Nomura: Reiterates "buy" rating for NTES-S (09999), raises target price to HKD 215.

Nomura released a research report stating that it has reiterated its "buy" rating for NTES-S (09999), raising its earnings per share forecast for the fiscal year 2023 by 19% and for the fiscal year 2024 by 6%. The target price has also been raised from HKD 168 to HKD 215. The report predicts that the company's fiscal year 2023 and 2024 non-generally accepted accounting principles operating profit will increase by 37% and 14% respectively, while the revenue will increase by 7% and 12% respectively. The report states that the company's third-quarter revenue met expectations and its profitability performed much better than expected. The gross margin increased by 6 percentage points year-on-year to 62%, while Nomura had predicted it to be 60%, due to the improvement in the gross margins of its three major business divisions. The bank believes that the high gross margin will continue as NetEase's game revenue is now entirely contributed by self-developed games with higher profit margins.