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.
Reciprocal Tariffs
Yesterday, Trump signed a presidential memorandum announcing the decision to impose "reciprocal tariffs," which means that the tariff rates between the United States and its trading partners will be equal. He also mentioned considering additional tariffs on countries that use a value-added tax system to prevent tax evasion through transshipment. U.S. Commerce Secretary Howard Lutnick expects the study to be completed by April 1 at the earliest, and it could take effect at any time thereafter. Currently, the countries with the largest trade deficits with the United States are China, Mexico, Vietnam, Ireland, and Germany.
On Thursday, there was a net outflow of HK$1.02 billion from the Hong Kong Stock Connect. Among them, Alibaba (9988) had the highest inflow, reaching HK$1.73 billion, followed by SMIC (981). The largest net outflow was recorded by the Tracker Fund of Hong Kong (2800), amounting to HK$3.1 billion, followed by Tencent Holdings (700).
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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