025, leading to an 8.25% yoy increase in total revenue. In addition to "Marvel Rivals" and "Where Winds Meet”, the return of Blizzard's "World of Warcraft" and "Hearthstone" to the China market will also bring revenue support to NetEase. EPS is estimated to increase by 10.46%. Based on the 2025 EPS, NetEase's PE ratio is at 14.7 times, which is lower than that of the foreign game developers. Earlier, we gave a target price of $162 for Netease, which has now been achieved. Investors can wait for another entry point.
Social financing exceeded expectations in January, driven by government bonds
Last Friday, the PBOC announced the credit growth figures for January. The increase in social financing scale was RMb7.06tn, exceeding the expected RMb6.4tn; new RMB loans were RMb5.13tn, higher than the market expectation of RMb4.5tn. The main driving force behind the better-than-expected credit growth in January came from government bonds, with net financing of RMb693.3bn in government bonds, RMb398.6bn more than the same period last year. At the same time, new household loans decreased significantly year-on-year, with new household loans of RMb443.8bn, a significant decrease from 980.1bn yuan in the same period last year, of which medium- and short-term loans decreased by RMb49.7bn. Considering that January was the Spring Festival holiday and did not drive the growth of consumer loans, it may reflect that the consumption capacity of domestic residents has not yet rebounded.
The Hong Kong Stock Connect recorded a net inflow of HK$7.71bn on Friday, of which Alibaba (9988) had the largest net inflow of HK$4.56bn, followed by Tencent (0700); Xiaomi (1810) recorded the largest net outflow of HK$1.9bn, followed by SMIC (0981).
Wen Kit Kenny is a SFC licensed person accredited to KGI Group to carry on regulated activities (for details, please refer to:https://apps.sfc.hk/publicregWeb/indi/AJF244/details). He and/or his associate do not have any financial interest in the recommended issuer or new listing applicant.
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