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    NTES   US64110W1027

NETEASE, INC.

(NTES)
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NetEase Shares Dive on Game Suspension, Profit-Taking Pressure

11/30/2021 | 03:26am EST

By Yifan Wang

NetEase Inc. shares fell in Hong Kong on Tuesday, in part due to speculation that the company's move to temporarily suspend availability of a game on PCs indicates the product has regulatory issues and could hurt revenue.

The Chinese gaming developer's stock was down 7.1% in afternoon trading at HK$165.70, putting it on pace for its biggest one-day drop in nearly three months.

Brokerage UOB Kay Hian said investors appeared to suspect that NetEase's recent decision to suspend the desktop simulator for its new Harry Potter-themed game, which it said it did to facilitate a technical upgrade, was also related to regulatory issues.

Beijing authorities earlier this year halted approvals for new games, requiring developers to first complete system upgrades to comply with new anti-addiction requirements for underage users.

The brokerage said NetEase's latest service suspension was unlikely to hurt revenue significantly, noting that the PC version of the Harry Potter game accounts for a relatively small portion of its total user base and income stream. "We believe the absence of the PC game can be mitigated by the mobile version," it said.

UOB Kay Hian has a buy rating on NetEase, with a price target of HK$213, around a 29% premium to shares' current level.

Some investors could also be moving to take profits after a run-up in the company's stock, other analysts said. NetEase is up about 25% so far this quarter, while peers including Alibaba Group Holding Ltd. and Tencent Holdings Ltd. have fallen in the same period.

Chinese tech stocks have broadly sold off in recent sessions, with the Hang Seng TECH Index losing ground for three consecutive trading days since late last week. Analysts attribute the downturn to earnings pressures for tech firms amid China's macroeconomic weakness as well as to rising uncertainty over the effects of the new Omicron coronavirus variant.

Write to Yifan Wang at yifan.wang@wsj.com

(END) Dow Jones Newswires

11-30-21 0325ET

Stocks mentioned in the article
ChangeLast1st jan.
ALIBABA GROUP HOLDING LIMITED -5.95% 123.23 Delayed Quote.10.30%
NETEASE, INC. -6.16% 96.99 Delayed Quote.1.55%
TENCENT HOLDINGS LIMITED 0.68% 474.8 End-of-day quote.3.94%
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Analyst Recommendations on NETEASE, INC.
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Financials
Sales 2021 87 515 M 13 807 M 13 807 M
Net income 2021 14 814 M 2 337 M 2 337 M
Net cash 2021 81 896 M 12 920 M 12 920 M
P/E ratio 2021 29,9x
Yield 2021 0,97%
Capitalization 426 B 67 233 M 67 255 M
EV / Sales 2021 3,94x
EV / Sales 2022 3,24x
Nbr of Employees -
Free-Float -
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Technical analysis trends NETEASE, INC.
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Income Statement Evolution
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Mean consensus BUY
Number of Analysts 27
Last Close Price 655,36 CNY
Average target price 868,46 CNY
Spread / Average Target 32,5%
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Managers and Directors
Lei Ding Chief Executive Officer & Chief Technology Officer
Zhao Xuan Yang Chief Financial Officer
Ting Bun Lee Chief Financial Officer & Director
Lun Feng Independent Non-Executive Director
Tze Kay Tong Independent Non-Executive Director
Sector and Competitors